Lee Yock Suan
Singapore
“The position will be clear when the regulations have been drafted. Right now we are debating it in the absence of actual wording of the regulations. The regulations will be fair, they are meant to maintain a level playing field, and we should wait for the regulations before we pass judgement. The intention is not to go after everybody.”
“I think the Member will be aware that Internet is a very dangerous place. We can have all kinds of poison letters and they will just spread like wild fire. So we must have some means to try and minimise this and make sure that everything is orderly and fair.”
“The other Members have no problem supporting the Bill, including Mr Chiam. I think the position is about 95% clear. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Lee Yock Suan].”
“Then we will have to see the actual situation. But, as I said, the intention is to go after the popular sites, the main sites of parties and non-party political sites. If it is an individual, eg, a young man posting up his own site and saying "These are my views", we are not going to go after those people.”
“The intention is to make the rules clear for the main parties involved in the contest, in other words, the party websites. These are the areas we are mainly after.”
“I thank Mr Chiam for reminding me about his question. On listening to his speech, I was under the impression that he was asking whether this ban on opinion polls applies to the mass media. The answer is yes, it applies to all media, not just the Internet but also newspapers, TV and so on. Thank you for pointing this out.”
The complete record
Every one of 1,595 lines we hold for Lee Yock Suan, in date order, each linked to its source. Free to read, in full, without an account. Page 24 of 32.
“About 200,000 self-employed persons are already CPF members. Of this number, 72,000 are active members. This means that they have been paying CPF recently. The figure of 300,000 is actually an over-estimate in the sense that some of the self-employed actually are employees. They may be doing some other job on a part-time basis. For example, quite a few working persons may have taxi licences. They may drive at night or they may be holding their licence as an insurance against unemployment. So we are narrowing down the figures further. TRANSFER OF CPF INTO MEDISAVE 8. Mr Chew Heng Ching asked the Acting Minister for Labour if he will consider allowing the transfer of funds from a person's Central Provident Fund Ordinary Account into his Medisave Account to meet hospitalisation expenses, on the condition that the funds so transferred will be paid back into his Ordinary Account from his future contributions into his Medisave Account. Mr Lee Yock Suan: Mr Speaker, Sir, I appreciate the concern of the Member for Kaki Bukit for CPF members who do not have enough CPF savings in their Medisave Accounts to meet hospitalization expenses. There is, however, already sufficient flexibility built into the Medisave scheme to cater for the needs of such members. Firstly, a member who does not have enough savings in the Medisave Account can make use of the Medisave savings of his immediate family members. Secondly, if he opts to stay in a Class B2 or Class C ward in a Government hospital and does not have enough in his Medisave Account to pay the bill, he is allowed to settle the difference from future Medisave contributions. CPF FUNDS FOR PRIVATE PROPERTY (Raise to full Valuation price) 9.”
“As at September 1986, there were an estimated 67,400 unemployed persons in Singapore, ie an unemployment rate of 5.4%. During January to September 1986, the Employment Service Department of the Ministry of Labour referred about 9,700 job registrants to potential employers. Of these 2,464 were successful in securing jobs. The others declined the job offers because of higher salary expectations, distance or other reasons or were not found suitable by the employers. SANCTIONS AGAINST SOUTH AFRICA 7. Mr J.B. Jeyaretnam asked the Acting Minister for Trade and Industry whether the government has taken any steps to cease all trade with South Africa following the statement by the Minister for Foreign Affairs that the government supported the call for sanctions against South Africa and what steps the Government has taken to implement the statement by the Minister for Foreign Affairs. BG Lee Hsien Loong: Singapore has supported UN resolutions calling for sanctions against South Africa. Singapore continues to abide by the above resolutions. Singapore has taken a further step, prohibiting imports from South Africa under the Prohibition of Imports Order (South Africa), 1965. Singapore does not encourage exports to South Africa. Singapore has endorsed the Nassau Accord of October 1985 and the ASEAN call for comprehensive and mandatory sanctions announced in June 1986. Appendix I - CLASS 'C' BEDS IN GOVERNMENT HOSPITALS (Cols. 823 - 824) Appendix II - SINGAPORE GENERAL HOSPITAL NO. OF BEDS BY CLASS, 1980 & 1985 (Cols. 825 - 826)”
“Mr Speaker, Sir, the figure of $10,000 only relates to a certain group of CPF members. Those who have less than $10,000 in their Ordinary and Special Accounts are allowed to withdraw the whole sum. They can do what they want with it. We are telling them that they should plan for their own old age. If they need to spend it on their children's education, nobody is stopping them. In the case where they have between $10,000 and $20, 000, they are allowed to take out $10,000 and keep the rest. Again, I think, the $10,000, in most cases, will be adequate. It will not be enough to send the child to UK for studies but it will be more than enough to pay the fees at NUS which only amount to about $1,100 per year for most courses. For those with larger sums and with no property, say, he has $40, 000 in his account, he is allowed to withdraw half, not $10, 000. He is allowed to withdraw $20,000. If he has $50,000, he is allowed to withdraw $25,000. If he has $60,000, he is allowed to withdraw $30,000. In fact, he is allowed to withdraw the whole lot, but we ask him to put part of it in a bank or buy annuities or whatever to stretch it out for the rest of his life, if possible. BILLS INTRODUCED 12.50 pm LEGAL PROFESSION (AMENDMENT) BILL "to amend the Legal Profession Act (Chapter 217 of the Revised Edition)", presented by the Second Minister for Law (Prof. S. Jayakumar) (on behalf of the Minister for Law, Mr E.W. Barker); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed. PARLIAMENT (PRIVILEGES, IMMUNITIES AND POWERS) (AMENDMENT) BILL First Reading”
“Take out this money at age 55 and we set aside this sum for you from age 60. If it so happens you need some more, you can come and take some more." Then the whole scheme is defeated, is it not? For the scheme to work, we have to have certain basic requirements and the member must try and plan within those requirements. As I said, the scheme is meant to help him plan for his financial security. The Member for Anson asks for details of investments by GIC. This is something that the Minister for Finance has already answered. To the extent that it is common to release such details, and they have been released. It is not a secret that we have plenty of reserves with GIC earning adequate returns. As far as the CPF members are concerned, they are assured of getting their money back with CPF interest. The CPF Board is paid the same interest that the CPF member gets from the CPF Board. The Member also wants to know whether we would appoint a committee to find out public views and so on. This Minimum Sum Scheme is not a new idea. It was mentioned in the last general elections by the Prime Minister. I have mentioned it a few times in Parliament. Recently, before we decided on the scheme, my Ministry has also done a spot survey of quite a big sample. The majority, even based on the information that has been given out so far, are in favour of the scheme. A lot of these people who were not sure will be in favour once they know the details. For example, we will allow them to take out the whole sum and put it in a bank so that nothing is held back. We believe that more than 80% will be in favour of the scheme. So there is really no need for us to do another survey or have a committee for this purpose.”
