Ng Eng Hen
Singapore
“I think we try to keep this virtuous state of affairs as long as we can to make sure that we can invest steadily. Year-to-year fluctuations would occur, whether it is economic, not so much in COVID-19, but remember the Global Financial Crisis? Everybody needs to take a haircut. If you have to take a haircut, you have to take a haircut.”
“Mr Chairman, as the World around us becomes more unpredictable and changes, the more we need to keep the strongest commitment to strengthen our own defences and, if needed, we must be willing to do more. Singapore celebrates 60 years of Independence this year.”
“MINDEF will continue to work with partners to encourage Singaporeans to raise their digital literacy, develop and maintain good cybersecurity habits, protect sensitive data and guard against scams, fake news and disinformation so as to make the digital domain a safer and more secure space.”
“The Singapore Armed Forces (SAF) conducts regular mobilisation exercises (MOBEX) of our National Service (NS) forces. In a silent mobilisation, NSmen are notified through their personal contact numbers. Open mobilisations include the broadcast of unit code-words through mass media.”
“In 2020, the Ministry of Defence replied to a Parliamentary Question on this matter that the relocation of Paya Lebar Air Base (PLAB) would likely occur around 2030 or beyond, after Changi Air Base and Tengah Air Base have been expanded to house the existing assets at PLAB.”
“When incidents or near-misses happen, as it did where one Hunter armoured fighting vehicle rear-ended another during Exercise Wallaby in Australia, thorough investigations are conducted and lessons learnt shared across the units.”
The complete record
Every one of 2,266 lines we hold for Ng Eng Hen, in date order, each linked to its source. Free to read, in full, without an account. Page 29 of 46.
“Sir, first, let me thank Members for their comments, many of which strike at the heart of our labour market policy, which includes allowing foreign workers to work here. Many good suggestions and many comments. I take it that at the heart of all these questions is the central theme. It is everything we do, in terms of our labour market policy, helping Singaporeans, and that is the gist of what we should address and ask ourselves, because this is a good time to review them. And I would quickly say that the heart of our labour market policy, which includes allowing companies to use foreign workers, is to benefit Singapore and Singaporeans. If it were not so, we will not do it. We are replying from a position of a good year. Last year, as Members observed, was indeed a very good one. Many of you will remember that at the last Committee of Supply, I told Members that MOM had projected 450,000 new jobs for the next five years. It was a somewhat realistic projection, but in over just one year, the economy added 237,000 jobs, more than half in one year what we anticipated for five years. It is a phenomenal growth rate of 9.5%, more typical of a developing economy than a developed one. But beyond the numbers, beyond this phenomenal growth rate for the labour market for our workforce, most importantly, Singaporeans have benefited from this buoyant labour market. Members were aware and they themselves cited the figures of 92,000 jobs created last year went to locals. Usually, it is only 30,000 jobs because our supply is limited. Indeed, more locals are now employed than ever before in absolute numbers and as a proportion of working age population. So last year, 1.”
“With our rapidly ageing population and corresponding increase in retirement and healthcare needs, the priority must be to ensure that members have enough CPF savings for their old age. Because of the smaller size of families, many CPF members would have to be self-sufficient for their retirement needs. The CPF Education Scheme was a concession introduced in 1989. Its usage was deliberately limited to only full-time local tertiary education courses at approved publicly funded tertiary institutions. We should not extend the use of CPF for other purposes. This will reduce retirement savings and go against our primary efforts in enhancing retirement adequacy. Column No : 417 LIGHT RAIL TRANSIT (Effectiveness as a mode of public transport) 21. Mr Liang Eng Hwa asked the Minister for Transport in light of the recent land transport review (a) whether the Ministry has reviewed on the effectiveness of Light Rail Transit (LRT) as a mode of public transport and, in particular, if it has served the commuter needs well so far; and (b) whether there are any plans to make up for the shortcomings of the existing LRT system, if any.”
“The mandatory requirement of medical insurance is set at the level of coverage of $5,000 for inpatient treatment and day surgery only. It excludes outpatient treatment. These terms of insurance coverage make abuse less likely. Additionally, insurers generally build in safeguards against abuse in their policies. These include provisions within the insurance plan to prevent and recover fraudulent claims, and the exclusion of pre-existing medical conditions. To encourage responsible healthcare usage, employers have the flexibility to enter into co-payment arrangements with their foreign workers and co-pay the cost of the co-insurance or deductibles. MOM will allow this but will also set an absolute cap that is proportionate to wages earned, to ensure that the co-payment is not onerous on the foreign workers. We do not anticipate any increase in utilisation of medical services as a result of compulsory medical insurance but will monitor usage patterns nonetheless. PROPERTIES DAMAGED BY RED DYE (Compensation amount) 22. Ms Ellen Lee asked the Minister for Defence what was the total compensation amount for those affected by the recent incident whereby civilian/public properties were damaged by the red dye as a result of an aerial military training exercise.”
