Today, the NIRC is one of Singapore’s largest sources of Government revenue for annual spending. At the same time, there have been calls to increase the NIRC, above the present spending limit of 50% of the annual investment returns.

The NIRC framework is part of a larger sustainable fiscal system.

The framework balances between the needs of today and tomorrow. It underscores the Government’s commitment to continue growing our reserves, while allowing the Government to tap on part of the investment income for current spending.

While our reserves are growing, the size of our economy, the challenges facing our economy and complexity of our needs are growing even faster.

Returns on our investments are not guaranteed. They are subject to significant headwinds in the global investment environment – increasing geopolitical tensions, climate change, ageing populations, low productivity growth. We cannot choose at will when to slow down or increase the pace of returns.

Even at the current pace of accumulation, reserves growth will at best keep pace with economic growth.

We cannot predict what the future holds, what crises we will run into and how much more we will need. Keeping up our pace of saving will give us a safer buffer to meet future, growing needs.

If we spend more from NIRC today, we would effectively be reducing the reserves available for future use, which might result in higher taxes in the future or reduced expenditure for our future needs.

Find out more about our reserves.