“Mr Speaker, Sir, coming to the first point about those who have put aside some money at 55 and who would need some money before they reach 60. I have explained that we have planned the scheme such that he has as much front-end money as possible. The intention is that he should try and use that for his living expenses between 55 and 60. For example, if he has withdrawn $20,000 and he needs to go on a Haj, in the case of Muslims. He should consider whether he could afford the trip; out of the $20,000 how much would he need to live between 55 and 60, and set aside a sum. The rest can be spent more freely. But he must realize that what we have planned for him after age 60 based on the minimum sum is only enough for subsistence living. If he is contented with that standard of living, he can be more free with the money in the front-end. The data I have given you also shows how we derived the $230. It is a very frugal amount. As for people not being able to find jobs after 55, this is a temporary problem. If you study the data of those aged 55 and above and even above 60 for males, you will find that the majority are still working. According to actual statistics, I think it is more than 60% in the case of males aged 55 and above, ie, more than 60% of males above that age are still working. The unions and the Ministry of Labour would like to encourage employers to offer employment to their workers beyond the age of 55. I think quite a few companies already have this scheme where their employees can opt to retire at 55 or carry on working as long as possible. There are various kinds of jobs still available for people who are older. My Ministry can also help those who are above that age if they want to find jobs. On the other hand, it is difficult for us to say, "Look.”
“So it need not be exactly $230 per month. $230 per month is what he will get to spend if he wants it to last. So he can either withdraw monthly or quarterly or yearly, as he wishes. But he should only spend whatever he has accumulated, not more than what he has accumulated. The Member for Chong Boon asks whether it is necessary to have the pledge on the property. Here there is some public misunderstanding over the mechanism. We are not saying that there will be a charge on the property. It will be some kind of a legal hold on the property for his own protection, to protect him from creditors and also the hold is to retain the minimum sum for his own benefit. If a bank imposes a charge on the property it is for the benefit of the bank as a lender. But in this case we will have some kind of legal mechanism which is to safeguard that value of $30,000 for the member's own benefit. And we intend to make the mechanism as simple as possible. Maybe just signing a form and saying, "This is the property." If he is does not sell the property that is the end of the story. If he sells he renominates another property or he puts aside the minimum sum. So the mechanism will be as simple as possible. [Applause].”
“We look at each account on its own and apply the rules on each account. But it is only when we look at the ceiling that we have actually made a concession. Instead of $30,000 each, we say the total need only be $45,000. But it does not mean that every husband must set aside $45,000 for both. It depends on how much the husband has in his own CPF savings. For example, if the husband has $60,000 and the wife has $60,000. If they were singles, we will have to ask them to set aside $30,000 in one case and $30,000 in the other case. But because they are living together and they are able to share expenses, we say, "Look, only one member needs to set aside $30,000; the other one only needs to set aside $15,000, to make a total of $45,000." So it is actually lower than what it would be if both of them were single members and treated separately. But if only one of them is a member, then to be fair to him, we only look at his account. We cannot insist that he must put aside $45,000 because he may not have enough money. So he will only be required to set aside $30,000. The Member for Thomson wanted to know what happens after, say, age 60 and the member has put aside this minimum sum, and he then needs to have a lump sum of money for expenses. The point here is that we have planned out a stream of income so that it will last him throughout his life until he dies. If he has some other means of support, he need not live on this minimum sum. If his family is still supporting him, or he has other savings, or he is working, he can keep the money with the bank and allow it to accumulate. So instead of withdrawing the money every month, he can withdraw it, say, every year. In that case he can withdraw about $3,000 every year to go on a trip or whatever.”
“The Member's third question is that we seem to be letting go those people with low balances, and so they are not protected by the scheme. The problem is that they have so little savings that we have to let them have the money to live on in case they have stopped work. But we hope they will realize that this is all the savings they have, that they will continue working, save more and manage the sum carefully. If they need our help to plan how to manage the sum, we will be happy to help them do so. They can put it in a bank or buy an annuity. But since the sum is so little, there is not much we can really do. These people are really the interim case; the older people who have had a lower income and lower CPF rates. Their sums are small. As the years pass by, there will be fewer and fewer such people. The Member for Paya Lebar wants to know who decides on the value of the property. The value of the property will be based on the market value. For example, if it is an HDB flat, then we will look at the list of actual transactions of HDB flats, say, over the last year and use that as a gauge. In the case of private properties we may have to use a valuer or some other basis. We have to work out the details in due course, but the basic concept is market value. Will the Minimum Sum be adjusted? I think I have answered the point. We will have to take care of inflation and rising standards of living. But we are going to confine it to the minimum for subsistence living. The Member for Bukit Timah asks about the case of a couple. This is slightly complicated. Maybe I should explain again. Let us take the case of a husband and wife where the husband has $60,000 and the wife $1,000. The husband sets aside $30,000, the wife sets aside nothing.”
“Eventually when all have homes, 100% home ownership, the scheme is reduced to just this Minimum Sum, which is protected by law in the value of the property. If it is a private property, the member can still use the property to raise funds. He is also not hindered if he wants to transact his property. He can sell it, buy another one and say, "Look, CPF Board, I want to nominate this new property." And so it goes. Just a very simple process. So there will be minimum inconvenience to CPF members. We are, of course, working out the legal mechanism for this and it will be announced in due course. But our intention is to make this legal protection and the legal hold for the member's security as simple as possible. Coming next to the questions from the Member for Radin Mas. He says we have to explain to the public. This is very true. We will do our best to try and explain it and I hope Members will help me out in this respect. The Member's second question is whether the $30,000 is the full value of the property or net of bank loans. The answer is net of bank loans. We are looking really at how much of the property belongs to the member. If he has only paid out $100, his worth is only $100, not the whole value of the property. If there are joint properties with several owners, we will look at the share of each owner. Of course, with joint properties there will be further complications of having to get the consent of the other members and so on. We will have to study that in more detail. What I have covered are just properties owned by spouses, singly or jointly. If one member, say, a husband, has a property worth $45,000, he can use it to cover both husband and wife. It does not have to be a joint property.”
“So when the time comes to pay out the CPF members, the assets will, if necessary, be sold and used to pay CPF members; and there will be enough assets to pay everybody. The Member asks why we do not convert the full CPF scheme to a pension scheme. I do not know how many members of the public would support him on this point. It is a valid point, but it is a very drastic change because most people want to collect their CPF in one lump sum and be able to do what they want with it. Most people are able to manage. So we need not impose on them to the extent of converting all their CPF money into a pension scheme. What we have done is to convert a minimum portion of it at the end, and this portion can even be in the form of a property. So there is no need to set aside other sums. I know the Member is thinking of an alternative scheme where we contribute lower amounts and it becomes a pension. Then it is a question of how much is sufficient for a pension scheme. The CPF scheme is designed such that it should be sufficient to pay for a home commensurate with the member's income, pay for hospitalization through Medisave and so on. And we are still studying this point - how much would he need at the end after retirement? What level of a monthly income would he need to live on after retirement? Is it 30%? Is it 40%? We have to cater the CPF scheme in that manner. But there is perhaps no need to take the drastic step of converting everybody's savings into a pension scheme. The Member for Anson asks why we have changed our position and are not allowing people to withdraw all their money at 55? My answer is they can withdraw all their money at 55. So the question does not arise. We have not changed our position. We have not imposed on anybody. The majority will have homes.”