“And if there are cases indeed where we certainly do not want to add greater hardship for these cases, we will spend the extra effort to return all the interest, if need be. So let me give the House and Ms Sylvia Lim that assurance. So, that answers the unjust refund under DPS. Ms Sylvia Lim also asked about the WIS payment in cash. On that last point, I was not quite clear that the CPF Act wanted us to prescribe the manner in which the cash is to be used. I would have to check up on that, but I do not think that that was the intention of the legislation. Once the cash is given to you, I think that is out of our hands and nobody can legislate what you do with it. So let me check on that and return to her perhaps in a written reply, if I may. 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. - [Dr Ng Eng Hen]. Bill considered in Committee; reported without amendment; read a Third time and passed. COMMISSION ON PARLIAMENT STAFF (Motion) 6.34 pm”
“And I used the reverse example in my speech where I said that we may have to recover because we give the Workfare in two tranches as your income changes. But we wanted not to be tight-fisted, we wanted to give you the money first, and, if there are adjustments in the second half of the year, we can adjust. That was the reason. But because of the new interest rate structure, 1% is given on $60,000 from all combined accounts. Again, we wanted to be flexible because among the three accounts - the Ordinary Account, the Retirement Account and the Medisave Account - it shifts. When you sell a house and you have a lot of money, suddenly, you do not earn the 1%. Then you buy a new house, you take out from your OA, you are below the $60,000, the 1% comes back. It kicks in. So that 1% moves with three accounts. The Second Minister for Finance (Mr Tharman Shanmugaratnam): It is complex. When we deliberated internally, I said, "Look, why can we not calculate exactly how much we are to give back or how much that extra 1% is?", and they told me that just to build a system to track that extra 1% on the moving $60,000 in three accounts would cost enormous amounts, and I said we will take a practical approach. Where it is necessary and, for a few members, we can calculate, I suppose manually, to return it. It is only that 1% on the extra amount; it is not the entire interest, in other words, that flat 4% or the 10-year SGS+1 in which the new interest rate structure is based. That is quite clear. That is not a problem. But the extra 1% is contingent on the $60,000, which makes it a bit more complicated. Similarly, when we are recovering interest, we may have to just say that the extra 1% is difficult to calculate. We can recover but that gives us the discretion.”
“Let me just say that, in the same vein, when we started our Workfare scheme, we started this section Part VIA in the CPF Act to be able to recover money. But I would not stance it as if, again, in a legalistic manner, that we will try to recover every cent if there is a technical infringement, and we do not want to incentivise work. That is not the aim of it. The aim is really, of course, to create legislation to allow us to act against those who are egregious sinners, those who are plainly fraudulent, and that we can go after, because it is important. You and I know that our grassroots members are very savvy. I remember once we gave out transportation vouchers and a grassroots member came up to me and said, "I saw so and so who live there. They are retirees. They live in a terrace house and they were queueing up with me for these transportation vouchers. Why does Government allow this?" So word gets around, it gets diluted. And if people can get away, in a sense, by cheating the Workfare scheme, falsely declaring, or they know that they have other sources of income, I think it dilutes it, it diminishes it, it really perverts the scheme and distorts it, and it does not allow that scheme to do what it was intended, which was to really help those in need. So all these laws, in terms of adjustments, in terms of being able to recover, are to allow us to act against those people. I suppose it is no different from saying that you fine somebody who is speeding but, if there are mitigating circumstances, then you have to act with compassion. So the DPS was to say that there were circumstances where the CPF Board had to return to the member certain DPS premiums when the policy was cancelled.”
“Death of a nominee - it will be revoked when a nominee dies before the member, and this is so that the member's CPF monies may be distributed under the intestacy laws or Muslim inheritance certificate when the member's intended nominee has predeceased him. It can also be revoked on a written notice of revocation. The member should have the right to revoke his nomination at any time as this is his money, so he can complete the notice of revocation. If a nomination is revoked and no subsequent valid nomination is made, the member's CPF monies should be distributed under the intestacy laws and, again, the Muslim inheritance certificate. A subsequent valid nomination by a member would revoke his earlier nomination. This is to make clear that CPF monies will be paid in accordance with the latest CPF nomination. What is the effect of a revocation when a nomination is revoked and no subsequent valid nomination is made? The CPF monies belonging to the member will be distributed to the Public Trustee, again, according to the intestacy laws and the Muslim inheritance certificate. And if a member has made a subsequent valid nomination, then it will be paid in accordance with his latest CPF nomination. We have discussed this issue internally quite a few times. We want to strike a balance between the ease of application and making sure that members also know that it is something important that they need to do. Simply, if there is no nomination, then the intestacy laws apply. I think that makes sense because that is distributed to his remaining family members. So, as I said, I may not have given all the information that Ms Sylvia Lim has asked. If this is so, I will request that she files a Question to answer those specific questions. Ms Sylvia Lim also asked about clause 15.”
