The management of Singapore's reserves helps ensure fair allocation between generations while maintaining the Republic's position among the world's few triple-A credit-rated countries, Temasek Holdings chief executive Ho Ching said yesterday morning.

Ms Ho explained in a Facebook post how the country manages its reserves, and noted that a portion of the earnings and returns can be spent on the present generation, while the rest is set aside for the future. Over the past week of election campaigning, some opposition candidates have proposed that Singapore draw on more of its reserves to fund higher social spending.

Up to half of the returns from investing past reserves may be used for current government spending under the Singapore Constitution, Ms Ho said in her Facebook post.

The Constitution was amended in 1991 to require each successive government to live within its means, spending only what they have earned during their term of office.

Past reserves saved up by previous generations and governments before the most recent elections can be spent only with the approval of the President.

Proceeds from land sales are also locked up as past reserves, Ms Ho noted.

Most other governments treat land sale proceeds as revenue to be spent, including island economies like Hong Kong.

The International Monetary Fund also treats land sales as part of government revenue for spending.

"We in Singapore treat land sale monies like some prudent countries treat their oil revenues, a heritage asset transformed from one physical form...to a financial form, and save them up in their sovereign wealth funds," she added.

Ms Ho likened the management of Singapore's reserves to a grandfather protecting savings and the interest earned for future generations. His children then have to decide whether to also save all the interest they earn for future generations yet unborn, or to spend part of it on present needs each year.

The Monetary Authority of Singapore, GIC and Temasek Holdings are the three key financial institutions of Singapore.

The returns from these three entities and other investments, such as interest from bonds, totalled $8.6 billion last year.

This helped to fund the $8 billion Pioneer Generation Package, Ms Ho said.

"It is very fitting that the returns from past savings and reserves are used this way to provide for our pioneer generation," she added.

"It also gives meaning to those of us working in these institutions, past and present as well as future."