“What has to be done really is for these members to continue working for as long as they can, maybe to age 60 or 65. The Government will still like to encourage people to work for as long as they can because that is the way to stay healthy and financially independent and live longer perhaps. For those with very low savings, we are also considering a scheme where the children can take out part of their CPF savings and transfer it to the Minimum Sum Scheme account of the parent. This is being considered and details will be announced later. The amount transferred must be limited only to the Minimum Sum and provided the son himself has enough for his own needs. This will help to top up the CPF accounts of the aged persons. We may also allow the son to contribute cash to the aged person's CPF account. We are talking to the Ministry of Finance to have this cash contribution exempt from tax, so long as it is limited only to $30,000. If the old man dies any balance must go back to the contributor's CPF account. Otherwise it becomes a tax loophole. The Member for Anson wants to know how the CPF Board has invested the CPF members' money. The report of the CPF Board shows this very clearly. The CPF Board collects on the one hand from CPF members and on the other hand lends out the bulk of this money to the Government which then invests it in secure assets, overseas or through other arrangements. The net result is that all these CPF savings have been salted away, invested. So if the Member wants to look at the accounts, it is really very simple. The liabilities are the CPF members' savings; the assets are mostly Government bonds. The money has been placed with the Government, with GIC and MAS, for management.”
“If you turn to Annex 5, you will find that in 1985, there were about 290,000 people aged 55 and above. In the year 2030, that number will be more than 1 million persons. In 1985, there were 5.7 young persons to 1 aged person. By "young person", I mean somebody between 15 years old and 55 years old. So in 1985 there were be 5.7 such young persons to 1 person above the age of 55. But in the year 2030, there will be only 1.4 young persons to 1 aged person. So if there is no CPF plan and there is no Minimum Sum Scheme, the burden on the young people in future will increase four-fold from what it is now. But because we have this CPF scheme where everybody saves up something for himself, I think we need not face this problem with so much concern. That is the real story behind all this. Coming now to the questions of the Member for Anson. His first question was that the minimum sum set aside can only be withdrawn from age 60. What happens before that? Before that, at age 55, the member can withdraw at least half of his savings. If he has $10,000 or less, he withdraws the whole lot. If he has between $10,000 and $20,000, he withdraws $10,000 and leaves the rest and so on. So the intention of this front-end money is for him to live on between 55 and 60 years. If he lives frugally, he can live through those five years with maybe less than $10,000. The balance, he should really plan and set it aside for his future years. But if he does not want to and he has other commitments, he can use it to meet them. For members with very low savings, their basic problem is that they have insufficient savings. We are not able to design a scheme that will stretch their savings out too much.”
“I was not trying to make fun of the Member. Maybe I have misunderstood him. But it sounded so funny that all of us could not help laughing. The Member wanted to know how come there are 3,000 cases. I have given him the full figures. He can look at them. Those are the full data. Again, he raises this question, this bogey of whether the CPF Board is able to pay. I have tried to answer him so many times. As I said before, I have managed to convince the Member for Anson who understands, but not the Member for Potong Pasir. He comes up again and again with the same story based on some misconception that his supporters may have given him. I have stated categorically that every member can withdraw all his CPF savings, every cent of it. So where is the mechanism to hold back the money? If the Government has no money to pay, will we promise the CPF members that they can withdraw everything? If they choose to leave the money with the CPF Board, well, welcome, they can leave it there. But they are free to take out all their money. In the case where they have property, they can take out the whole sum. They need not set aside any sum. In the case where they do not have property, they can take out the whole sum but they have to invest part of it in some investment plan. So there is no withholding of the money. I have given figures before to show that our financial resources are very strong and there need not be any worry about this point. This is a very prudent Government. We manage the State's resources very carefully. So there will be money to pay every CPF member. The Member asks whether we are concerned about the declining ratio of contributors to the aged. There are also some data given in the Annexes.”
“Sir, may I just finish my speech because I have so many questions to answer?”
“Of course, he has to leave it with his family, and that is what most members would do. Is the Member advocating that every CPF member, as soon as he receives the money, should spend all of it just in case he dies the next day? Of course, not. He must plan, as a sensible person, to have enough money to last him for as long as he lives. A cautious person would just put the money in the bank and live on the interest. That is fine. But the interest might not be enough. In fact, if he lives on the interest alone, it is a bit too conservative. You can afford to eat a little bit into the capital, and we have planned it such that if you follow the scheme, there will be enough money to last you for the rest of your life. Of course, if the member dies, the money then goes to the family or to his nominees, probably his wife or his children. If there are no nominees, then it goes to his estate and the laws of intestacy will follow. So we have not changed the rules. And nobody is trying to deprive any member of his CPF savings. The savings are his money. He is entitled to use it. And if he does not use it in his lifetime and he cannot carry it with him when he dies, it goes to his family. Mr Chiam See Tong rose -”
“So let us all be careful and plan for our future. Let us not be a burden on our children. There are other examples but I need not go through all of them. The Member for Potong Pasir also asked whether I could give an assurance that the Minimum Sum of $30,000 would not be raised. If he had listened carefully to my speech, he would have heard me saying that the $30,000 is based on the current value of money. So it is inevitable that, in money terms, we have to make adjustments for inflation. If not, then very soon the sum of $30,000 will be quite meaningless. In terms of its purchasing power, say over a period of 20 years or 30 years, the value would have dropped to maybe one-half or one-third. I therefore said in my statement quite clearly that my Ministry would review the sum every three to five years. And if there is a need, then we will have to adjust the sum to compensate for inflation. I have also said that we are confining it to the $30,000 in real value, the intention being to leave the member with maximum discretion to manage his own savings. The intention is not to widen the Scheme so that more and more money is taken up. The intention is to provide a minimum safety net but because there is inflation, it is inevitable that we must adjust the sum. But for a person who has $30,000 now and it is earning interest at, say, 5% or 6% which is higher than the inflation rate, then even if you adjust the $30,000 for inflation, it gets to be a smaller and smaller portion of his savings as the years go by. So the CPF members need not be worried about this point. Then the Member asked a rather unusual and amusing question. "What happens if the member dies at 57? Why do we give the money to his nominees?" I do not know how to answer him! Can he take the money with him?”
“Maybe for Members' information, I can read out one or two cases, just to make the point that people do, for whatever reasons, lose their personal savings. There was one person who had $40,000 in his CPF in 1984. He withdrew the whole sum. He was a very kind-hearted person, very caring for his family. So he gave out the whole sum to his five sons and one daughter. Son A comes along and says, "I want to do renovation. How about giving me some money?" Son B wants to run some business, and he says, "How about giving me some money?" After all, the old man has got a big fortune now, $40,000. Eventually, the whole sum was exhausted. He became ill in 1985 and retired. Now he has to depend entirely on his children for support. And when we asked him, he said that he regretted having done what he did, and if only we had the minimum sum scheme then, he would not be in this position. Another case is a member who had $29,000 in his CPF in 1981. He withdrew the money at age 55 and, since he was still working, he spent his money on entertainment and on helping out friends with financial problems. His friends never paid him back. He spent the whole sum of $29,000 in two years. On retirement in 1984, he collected $13,000 as retirement benefits and took out another $12,000 from his CPF. In the same way, he spent all the money in two years. Fortunately for him, he has a filial son who is supporting him. And fortunately for us now, I think most children are still filial but we do not know about the future. Right now, you may have five or six children to support the aged couple. But in future there will be one, maybe two or at the most three children. The burden on them will be that much heavier and we are not sure whether they will support us.”