“And this is where we need persuasion by unions to get these self-employed to put in money so that they can benefit from Workfare. Then there is a group that is in between where we use both measures and we will need all stakeholders to persuade them. Some of these are self-employed, some of these are daily-rated, and we have to explain to them why it is good for them. So I would not underestimate the challenge. There may be 100,000 or 150,000 such employees. It is right to focus on them. It is right for MPs to continue to ask what the progress of this is. And I think that we have to expand resources to slowly step this up because it is an important component of social security. So I thank her for bringing this up. Ms Sylvia Lim asked about certain questions of revocation. They were very specific. Let me answer what I know and, where there are lapses, I will encourage her to file a specific Question and we will have more time to address them. She asked about new section 25(5). The reason is not that we are trying to change the rules for revocation. They stand as they are. But, previously, the processes and the circumstances of the revocation were in a sense implicit and we wanted to make it explicit because we agree with her that this is a very important point. Who are you giving your money to or nominating? So, basically, the amendment is to make it explicit. The Board's power is to make rules prescribing the manner and circumstances, but the manner and circumstances are not changed from this Act itself. She asked about the circumstances in which a nomination is revoked. As they stand, one of the circumstances now is marriage. She has quite rightly pointed out that it can be revoked by a member's marriage and this makes sense.”
“We are supporting a group across-the-board, a sizeable group, over 300,000 workers and their families, with Workfare support. Mdm Halimah also brought up a very important point - that the CPF is such an integral part of our structure that we ought to make sure that people make contributions. It is not to approach it in a legalistic manner to say that you have to put it in, but because we all recognise that this is really a core system which enables our housing, medical and retirement, and that if you do not do it regularly and early, sooner or later you will have to pay the price of not putting the money into it. And I agree completely with her that we want to put in as much resources as we can and involve as many stakeholders as we can to be able to accomplish this. And that is why we set up the Tripartite Committee for Low-Wage Workers which the Minister of State Gan Kim Yong chairs, and SNEF and NTUC will facilitate this. But the way to do this also has to be customised. There will be groups that we want to take a very hard line. And these are employers who systematically or basically cheat and do not pay their employees CPF. Even those who say that they are the contract workers, but if it is proved in practice they are the employees, we will take action. So there will be a group that we will use the law and we will send a very strong signal and, from time to time, we will do that to make sure that the employers know that they are liable to pay their employees CPF. I think that there is a place for that, and indeed we will do that. There is a group, on the other hand, which we do not want to use the stick but carrot, and this is where the Medisave Contributions Draw comes in.”
“I think that is still the correct target to give maximum support. But we also wanted to help those who are earning more and even those who are younger. As recently announced in September, we decided that we would give even more to those who are older, aged 55 and 60, so that, in essence, somebody who is aged 60 earning $1,000 gets $200 a month, a 20% wage supplementation. It is a sizeable contribution. Because it is targeted, it allows us to put more money where we think help is more needed. I think that is also a fundamental implementation principle. We do not want to spread the help too wide because then it becomes difficult. Every time we raise it, we have to give more and certainly there will be a fiscal impact. So, as it is, we think that it will cost us $400 million a year, every year, a fiscal cost, and we have to factor that in. And we want to see how it works because it has not really started. The real scheme, I remind Members, will start next year, and the last two years was the Workfare Bonus Scheme. So I would say that, in principle, we are not closed to reviewing where the wage parameters are, what are the margins we need to help. But I would say, let us review what happens, whether it supplements the income, it incentivises work and that it can match, and whether it helps those we want to help, in terms of their daily livelihood and living expenses. Mdm Halimah asked how many have benefited. From 2006, it was about 340,000. This was the Workfare Bonus Scheme. And from 2007, it was about 362,000. So this was real money going into a large portion of our workforce. If you consider only our Singapore workforce, resident workforce, it is less than two million.”
“Madam, thank you for the opportunity to clarify some aspects. First, let me deal with Mdm Halimah's questions. She is quite right that we have structured the system where we have set the cap at $1,500 and she has asked for this to be reviewed. The $1,500 is the gross salary, which basically means it can include overtime pay. Madam, I would like to approach this, first, from a larger picture to say what we have put in place and to say that, in principle, nothing is cast in stone yet. We are on the front edge of the envelope in having a nationalised income supplement scheme, first among developed countries and, certainly, very few, if any, developing countries do this. And we do this recognising that there is a wage disparity and globalisation is acting on certain wages of our low-wage workers. I say that, both as a mark of our progressiveness but also to sound a cautionary note that any scheme with the best of intentions can degenerate into something which you never conceive. This was what happened to pension schemes worldwide. So we wanted to be careful when we first did it. We did it in a selective manner, and the Workfare Bonus Scheme, which we introduced in 2005, gave us confidence that it could be implemented on a wide scale. Other Workfare schemes, for example, in the States, are for selected populations, not general, and certainly not based on just incomes, including all and sundry under their schemes. I would say that this can be reviewed, and we have said that we would review it in three years. We have used $1,500 a month, which is about the 30th percentile. And this scheme is meant to target specifically those who are older, actually those who are above 45 and earning $1,000, which is about the 15th percentile.”
