What are government endowment funds and why does the Government create them?
A government endowment fund is a sum of capital money set aside from the governments annual budget into a fund to provide a stable source of funding for specific programmes which span many years in the future.
The principal sum set aside in the endowment fund cannot be spent, and is used to generate a stream of income to finance such programmes on an ongoing basis. Examples include the Lifelong Learning Endowment Fund, ElderCare Fund, Medical Endowment Fund (Medifund), Edusave Endowment Fund and Community Care Endowment Fund (Comcare Fund).
These funds underscore the Governments commitment to meet important objectives in a sustained way e.g. helping needy Singaporeans meet their medical expenses (Medifund and Eldercare Fund); and helping Singaporeans with their basic living expenses and childrens educational needs (Comcare Fund). The Government makes top-ups to the endowment funds from time to time to meet the expenditure needs of the respective programmes.
This helps to ensure that such programmes are not affected by fluctuations in revenues due to the economic cycle.
Government endowment funds are created by law and further top-ups to the principal sums of the endowment funds require Parliaments approval.
The respective Acts also specify:
(i) how the income of the fund can be spent; and
(ii) that audited financial statements be tabled in Parliament every year.
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