“Yes, success stories too. Of the two success stories published on Saturday, the first one clarified that it was a big risk for him to go into business. He invested not only his CPF savings but also his house and everything else. I do not know how many people want to take that kind of risk with their life savings. The second case is just backing up the story saying, "You must plan carefully." But it is true that the majority can manage and that is why, in designing the scheme, I have tried to make it such that it causes minimum inconvenience to the members. If a member owns a property of sufficient value, all he has to do when he withdraws his money at age 55 is to sign a form saying, "I nominate this property to be the asset in which I owe the Minimum Sum," and deposit it with the CPF Board. So long as he does not sell the house, his position has not changed. He can withdraw all his CPF savings and still have the house. And he will need a house to live in for as long as he lives. So the position has not changed for him. For the members with low balances, we have designed a scheme to help them, really. At first, they may feel that we are trying to impose on them but really the scheme is such that we have considered what a person might need at age 55. They might have already made certain plans to use that money. So we allow them to withdraw as much of the money, front-end at age 55, as possible. If he has less than $10,000, everything is withdrawn. If he has between $10,000 and $20,000, he withdraws $10,000 and only sets aside the balance, and so on. We have done a little bit of research and we were able to dig up quite a few cases of people who have been hit by misfortune.”
“I am not saying that it is a very common occurrence, but it is sufficiently common for mony of us to have come across such instances personally.”
“My Ministry is thinking of mailing out a simple question and answer leaflet to every CPF member so that they will at least have the facts straight and not be confused by distorted stories. I hope that the hon. Members here will help us in this task of explaining to their constituents as well as others, for example, the unionists; I think a lot of them will want to know how the scheme affects them. So this is something in which all of us have to play a part. Coming to the questions from the Member for Potong Pasir. He asked what is the rationale for this scheme. I think the rationale is very clear to all the other Members. I do not know why it was not clear to him. I have already explained in full in the Statement as well as in answering some of the questions the basic thinking behind the scheme. We are not saying that Singaporeans are spendthrift, that they will squander their money. Far from it. We think that the majority can manage but there are some who may be struck by misfortune, who may be too generous with their families, and some who may be caught by confidence tricksters. We have heard of how some confidence tricksters cheated over the telephone. In future there will be more and more old people with substantial CPF savings. So something must be done to help them preserve their savings. They may not realize that they may live up to 75 years or beyond. So what we have done is to design a scheme which is no more than what a reasonable person would do in planning his financial resources after 55. If you remember, in last Friday's Straits Times, there were three vivid examples of people who, although they were fairly educated, met misfortunes in various ways. This goes to illustrate what can happen to your money.”
“Another 5,700 have used their CPF for properties, so they need not set aside cash if the value of the property is sufficient. Then there are 5,600 members who have less than $10,000 each. We have to release whatever money they have because they need the money to live on between the ages of 55 and 60. If they have stopped work, they need to have this money to live on. If we ask them to stretch this money over a longer period, the sum would be so small that it is not meaningful. So the problem for this group is that they do not have enough savings. As for the others, a total of 2,800 members in the first year will have to set aside various sums of money. I must make it clear that the money does not have to be kept withe the CPF Board. Members can withdraw the whole amount. I think this point was missed by the Opposition Members when they said that we are trying to retain the money. We are saying that you can take out all the money at age 55, every cent, excluding Medisave which is a different scheme. Every cent in your Ordinary Account, every cent in your Special Account can be withdrawn at age 55. But we have worked out a scheme for you such that if you have not got a house, then it is better for you to initially live on half the amount and set aside the balance under a scheme which will ensure there is financial security for the rest of your life, and that means stretching out the money in monthly instalments. So the money still belongs to the member. And if he has not used up all his money before he dies, it goes to his family. The Member for Pasir Panjang also asked how do we plan to explain this to the lower income group. I think this is a problem because we are trying to do it through television, the press and so on.”
“As for the balance, he can be more flexible about using the money. Of course, if a person does not have enough savings and if he does not also have family support and so on, and his money is used up, then he will have to depend on support by the society at large and by the Government. I think nobody is running away from that role. What we are trying to do is to minimize the number of people who will fall into that position. But it is no joy to be in an old age home. The thinking of the Government is that the best way to help a person is to make it possible for him to help himself. So the CPF scheme is arranged in such a manner that every member will have sufficient savings for his old age. He is asked to save from the time he works until he retires. Having done so, he must also ensure that his savings are properly invested to last him over his retirement years. So every member should plan for himself. What we have done really is the minimum for everybody on the premise that the people want to manage their own savings - which is good. But there should be a minimum safety net for all CPF members. Moving now to the questions from the Member for Pasir Panjang. He wanted to know how many members have less than $30,000. I think if you look at Annex 8 that I have given out, there is a Table there showing how many CPF members will reach 55 in the next five years; and of those numbers how many will be home owners and therefore they need not set aside any cash; how many pensionable officers will be excluded, and so on. For example, in the first year, there will be a total of about 18,000 CPF members who will reach 55 in 1987. In that group, about 3,400 are non-Singaporeans or non-permanent residents. So they are not covered. 600 are pensionable officers.”
“The point is that nobody knows how long he is going to live. Death will come for certain but when, nobody knows for sure. How do you plan? So if you contribute to this kind of a pool and if it so happens that you live longer, and there is a 50-50 chance you will live beyond 75, then the money from the other members will be used to subsidize you. In buying annuity plans, there are three kinds of plans. One is a straightforward plan which is called annuity certain, where you put the money with the insurance company and they pay you the full sum back after a period of time. It is just like a bank deposit. That is a financial arrangement. The other arrangement is a life annuity where you pay a capital sum to the insurance company and the company guarantees you a fixed amount every month until you die. But if the member dies, then nothing is left. The third plan is a combination of the two. It is called a guaranteed life annuity where you get a sum of money for life. But if you die before a certain age, then the balance of the amount will be paid to your dependants. We have done the calculations and found that $30,000 roughly, will be enough for each of these three schemes. It appears to us that the guaranteed life annuity scheme is, in fact, the most advantageous. Members may want to consider structuring their financial plans after 55 somewhat along those lines, in other words, using the amount of money to buy a sum guaranteed for life. It may be two times the minimum sum, three times the minimum sum. It is up to them; their own option. What we have here is only the minimum scheme. Members who have higher CPF savings may want to use this as an example and set aside part of their money for as long as they live through an annuity plan.”
“It might be better for the CPF member, say, to put it in some other form, say, shares, or even leave it with the CPF Board if the interest earned on the CPF deposit is higher than what can be earned from the insurance plan. But in principle there is no objection to an endowment policy so long as it is limited to the minimum sum. There is one further condition. The endowment plan and the subsequent annuities cannot be terminated because, in a commercial arrangement, you can surrender the policy. But for the purpose of the Scheme, the endowment policy cannot be surrendered because the intention is to protect the member as long as he lives. The Member has asked one other question, and that is: when the Minimum Sum is exhausted when the member reaches the age of 70 or 75, what happens then? The answer is that we have based the Minimum Sum Scheme for 20 years on the average. This is the average life expectancy of a person at age 60. If you look at the Table that I have given you, Annex 1 shows the life expectancy of male Singaporeans as at 1980, and Annex 2 is for females. For females, the life expectancy is generally a few years longer than for males. If you look down the column marked "60 years of age", you will see that if there are 1,000 persons aged 60, then on average about half will live beyond 75.3 years. The number shows how many males will survive at different ages. After 75, there will still be another 306 males who will live to the age of 80 and beyond, and another 145 males will live beyond 85. The best plan for the individual really is to buy an annuity scheme for life. In this scheme, what happens is that the members contribute their funds to an insurance pool. Those who live shorter or who die earlier will subsidize those who live longer.”