“EXEMPTED BUSINESS (Motion) Resolved, That the proceedings on the business set down on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 2. - [Mr Mah Bow Tan]. CENTRAL PROVIDENT FUND (AMENDMENT NO. 2) BILL Question proposed. 6.09 pm”
“It will also empower the CPF Board to recover, from members or third parties, any cash or CPF paid to members in excess of that which they are entitled to receive, or, if these members were not entitled to receive the WIS benefit paid, such as in the case of fraud. This section also enables CPF Board to recover, on behalf of the Government, any Government debt due from the member out of the WIS, as well as to recover WIS in the event of the member's death, if the Board chooses to do so. Section 57D provides for an additional process for recovery via the courts in the event that the member was convicted of an offence under the CPF Act in connection with the WIS benefits, such as falsely declaring his eligibility for WIS to the CPF Board. In conjunction with section 57D, section 57E helps facilitate the administration of the enforcement process by providing for a certification issued by CPF Board which may be used as evidence of WIS amounts paid and amounts recoverable. Section 57F will provide for regulation-making powers to carry out the provisions of the new Part VIA. Clause 11 of the Bill amends section 24 of the Act, which protects CPF benefits, to facilitate the recovery of WIS under the new section 57C and any regulations made under the new section 57F. Clause 20 amends section 76, empowering CPF Board to compile statistical information relating to all members, which will help provide data to support the review of this scheme in three years' time. The new CPF interest rate structure and Workfare Income Supplement Scheme changes will take effect on 1st January next year, as previously announced. Madam, I beg to move.”
“Similar to other offences under the CPF Act, WIS offenders will be subject to a fine not exceeding $2,500 for the first conviction, and to a fine not exceeding $10,000 for the second and subsequent convictions. The new Part will also allow CPF Board to conduct recovery and adjustments of WIS already paid out to members. Apart from recovery of WIS benefits paid out under fraudulent circumstances, there may be legitimate situations where benefits will also need to be adjusted. This is because the first payment of WIS is a provisional one and the final payment for that year will be adjusted when the final average income is declared. Let me give examples. For example, a member could have been eligible based on his income for the first half of the year but subsequently becomes ineligible because he receives a high year-end bonus that causes his average monthly income for the year to exceed the WIS wage criterion. Conversely, a member who receives a salary cut during the second half of the year may be eligible for higher WIS benefits than that paid out under the provisional payment. The additional benefits would be calculated and the member's final WIS payment would be adjusted upwards. Clause 17 will insert a new Part VIA, comprising new sections 57A to 57F into the CPF Act. Sections 57A and 57B provide for the interpretation of terms found in the new Part and establishes the WIS as a scheme administered by CPF Board. Section 57C will enable CPF Board to distribute cash payments from the Government to CPF members directly besides crediting the monies directly into members' CPF accounts under the WIS scheme.”
“However, under the new interest rate structure, the extra interest that could have been earned would depend on the amount of combined CPF balances at each relevant period, as well as the balances in each CPF account at any one time, which would change due to contributions and withdrawals, including for uses other than housing. As such, it may be quite complex and indeed costly to determine whether the additional 1% interest could have been accrued at each relevant period. We therefore propose to take a more practical approach and the amendments in these clauses thus allow the CPF Board the discretion to recover up to the additional interest that could have been earned. Workfare Income Supplement Scheme Madam, to allow older low-wage workers to share in the benefits of economic progress and to reward work, Workfare has been introduced as a permanent feature of our social security system, and it is tied to the CPF system. The administration of WIS will become a statutory function of the CPF Board by the creation of a new Part in the CPF Act for the WIS scheme. This will empower the CPF Board to administer the scheme effectively. In order for CPF Board to have regulatory powers over the disbursement of the WIS, the new Part VIA is being introduced into the CPF Act to give the Board the power to credit the WIS CPF component into the eligible members' CPF accounts and to pay the WIS cash component to members directly under the CPF Act. To prevent abuse and deter false declarations under the Scheme, this section also empowers the CPF Board to take action through penalties calibrated according to the severity of the offence.”
“Clause 3 consolidates the existing provisions relating to the payment of interest and allows CPFB to pay the extra interest on the whole or part of the amount standing to the credit of a member in any of his CPF accounts. This will allow for the payment of the extra interest under the new structure. Clauses 4 to 6 provide the consequential amendments needed arising from the fundamental change in clause 3. Clause 5(a) specifies how the base interest and extra interest can be credited into a member's account, such as whether to pay interest into the account where the interest-bearing money stands, or to credit the interest arising from one account to other accounts. This will facilitate the crediting of the extra interest from the Ordinary Account into the Special Account or Retirement Account. In addition, clauses 5(b), 7(b), 8(b), 9(b), 10, 13 to 15, 18 and 19 amend different parts of the Act to provide for the recovery or refund of an amount of interest other than that which accrued or could have accrued in the event of any adjustments, transfers or withdrawals. Presently, when transfer or withdrawals are made to the CPF accounts for the use of housing, education and other uses, members are required to refund the principal amount withdrawn in addition to any interest that could have been earned if the transaction had not been made. So in other words, they have to refund the principal and the interest that could have been earned. Similarly, CPF Board may also have to refund monies into members' account with interest in certain cases, for example, when coverage for the Dependants' Protection Insurance Scheme is cancelled because the insured is found to have withheld relevant information from CPF Board and, in this case, the premium has to be refunded with interest.”
“In view of the importance of nominations, clause 12 will make explicit the CPF Board's power to make rules prescribing the manner and circumstances in which nominations may be revoked. Clause 16 extends the MediShield Scheme to cover the payment of costs incurred by insured members for medical services, in addition to medical treatment. This will allow organ procurement costs to be included as part of organ transplant costs, and be payable from the Medisave Account and claimable under MediShield. This amendment will take effect retrospectively from 1st October 2007, in line with the Ministry of Health's changes on the use of Medisave withdrawals and MediShield claims for organ procurement costs. CPF reforms improve returns on CPF savings Madam, in my Ministerial Statement on the CPF Reforms in September, I had outlined a number of measures to help members attain a more secure retirement. This included the extra 1% interest paid on the first $60,000 of a member's combined balances, with up to $20,000 from the Ordinary Account, and to defer the Draw Down Age of CPF members. This was to help ensure that members' CPF savings last their lifetime. I announced then that a Deferment Bonus will be given on Retirement Account balances of up to $30,000 for members who are affected by the increase in drawdown age. If eligible members voluntarily defer their draw- down, they will receive the Voluntary Deferment Bonus. Clause 2 of the Bill creates a new definition for the additional interest which CPF Board may pay in addition to the base interest. It also redefines the Retirement Account, so that it can receive contributions such as the Deferment Bonus and the Voluntary Deferment Bonus, as well as the extra interest earned from monies in other accounts.”
“Mdm Deputy Speaker, I beg to move, "That the Bill be now read a Second time." Within the last year, Government instituted two major changes that affect the CPF - Workfare Income Supplement (WIS) Scheme and the recently announced measures to change CPF interest rates and drawdown of CPF sums. These two sets of measures have been extensively debated in this House - Workfare, during the last Budget and Committee of Supply, and the latter in September this year. The Bill before this House today seeks to amend the CPF Act accordingly. It facilitates the implementation of the new CPF interest rate framework to help improve members' retirement adequacy. Amendments in the Bill also create a new Part for the administration of the Workfare Income Supplement Scheme to help low- wage workers increase their incomes and CPF savings. Lastly, some amendments are introduced to strengthen the administration of the Act and to clarify certain existing policies. I will deal will these administrative aspects first. Strengthen the administration of the Act and to clarify certain existing policies Clauses 7(a)-7(c), 8(a)-8(c) and 9(a) align the language used in sections 21(1), 21(1A), 21A(1), 21A(1A), 21B(1) and 21B(3) with that used in section 77(1)(h), so as to include "acquisitions" or transfers in addition to the existing "purchase" when referring to the buying of property. This follows on from the changes in the CPF Act amendment earlier this year for the division of matrimonial assets. The CPF (Nominations) Rules are currently prescribed by the CPF Board under the general powers accorded under subsection 77(2)(k).”
“Sir, if it was that cheap, we would have a line of suitors waiting for that money. There is none.”
“Mr Speaker, Sir, in the course of this debate, I may have misheard certain things and if I misquoted the Members, let me apologise. Mr Low asked whether the GIC money is derived from CPF money. The relationship is not so simple. Let me give an example. You put money in the bank, and you agree that you put it there and you get 2%. The bank publishes a report and says that of all its earnings, it earned 8%. You go to the bank and say you want 8%, it does not work. MOF has taken on our liabilities. What MOF does with its money is MOF's consideration but the Government takes over the liabilities of CPF Board that promises a risk-free rate to members. That is how it works. As I have said, the market test is, if anybody else thinks he can take on that liability, please line up, but no one will take on that liability because they cannot deliver.”
“And if technology has allowed you to speak to those who have crossed over, please SMS me. But of this, one thing I can be reasonably sure that they will conclude: that this Government did not shirk its responsibility but lived up to its duty; that this House had the resolve and courage to do what was necessary. That this generation of Singaporeans did what was good and right for future generations to benefit. That, Sir, must mean something to each of us here and to Singaporeans everywhere. [Applause.] Mr Low Thia Khiang rose---”
“It will help provide security and peace of mind for Singaporeans when they grow old. With higher CPF interest, all CPF members will be better off, especially the lower and middle income groups. Working longer, later draw-down, Deferment Bonuses, and longevity protection will ensure that as many as possible will have savings for as long as they live. Singaporeans can look forward to their golden years. Sir, this has been a high quality debate and one that this Parliament can justifiably be proud of. There was an abundance of sound views, probing questions and well-argued alternatives. But there was no vitriol, less rhetoric and little posturing. One got a sense that we were all trying to find the best system to make sure that all could age well. That all Members in this House, including those from different political parties can sit here, deliberate calmly, rationally and responsibly, is itself a strong affirmation that we have a strong and effective political system. We could not have imagined 40-odd years ago when this nation was conceived, that we would be here today in 2007 discussing how to deal with the problem of people living much longer. Faced with stark issues of survival then of having to provide basic necessities for an impoverished nation; indeed, not being sure that we could last as a nation, making provision for retirement savings to last till 100 would not even have been a remote possibility on the minds of our leaders and Singaporeans. What will they say 40 years hence of this House about this debate on 19th September 2007? As they pore through the Hansard, what will they think of us? How will we be judged? It is hard to be completely sure. Some younger Members here will physically be around in 40 years hence.”