“In the event the member buys an annuity scheme, where he uses the minimum sum to buy a stream of income, a regular stream, until he dies or over a certain period, the Ministry of Finance has agreed in principle to exempt tax on these annuity payments, provided the minimum sum is the ceiling on the capital amount. The details are still being worked out and we will announce further details later on. The Member has also asked whether we would consider other schemes. I take it that he has in mind some kind of an endowment plan where a member from a young age contributes monthly from his CPF into a plan which will buy a capital sum which at age 55 is converted into an annuity to earn a stream of income for as long as he lives or over a certain period. The answer to that is, yes, we can consider it in principle provided the plan is for the Minimum Sum. We must realize that endowment plans involve two elements. The first element is an insurance element. The other element is an investment element. In the case of the insurance element, it is good for a young member to have this protection. In other words, after contributing a few instalments, he dies and his dependants will get the sum insured. This is good. On the other hand, if he does not die before age 55, which is the most likely situation fortunately, then the premiums paid would have been spent. It is really a form of consumption of CPF savings to buy protection for the member's dependants. Therefore, we have to make sure that the amounts spent are not excessive because the CPF savings are basically for the member's old age requirements. As far as the investment element is concerned, it is a question of comparing the returns from this endowment plan with other forms of investment.”
“Mr Speaker, Sir, I thank all the Members for their questions. I am sure, as I explain the rationale and give my answers, it will become clearer to the public how the scheme is worked out. It would help my explanation, Sir, if I could now be allowed to distribute some additional tables (Cols. 635 - 650) which I have prepared. The tables will provide data on some of the points that have been raised. tables - POPULATION (PER THOUSAND) LIVING AT VARIOUS AGES, 1980, DEPENDENCY RATIOS, PERSONS 55 YEARS & ABOVE, PROPORTION OF POPULATION 55 YEARS OR ABOVE, Impact of Minimum Sum Scheme in 1st Five Years of Implementation (Cols. 635 - 650) I propose to answer the questions in the order they have been raised, dealing first with the question from the Member for Jalan Kayu. He asked how the sum of $30,000 is derived. The answer is very simple. The CPF member puts aside $30,000 at age 55, say, he puts it in a bank. The capital plus interest that he will earn from this deposit is worked out into the form of an annuity. He will be able to withdraw from age 60 $230 per month for a period of about 20 years. The period depends on the interest rate. At present the interest rate on bank deposits is about 4¦%. At that rate, if you check the calculations, you will find that the sum will last just about 20 years. His next question is: what is the tax position on the interest earned or the annuities? I am glad to inform Members that the Ministry of Finance has agreed in principle to exempt tax on the interest derived from bank deposits earned by this minimum sum in the hands of the CPF member. The same position will apply also to annuities.”
“At age 55, if a member has (excluding Medisave): - (i) $10,000 or less CPF savings, he can take out all the savings. (ii) If he has between $10,000 and $20,000, he can take out $10,000 and set aside the remainder. For example, if he has $16,000, he will set aside $6,000 and take out $10,000. The $6,000 can be put in a bank or with an insurance company, or with the CPF Board. (iii) If he has between $20,000 and $60,000, he can take out half of the savings and set aside the remainder. (iv) If he has more than $60,000, then the maximum he has to put aside is only $30,000. (5) The amount set aside need not be kept with the CPF Board. It can be (a) deposited in an approved bank account which pays $230 per month from age 60, or (b) used to purchase an approved annuity with an insurance company. Any residual value upon death will be paid to the member's nominees or, if there are no nominees, to his estate. (6) A husband and a wife who are both CPF members need to set aside separately or together at most only $45,000 in total instead of $30,000 each. (7) The Scheme will come into effect on 1st January, 1987, after the CPF Act has been amended. (8) The Minimum Sum will be protected by law from creditors. Annexes B and C are two examples to show how the Scheme will be applied. Annex B is for the case of a member without property and Annex C is for a member with property.”
“They may, however, opt to participate in the Scheme to protect their minimum savings if they wish. Members covered by the Scheme In the first few years of operation of the Scheme, only about 3,000 members each year will need to set aside part of their CPF savings in cash under the Minimum Sum Scheme. Eventually, as we approach the target of 100% home ownership, almost all CPF members and/or their spouses will have invested at least the Minimum Sum in properties and need not set aside additional CPF savings in cash under the Scheme. Their Minimum Sums will be protected by law such that they will at least have these sums to fall back upon as a last resort to ensure their financial security after retirement. Improvement to the CPF Scheme The Minimum Sum Scheme improves on the existing CPF Scheme by making it more complete. The objective is to allow CPF members maximum discretion in managing their CPF savings both before and after age 55, whilst ensuring that most members would have at least the minimum sum to live on after retirement. I have prepared three annexes to illustrate the main points of the Scheme. I would like to ask the Clerk of Parliament now to distribute them. They are marked Annexes (Cols. 631 - 634) A, B. and C. [Copies of documents distributed to Members.] Annexes - MAIN FEATURES OF THE MINIMUM SUM SCHEME (Cols. 631 - 634) Annex A lists out the main points of the Scheme. (1) The withdrawal age remains at 55. (2) The Minimum Sum to be set aside at age 55 is $30,000 for subsistence living after age 60. (3) Members who own properties worth at least $30,000 need not set aside any minimum sum in cash. (4) CPF members with low balances need only set aside smaller amounts.”
“If he dies before the entire amount is exhausted, the balance will be paid to his nominees or, if there are no nominees, to his estate. Alternatively, a member can use the Minimum Sum to purchase an approved annuity plan from an insurance company which will pay him a monthly income from age 60 for about 20 years or until he dies. Depending on the annuity plan, his dependants may also receive some money if he dies before a specified age. If the member chooses to, he can keep the sum with the CPF Board earning tax-free CPF interest. The Board will act like a bank and similarly pay out $230 per month until the sum and interest are exhausted. Protection for the Minimum Sum The Minimum Sum will be protected by law from seizure by creditors. This will apply regardless of whether the Minimum Sum is deposited with a bank, left with the CPF Board, used to purchase an annuity policy from an insurance company or invested in a property. Thus, if a member loses all his other savings, he will at least have the Minimum Sum to fall back upon for subsistence living. Other Exclusions from the Scheme A member who is already assured of a retirement income no less than that provided for in the Scheme will not be required to set aside the Minimum Sum. Thus, a member who is provided with a sufficient sum of retirement income under the Government Pension Scheme, an approved company pension scheme, or an annuity scheme will be excluded from the Minimum Sum Scheme. Non-citizens and non-permanent residents will also be excluded unless they continue to work or reside in Singapore after age 55. Members who are above the age of 55 on the commencement date of the Scheme will be excluded from the Scheme even though they may have savings in their CPF accounts.”
“However, if only one spouse is a CPF member, he or she need only set aside, at most, $30,000. Where a member owns property of at least $45,000 in value, both he and his wife will not be required to set aside any savings provided they retain their investments in the property. However, should they decide to sell or transfer the property, $45,000 of the proceeds or a pro-rated portion of it depending on their ages will have to be set aside. Implementation The Scheme will come into effect on 1st January 1987 after the Central Provident Fund Act has been amended. Minimum Income The sum of $30,000 is arrived at after careful study. This amount, set aside by a member at age 55 plus interest earned, will provide him with a regular income of about $230 per month from age 60. The income will be available for about 20 years depending on the interest rate. As inflation and rising standard of living will inevitably force up the cost of living, in time to come the $230 per month will have to be adjusted so that it continues to provide sufficient income for subsistence living. The minimum sum of $30,000 will also have to be adjusted accordingly. This figure will be reviewed every three to five years to ensure that the real value of $30,000 is retained. In the case where both the husband and the wife are drawing monthly instalments from their respective sums set aside, their instalments will total $345 per month. This is calculated based on $45,000 set aside. Investment Options for the Minimum Sum The minimum sum to be set aside need not be kept with the CPF Board. It can be withdrawn at age 55 and invested in an approved bank deposit which will pay the member a monthly income of $230 per month from age 60 until the sum, together with normal commercial interest earned, is exhausted.”
“If the need arises, he has the value of the property to fall back upon. However, if he decides to sell or transfer his property, then the minimum sum must be set aside to ensure that he has a minimum income to live on after age 60. If he is above 60 years old at the time of the transaction, the sum to be set aside will be reduced accordingly. The legal arrangements for this are being worked out. If the market value of the property is less than the Minimum Sum, the difference will be set aside from the member's CPF savings. As the market value of a 3-room HDB flat today is generally above $30,000, most CPF members who own homes need not set aside further CPF savings in cash. For those without properties, the following will apply. Those with balances of $10,000 or less need not set aside any amount under the Scheme as they may need to live on their low CPF balances after age 55. Those with balances between $10,000 and $20,000 can withdraw $10,000 at age 55 and set aside the rest to live on after age 60. For those with balances of $20,000 or more, the sum to be set aside will be half the CPF balance (excluding Medisave) up to a maximum of $30,000. Thus no member will have to set aside more than half his CPF balance. If a married couple are both CPF members, their CPF accounts will be considered separately. If either account is less than $10,000, it can be withdrawn completely, and so on, as I have explained. Neither of them will have to set aside more than half his or her CPF balance. If the husband has already set aside $30,000, the wife needs only set aside at most $15,000. A couple would need to set aside at most $45,000 together, instead of $30,000 each. This is because the couple can share certain living expenses.”
“Mr Speaker, Sir, the Government has decided to maintain the present CPF withdrawal age of 55. Raising the CPF withdrawal age would pose problems to those who, for reasons beyond their control, are unable to work beyond 55. Instead, the Government has decided to introduce a scheme to be called the "Minimum Sum Scheme". It will provide for a minimum sum to be set aside for retirement needs after age 60. Today, a Singaporean aged 55 can on the average expect to live for another 20 years. If he stops work at 55, and lives only on his CPF, he will need to have sufficient savings to last him for 20 years on average. He needs to invest his savings securely to assure him of a source of income for as long as he lives. A CPF member who withdraws his savings at age 55 therefore needs to plan an average of 20 years into the future for his financial needs. Unfortunately, the best of such long-term financial plans can and do fail. If that happens, the old age security of the member would be at risk. It is against this risk that CPF members should be protected. The Minimum Sum Scheme will protect a portion of the savings of CPF members, so that they will at least have a minimum income to fall back on after age 60. Under this Scheme, all CPF members can withdraw their entire CPF savings from the CPF Board at age 55 if they wish, provided certain arrangements are made, as I will explain later. The Minimum Sum Scheme The sum to be set aside to provide a minimum income will be based on the balance in each member's CPF account at age 55 (excluding the amount to be retained in Medisave). The sum will not be more than $30,000. A member who owns a property need not set aside the minimum sum if the property has a market value of at least $30,000.”
“The Government's policy is to progressively reduce our dependence on foreign workers. The policy is however administered flexibly. Foreign workers have been admitted in large numbers in the past to solve our labour shortage. We cannot phase them out abruptly without affecting economic growth. Moreover, as shown by recent experience, a pool of foreign workers helps to cushion the impact on Singaporeans of job losses during a recession. The government is however mindful of the potential adverse social, economic and political consequences of having a large number of foreign workers especially unskilled ones in Singapore. The Ministry of Labour has a programme to phase out non-traditional source workers in the manufacturing and commerce sectors. The programme is almost completed. The target date is 1992 not 1990. Non-traditional source workers are however still allowed in construction, shipbuilding and domestic service, where the jobs are shunned by Singaporeans. Our dependence on foreign workers in these and other sectors will be gradually reduced as and when there are enough Singaporeans willing to take up these jobs. We will continue to allow the recruitment of skilled foreign workers of economic value to Singapore. Those who will raise our productivity and contribute towards economic growth will be considered for employment on a longer-term basis. COMMUNITY CENTRE HALLS FOR PUBLIC FORUMS 23. Mr J.B. Jeyaretnam asked the Acting Minister for Community Development if he will explain why halls in community centres may not be made available for the holding of public forums for citizens.”
“It is misleading to consider only work permits issued without realising that simultaneously other work permits are being cancelled as foreign workers return home. Some workers leave Singapore without returning their work permits or informing Work Permit Department. In other cases work permits which expire are being renewed for those who continue in existing jobs. Others may decide to change jobs and require new work permits. The approximate net position is that there has been a fall in total foreign workforce by an estimated 50,000 workers between April 1985 and March 1986. Despite the recession and rising unemployment, foreign workers still have to be admitted for jobs which are shunned by Singaporeans. PHASING OUT OF FOREIGN WORKERS 22. Mr Chiam See Tong asked the Acting Minister for Labour whether the Government intends to carry out its announced policy to phase out all foreign workers by 1990 in view of what the Prime Minister said during his recent visit to the Philippines that "the Government would not phase out foreign workers from non-traditional sources in five years".”
“Mr Speaker, Sir, rentals from residential properties can be kept by the CPF member. The only requirement is that when they sell, they must put back the CPF sum withdrawn plus the accrued CPF interest. It is a fact that we have always treated properties differently from other investments. And there are good reasons to do so. This preference in favour of properties will continue. Properties are not so saleable. For many years now, the scheme for HDB properties has been very liberal. In fact, the Member can use CPF not only for the full purchase price but also the interest involved in servicing the HDB loan. So I think it is fair in our situation and in view of our policy to encourage home ownership to allow people to keep their capital gains and also rentals. This is a special feature of the scheme.”
“Mr Speaker, Sir, it is correct that the special account has been excluded. The CPF committee is looking at this problem of what would be the functions of the special account. In the past, it was meant for insurance, for minimum old-age requirements and so on. Until a decision is made on the special account, we will not touch it. That is the idea behind all this.”
“In the case of the NUS, the fees are only about $1,200 per year and most people can afford that. Even if they cannot afford, education is so important that the Government must make it possible for everybody who can qualify to get a place. No one will be barred because of financial circumstances. So for local education, there is no need to touch the CPF. In the case of overseas education, the sums involved are of the order of $100,000. That will make a big hole in the CPF savings of members. It is quite different from investment in properties, shares or deposits with the CPF. What we do is to calculate the amounts needed at old age, with the idea of allowing the member to try and get a better return through his own investment. The amounts are still left with the CPF in the member's account. In the case of overseas education, if it is $100,000, it may well be half or more than half of the member's CPF account which is transferred to another member. I think most Members would know that inclusive of fees and cost of living - in fact, many countries are now using education as a form of export earnings and so fees are going up all the time - it is difficult to go overseas for education for anything less than $50,000 for the whole course. In many places, it would be $100,000, say, the US, Britain and maybe Australia. Sir, I think I have answered all the points.”