“Our projections show that, under the new system, 84% of new entrants to the workforce would have enough to meet the Minimum Sum for retirement, even for low wage workers and even after buying their first home. So you buy a first home, 84% of entrants now will meet the Minimum Sum. The additional housing grant will help further. So our home ownership need not be sacrificed for retirement adequacy. We can have both - high home ownership as well as those achieving Minimum Sum. But some Singaporeans can over-commit in buying bigger and subsequent homes. This was a point that Dr Faishal made. He said his resident was shocked by how much money he got when selling the house and wondered whether he could put it into his CPF. I want to tell him that he can. We have already relaxed the rules. Because this resident of his said, "I have so much money I am spending it too much and I am not really saving it." That is a wise resident. So these people sell their first homes but plough back gains from the sale of their first home and purchase a bigger home. And I think this is a good thing. It is a good aspiration that Singaporeans can own bigger homes if they can afford it. But perhaps they ought to think about how much funds they have in their Retirement Account when they sell their homes to buy another. Because if he had put that money early into his Special or Retirement Account, which now earns 5% on the first $60,000, compounded over a number of years, it adds up. As Members have advised, we should study how to advise first home sellers about this. I think it is a good idea that we pay some attention to it. The changes to the CPF system are fundamental and long term. It will better prepare Singapore to support its larger older population.”
“Is our 3M (Medisave, MediShield and Medifund) framework working? Collectively, there are $36 billion in our Medisave accounts and this is growing at more than $1 billion a year. The lower income group has good access to relatively affordable healthcare. In 2001, WHO ranked the performance of Singapore's healthcare system as number six in the world. I am quite familiar with hospitals around the world and healthcare systems. I have worked in some of them. Singaporeans can take comfort that we have one of the best healthcare delivery systems in the world, and I say this objectively. Our aspiration to make sure that all Singaporeans are included in our economic and social progress is a good one. Indeed, we must always strive for this, because we are representing our constituents and we want them to have a better life. But we need not diminish the progress that we have achieved. We need not unfairly malign the CPF system. It has worked well and allowed us to achieve a social compact that few others have. It has provided economic security and equity to the majority of Singaporeans. It needs to be strengthened but it is by no means ineffectual by any yardstick. Some of you have mentioned the CPF cuts. Yes, indeed, we did have to. But the economy turned around and we raised it up again, and we have resources to help those who need it most. Some Members have asked: does usage from CPF funds need to be tightened? Have we allowed it for too many purposes, or too lax in any one area? I think Mr Inderjit Singh asked this. These are serious questions to be considered. Some have asked for projections - Mr Ong Kian Min and Ms Irene Ng.”
“But even such households own homes which are a substantial store of value which members can cash out on. In a survey in 2003, each HDB household was estimated to have an average housing equity worth about $154,000. But you may say, "Ah, that is average. What about the lower income households?" Even the lowest 20% of households had an average housing equity of $138,000. Can you show me a similar figure anywhere else? While these figures would be higher in today's market, the important point is that each HDB household has significant value in their flat. Singaporeans own an asset - and 90% of Singaporeans, mind you - which they can subsequently monetise, either by rental or by sale, if they need to. Flats are already subsidised and we give Additional Housing Grants because we want the lower income families to have their own homes. In addition, HDB has announced that it will introduce a Lease Buyback Scheme to help the lower income monetise the tail end of the lease for two- or three-room HDB flats, and this will provide a monthly income for the rest of their lives. It is a stored value. I do house-to-house visits like hon. Members. As I told you, Toa Payoh is an old estate. We see these two- or three-room flats and we ask, "When did you buy it?" and they say, "Oh, this block was built in 1960, 47 years." "How much did you buy it for?" "Oh, $7,700 at that time." "Is it paid up?" "Oh, paid up long ago." "Why are you living alone? Why not you rent out one room?" "No, too much trouble." "Why do you not live with your children?" "No, I want independence." "Do you need the money?" "It is OK. I will get by." But it is very different because they have a choice. They can monetise it if they want to, and that value will grow.”