“He mentioned this point about why we do not cut the employee's CPF. That has already been answered fully. All I need to say is that the Government did a study of the CPF contributions, relative to the ability of CPF members to service housing loans. The assessment is that about 15% is the maximum extent you can go before you make it difficult for large numbers of people to service housing loans. If you can cut 15% off the CPF rate, the question then is: do you place it on the employer's side or the employee's side? Our economic problem at the moment is high cost, wages have gone up faster than productivity. So the Government decided it is better to put the full 15% on to the employer's portion. The other reason is, which was explained before, that if you cut employee's CPF, a lot of the money will probably leak out to foreign imports, purchases of videos or cars or holidays. Of all the goods and services consumed in Singapore, about two-thirds are imported. So the stimulatory effect, while it is there, will not be as large as you would imagine. To my surprise, the Member for Potong Pasir has now decided to talk about CPF for education. He has kept silent all this while when the Member for Jalan Kayu and others were passionately asking for the scheme to be introduced. Now that the other Members have realized the logic and the sense of what the CPF committee is trying to do, ie, to reduce therates so that people can have more savings and decide what they want to do with their own savings, he now comes out and tries to champion this issue. As I have explained before, there is really no need, in the case of tertiary education in Singapore, the NUS, Polytechnic and so on, to touch the parents' CPF savings because the fees are so highly subsidized.”
“The prices of silver are very speculative, even more volatile than gold. And I think Members will recall that some years back, the Hunt Brothers were able to corner the market and manipulate prices. It is much more difficult, I think almost impossible, to do the same thing with gold. In the case of platinum, we have to look into it. Firstly, I think it is of a wrong colour for most people. But basically platinum in some cases is also an industrial product. The value, I think, is better than, say, silver. But we have to look into it. The Member for Whampoa made a good point and that is the non-residential properties scheme is good for HDB home owners. The Government is not able to allow HDB home owners to also own a private residential property because of land constraints in Singapore. If you are able to afford to own a private residential property and you, in fact, own such a residential property, then you should move out of the HDB flat and allow somebody else to buy that flat. But this does not apply in the case of non-residential property. So HDB home owners may want to take advantage of the non-residential properties scheme. They can invest in non-residential property and still keep their HDB flats. Turning now to the points made by the Member for Potong Pasir who felt obliged to say something, I suppose, on this subject. His first point about rationale has already been explained several times and there is no need for me to repeat. I think Members have already answered him. It is purely an optional scheme. Nobody is telling anybody to invest. We are not trying to stimulate the market. I have said so before and I say it again now. If members want to put their money with the CPF Board, I will be most happy.”
“The idea is not for him to withdraw CPF prematurely, whether it is the interest or the earnings or the capital sum. The idea is for him to manage the savings to try and enhance the value of his savings. But you may want to note one point, and that is, we only require him to return dividends net of tax withheld, which is normally at the corporate tax rate. At present that is 40%; next year it will be 33%. Now a member, if his tax margin is below 33%, can claim some tax rebates back from the Income Tax Department. We have looked at this point and finally we decided that it is not practical for us to chase after all these amounts. So there could be a certain amount of leakage there but this could be tolerated. The Member for Whampoa also asked why we only allow investment in gold and not silver or platinum. The reason is that gold is normally regarded as a store of value. It is used by countries as a form of national reserve and the market is almost perfect. It is almost impossible for any member to corner the market. The risk involved when we invest in gold is purely market risk - either the market goes up or it goes down, of course depending on what the Russians do or the South Africans do, and so on, or the oil sheiks for that matter. The investment in shares, however, is slightly different. You not only have market risk but also management risk and other kinds of risks. Sometimes Government policies may move against you, for example lifting of duties. But in the case of gold, it is purely market risk. But gold does not give you any income. There are no dividends, purely capital gains. In the case of silver, however, it is normally regarded as a commodity, a high priced commodity. It is not quite in the same class as gold.”
“This is the same thing as in the case of properties where we allow the cost of the transaction, whether it is conveyancing fee or other charges, to be charged to the CPF account. So I think it is fair for us to allow the fees and charges to be paid out of the CPF fund. But I take his point and we will monitor the situation to see whether this, in fact, causes more people to take more speculative investments and buy and sell their shares too frequently. In our scheme we are going to act with the banks. Members will have to open accounts with certain approved banks and when they apply to buy the shares, the money will be transferred to the bank to buy on their behalf; and subsequently when they trade on this account, there will be no need to involve the CPF Board. This is to simplify the administration of the scheme; otherwise it will be almost impossible for the CPF Board to deal with so many members of the public. The CPF Board will be issuing some guidelines to banks to discourage speculative trading. Members will not be allowed to trade on margins. Trading will have to be on a ready basis and scrips will have to be delivered within a certain time. There will be certain precautions made to discourage speculation. However, we do not want to make it so inflexible that when a person feels that it is better for him to sell, for example, when the market turns against him we do not want to restrict his investment decision. But at the same time we do not want him to make use of the balance and trade on margin, engaging in very speculative trading. Coming now to the points made by the Member for Whampoa. He wanted to know whether dividends will be retained by the member. The answer is no. All the dividends, net of corporate tax withheld, must be returned to the account.”
“All these steps will be implemented within April so that the scheme can start operation from the 1st May. Turning now to the Member for Jalan Kayu, he has suggested that we put a warning on the application form. I think there is no need for this. Members are already aware. One possibility is maybe we should put at the bottom of the form, "Members invest at their own risk." This is an idea which we will look into. The other point he made concerns the proceeds from the sale of properties, non-residential properties and residential properties. In the case of shares, as he has noted correctly, both capital gains and losses will be for the CPF account. Now, in the case of residential properties, regula- tions have already been effected to say that if the member sells the property, he will have to return to CPF the capital sum withdrawn from the CPF, plus the imputed CPF interest, or the sale proceeds if that is less than the first amount. So it is an either/or situation - either the sum plus interest or the sale proceeds, whichever is less. So I think his point has been answered, and in fact it has already been implemented. Why do we allow members to charge fees and other charges for share transactions to the CPF account? I take his point that this may give rise to some lack of prudence on the part of members who think that CPF money is not their own. Actually it is their own money and so they should be careful in managing the money. But the logic behind this is that since you want the member to return both the capital gains and the losses to the CPF account, the cost of making the transaction must of course, be taken into account. It is part of the cost of investment.”
“The amount of CPF savings that can be used for non-residential properties will be limited to a maximum of 70% of the valuation of the property or the purchase price, whichever is lower. In the case of residential properties, the limit is 80%. Members may purchase more than one non-residential property at a time. They may also purchase more than one non-residential property. CPF members who are not relatives or family members may jointly purchase a property. This is a new idea. Basically, the scheme is to allow people to invest in properties and if they feel they want to go in together,jointly, and they can work together in this joint venture, it is acceptable to us. There will be a time bar of one year on the use of the funds. If a member invests a certain sum in the property and then sells it, he will have to wait one year before he can use the same sum plus the accrued interest gained. Previously the time bar was three years. We have relaxed this to one year now. The other table, as I said, shows the substantial amounts which are now available to members to invest in shares and gold. Altogether about 347,000 members can take part in the scheme. These are people who have more than $30,000 in their CPF accounts, including amounts withdrawn for housing. The members are placed in different groups ranging from those who have below $1,000 to those who have more than $40,000 to invest. The total sum which may be released under the scheme is roughly $2.4 billion. This is roughly double the amount that was announced on the previous occasion. Other details of the scheme will be spelt out in the regulations and the CPF Board will provide more details to members of the public, if necessary.”
“The impression was that many CPF members, who wanted to invest, felt that the amounts which they could invest were too little. On the other hand, there are a lot of members who are cautious and who may not go into the market. So our concern is really to do this gradually so that we do not inflate the share prices which will be at the expense of CPF members. But at the same time where we feel it is safe, we should gradually move the limit upwards, giving greater flexibility to those who feel they can invest better on their own to try their luck. That is why we have now raised the limit from 10% to 20%. The Member for Radin Mas has also asked for some details on the non-residential properties scheme. I am happy to report to him that details are now ready, and I will ask the Clerk to distribute the papers (Cols. 1489 - 1490) showing the main essence of the scheme. [Copies of tables distributed to hon. Members.] In addition, there will be another table showing how much money can be invested under the scheme for shares and gold. This shows the number of members in the different categories of CPF balances and how much they can invest. papers - FEATURES OF THE NON-RESIDENTIAL PROPERTIES SCHEME, ANALYSIS OF MEMBERS WITH INVESTIBLE FUNDS (AS AT END OF FEB 86) (Cols. 1489 - 1490) Perhaps I can just spend a few minutes to take Members through the features of the non-residential properties scheme. Firstly, as I have mentioned, the properties can include office space, factories, shops and warehouses but they must be located in Singapore. We are also excluding undeveloped land because that tends to be very speculative and does not provide an income. In the case of leasehold properties, the leasehold period remaining at the time of purchase must be at least 75 years.”
“Mr Speaker, Sir, I would like to thank Members who have spoken in support of the Bill. As some Members have pointed out, and I have said so in my speech as well, the intention of the scheme is to give members greater flexibility in managing their old-age savings. It is entirely up to the member himself. If he is happy with the interest rate paid by the CPF Board, he should leave his money with the CPF Board and we will only be too happy. The intention of this Bill, Sir, is not to stimulate the stock market or the property sector. The fact is that there are people who want to take advantage of the markets whether it is stocks and shares, gold or properties. Some of them may feel that this is a good time to do so. If the Government is seen to be too restrictive, we may appear to be depriving them of an opportunity for making gains. But, of course, they must realize that in any investment, there are risks involved. If a member wants to have a no-risk or risk-free investment, then he must be content with a low rate of return. He can put it with the CPF Board and get an interest rate which is comparable to what the banks are paying, and it is also tax-exempt. So it is a very good deal for the majority of CPF members who may not have the expertise or the stomach for other kinds of investments. The Member for Radin Mas has asked why we have increased the percentage limit from 10% to 20%. I think on several occasions he has voiced caution on this matter. On the part of the CPF Board too, we are very cautious. We do not want to rush into the scheme. We want to monitor the scheme and see how it works. At the same time, we do not want to be too restrictive. After I announced this scheme in October last year we monitored the effect on the market.”
“Mr Speaker, Sir, as I have said in my reply, we are all sympathetic to the plight of these people, some of whom have gone into business and lost money. The problem is that it is difficult for us to make exceptions tothe rule. Once we start giving unemployment benefits or allowing people to withdraw CPF, whether it is the principal or the interest, the effect will be the same. If cases like this were to approach my Ministry, we will do our best to try and help them find jobs. For example, last Saturday's Straits Times, if Members were aware, in section 2, there were altogether eight pages of advertisements for managerial, supervisory and technical staff. So jobs are still available. Of course, for management positions companies will want to choose the best man for the job and not just any man. So some people may still have difficulties but they will have to make adjustments. As for those who may face unemployment for some time, the situation is also not static. It does not mean that those who are unemployed will stay unemployed. If they try harder and make adjustments, they will find jobs and in turn there will be other people who resign or retire or drop out of the labour market for some reason or other and become unemployed. So we are not really talking of a static situation but of a moving situation. BILL INTRODUCED 2.28 pm COMPANIES (AMENDMENT) BILL "to amend the Companies Act (Chapter 185 of the Revised Edition)", presented by the Minister for Finance (Dr Hu Tsu Tau); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed. FUTURES TRADING BILL Order for Second Reading read.”
“Mr Speaker, Sir, I am in charge of the CPF. The problem is that a lot of the issues under CPF involve other Ministries, in this case, the Ministry of National Development. So maybe the answer should appropriately be given by the Minister for National Development. YISHUN NEW TOWN (Public library) 12. Dr Koh Lip Lin asked the Acting Minister for Community Development whether there are plans to provide Yishun New Town with a public library. The Acting Minister for Community Development (Mr Wong Kan Seng): The National Library has plans to build a branch library in Yishun New Town. The Yishun Branch Library will form part of the Library's Second Development Plan (1988-92) which also includes new branches at Hougang and Tampines new towns. Construction of the Yishun Library is expected to begin in mid-1988 and is scheduled to complete by the end of 1990. The Yishun Branch Library will serve the residents of Yishun, Sembawang, Mandai and the Upper Thomson areas. RENEWAL OF SEASON PARKING TICKETS AT HDB AREA OFFICES (Computerization) 13. Encik Zulkifli bin Mohammed asked the Minister for National Development whether the Housing and Development Board has plans to improve the present system of renewing vehicle season parking tickets at all HDB Area Offices.”
“If I understand the question correctly, Sir, I think this point has already been answered by the Minister for National Development. If home buyers have difficulties servicing their housing loans for various reasons (maybe this is one such incident) the HDB might allow extension of the loan repayment period or even in certain cases suspend the payments.”
“Mr Speaker, Sir, I am not sure in this situation whether reimbursement is needed. What I have said is that we have to look at the possibilities, and my officers will make a study with the HDB. We do have certain national objectives and priorities. I am trying to be as flexible as possible to see whether on a case-by-case basis we could allow the daughter's CPF savings to remain with the parent's flat. We have to look into the details further.”
“There is no need to do anything like that. As a result of these companies holding back their workers, productivity last year went down from 6.4% in 1984 to 3.4%. There is no need for us to try and second- guess the management. Management is there to do the job. They know whether or not a job is necessary. They know whether a worker is productive, and which worker is not. What is the market situation? Can they have orders six months' time, 12 months' time? How can we, as officials, go and tell them, "Look, you must not retrench this fellow. You must not retrench that fellow." That will be the surest way to frighten away investors, at a time when we need more investments in order to create more jobs. The solution to our unemployment problem is not more hot air from the Member for Anson but serious marketing efforts - to go out and sell to foreign investors, convince them that Singapore is a good place to invest. This will create jobs. The solution to our unemployment problem is for our workers to accept the situation that there are jobs available, though less desirable jobs but still jobs that can enable them to earn a living. Make the adjustments and my Ministry will do our best to help them. Since I have only a few minutes left, I am afraid I cannot answer all the points. As far as the maid's levy is concerned, I think the Member for Jalan Kayu is aware that people can employ maids from Sri Lanka for maybe $100 per month. You add $120 per month as a levy, and it is still much cheaper than employing a local maid.”