“It is not benevolence when you have the wrong policies. Neither is it benevolence to ask somebody to spend more to help others - not your money but someone else's money. We should not, again for these groups - and we need to help them - change the central principle of self-provision that underpins our CPF system. It would weaken it. The system per se will not solve the problems of the poor. Members are correct. Just because we have a system, it does not mean that it will solve them. Indeed, it may actually heighten the contrast of those who have made provision and those who have not. But it is because of this that we want to ensure that that our CPF system, that those who can afford it must make full provision for their lifespans. Otherwise, precious resources will have to be used to assist too many that have not done so. And I can assure you that our needs will grow. As only 6% or 7% are above 65, our needs for healthcare will grow and our needs for educational care, as more want tertiary education, will grow. So there will be plenty of needs to ask where our Net Investment Income should go, and I do not think that we should just fritter it, use it for just this one purpose. Lastly, how has our CPF system delivered economic and social progress? Over the last two days, some Members have questioned if the CPF system has delivered. They cite reports from the World Bank and look to other models. I think it is good to keep abreast of developments but, at the end of the day, I would like to ask Members this: what do you believe? Has the CPF system been a plus for Singapore and Singaporeans, despite all your quotes? Yes, we have low income households. We will always have them.”
“It may be needed to tide us over calamities, as in a global pandemic, but we should not mortgage our future to serve present needs. Norway has that system. I visited Norway. "The luckiest people in the world", they are dubbed. They found oil. Every time they think they are running out of it, new technology comes and they have a few more years. But they did something very wise. The generation which found the oil did not claim it. They make a constitutional rule that you can only take x% from all the oil revenue to fund recurrent budget, which is what we are doing now. Some of it comes from Net Investment Income, but you cannot touch the principal sum because it is to last all generations. Like you, I do not know how long Singapore will last, but let us hope that it will last for many generations. Let me now talk about vulnerable groups. Some Members have appealed for more help to be given to vulnerable groups, eg, housewives, contract workers, odd-job labourers, caregivers of disabled children, and those who are unable to find work or with inadequate or no CPF accounts. Mdm Halimah called for the Government to contribute towards "social pooling". Dr Ahmad Magad called for a M-Bonus. Prof. Mehta called for a H (housewife) Bonus. I am sure the Ministry of Finance is quite glad that there are only 26 alphabets. We will need to help these groups. And we have - through ComCare, financial assistance schemes, additional housing grants, CDCs, top-ups during budget surpluses. We do assist them. Indeed, since 2001, including the GST Offset Package, special transfers from the Government have totalled $11.7 billion. This is benevolence. Benevolence is having the right policies to grow your economy and then give to your residents the surpluses.”
“If you do not want to share the risks, we should allow you to pay a higher premium so that part of your money goes to your dependants. Or, you can stretch out the payments so that you cover yourself for 30 years and reduce your dependence on longevity insurance. There is a Chinese saying, fu bu guo san dai, ie, wealth cannot go beyond the third generation. There is a deeper meaning: that the third generation, not understanding the values of the first and second generations that could accumulate, keep or grow wealth, lost it. The loss of values preceded the loss of money. We must avoid this and maintain personal responsibility. So why not use our reserves to fund this? Surely, the old have contributed to the reserves, as Mdm Ho Geok Choo says. They have poured blood, sweat and tears. It is a seductive argument, it is a compassionate one, but short-sighted. Every generation would claim that it has built and has a right to the reserves. But our reserves belong to all generations of Singaporeans, including future generations, not only our generation. So taking returns above market from GIC to put into pension funds is the same thing. You are taking from your reserves. It would be most unwise to deplete our reserves for only the needs of this generation. So, to guard against that constant temptation of every generation to do so - because I believe every generation would have some reason to use the reserves - is the very reason that the Elected Presidency serves as an impassive gatekeeper for all generations. We should remember, despite our prosperity, that we are still a small island, and our reserves are a strategic store that gives us weight in this world.”
“"It discourages work, hiring and the activity of young people and seniors, and it discourages people from working beyond the age of 55 [which is, in effect, a reply to Mr Low Thia Khiang's point that, indeed, pushing back the pension's age or keeping it in front does discourage]." These are the words of the French President. He can choose to argue with the French President, but I am quoting him. "The President wants to extend the legal retirement age for all French workers, raise taxes on those who retire early and remove legal restraints that now discourage people from working into their 60s." They quoted him and this is what President Sarkozy said: "We need a profoundly different social contract, and I want to establish it on the values of work, merit and equal opportunity," vive la France! Seeing others falter, we should not repeat their mistakes, especially since we are among the fastest ageing societies, and our old person support ratio will fall to 4:1 by 2030. Our CPF system is strong and fully funded because individuals save for their own needs and spend what they have saved. Government can top up from time to time, when it has budget surpluses. But that is radically different from saying that Government should now take on the responsibility of providing for the retirement needs of every Singaporean - which was the point made by Minister Tharman yesterday. It will slow us down, deplete our reserves and impoverish us. We would then have little resources to help anyone. Even longevity insurance is not asking others to shoulder your needs. You have to pay a premium first to share risks, so there is a cost to you that you are providing for yourself.”
“Mr Inderjit Singh, Mr Chiam See Tong, Mr Low Thia Khiang and Mdm Halimah suggested these things. That would be a fundamental mistake. It would take us many steps backwards and bring upon us the very problems that those with socialised pension schemes are trying to get out of. Any system where someone else pays for your retirement needs, whether it is a Pay-As-You-Go system or a state-funded pension system, is difficult to sustain. That is the experience over the last 50 years. That is the experience all over. Indeed, other countries which run these systems where someone else pays, are attempting to move away from them now, because their old person support ratio is also declining. Taxes simply cannot support the needs. And, as tempting as Mdm Ho Geok Choo says, look, start small, little bit, sedikit sedikit, ie, small group of people, well, you can start small, but you may certainly end up big. Italy spends 14% of its GDP just to fund state pensions. Think about it. Fourteen percent of GDP is what we use to run our whole Government, and it is one line item for them - state pensions. Let me quote to you something that was published today in the Financial Times about France. I quote: "French President Nikolas Sarkozy yesterday announced the first stage of a far-reaching plan to trim the cushy pension benefits of some 500,000 public sector workers. [They started small, just public sector workers.] Around 1.1 million pensioners are already benefiting. But the regime - introduced at the end of World War II - [surely it is a small thing and for a very small group of people] has become more costly as retirees live longer." "Our system of social benefits is not financially viable", Mr Sarkozy said.”
“How long you need to live, to break even or get more with your premium should be supplied, so that people can choose their plans with full information. I think Mr Zaqy asked about this. The basic tier scheme will be administered by the CPF Board. We want the committee to consider this. And this will allow members to leverage on the CPF system and make longevity insurance premiums affordable. It will also establish longevity insurance as another integral piece of our CPF system. It fills in that missing gap. Members have asked what is the Government's contribution to this scheme. Could Government fund part of this? In fact, we are indeed doing so. The extra interest that we are paying on the first $60,000 of all CPF members' balances will be more than sufficient to pay for the premium for our basic longevity insurance product. Some have asked, instead of the extra 1% or Deferment Bonuses, why not take some of that to fund this longevity insurance? These are two distinct aspects. We are strengthening our CPF system by putting in place a missing critical piece with longevity insurance for those who live longer than expected, so that their savings do not run out. But this system must be put into place for many generations after us. We should not begin with the philosophy that it should be subsidised from the outset. The CPF system works and is sustainable because it is based on savings, not tax. Each must save for himself for his own needs. We must not depart from this fundamental strength of our CPF system. This brings me to the next point. Why not fund a national pension scheme from reserves? Some have asked that the Government start a nationalised pension scheme and bear part of the cost.”
“These options are all possible, and could be offered as additional riders on top of the basic product. But, essentially, from the Minimum Sum in the Retirement Account, members can choose which portion of that Minimum Sum is to be earmarked for payments in the first 20 years, and which portion is allocated for the longevity insurance and which portion to be given to additional riders. I do not think it is a good idea to preset the payout amounts for the committee's consideration - whether it is at subsistence, $300, $400 or $500, etc. I do not think we should tie the committee's hands. What the committee should do is to recommend options to cater to different needs and let members choose. Indeed, this is what Mr Heng Chee How has mentioned. Some have asked if it is possible for earlier annuity payouts. So why wait till 85? Why not 75? Indeed, I think Ms Jessica Tan and Dr Amy Khor asked about this. Others have asked whether we could allow people to start their annuity payouts at 95 to reduce their dependence on longevity insurance. They want to stretch out their Retirement Accounts - Dr Lam Pin Min and Mr Ang Mong Seng asked about this. I say, why not? The Committee for the National Longevity Insurance Scheme, led by Prof. Lim, should consider all these options. They will propose the design for the Scheme. Our goal is to provide basic, affordable and flexible options to meet the needs of different CPF members. But so long as you fulfil the cardinal principle, put aside for your own needs, we should be satisfied. I want to stress that this system will be fair to all. No specific group should feel that they are disadvantaged. We should let professionals determine the risks and the adjusted premiums. The actuarial information will be transparent.”
“We know that half will live beyond 85. We just do not know which half. So if we wanted to cover everyone, we would have to stretch out the Minimum Sum for 30 years to 95, or 35 years to cover all eventualities. Yes, this will make the savings last much longer, but, of course, the monthly payments will be much reduced. Worse, while doing this may mean that nearly everybody's longevity risk is catered for, it also means that half who die before age 85 will also have to make do with lower monthly payments. In addition, if there is a big jump in life expectancy, our figure shows that life expectancy is increasing by one year for every five years, in 20 years, it may not be 80 or 85, it may be four years more. And Dr Lily Neo talked about this yesterday. So extending the Minimum Sum for a longer period is a solution and indeed is consistent with the principle that you must provide for yourself because you do not know how long you will live. You should provide for every eventuality, stretch out your Minimum Sum to 30 and 35 years. But obviously, that means that you have very little per month. This is why we have introduced longevity insurance, which is a better solution because you need only set aside a small fraction of your retirement savings, and it will guarantee you a monthly income for life, starting from, let us say, age 85. And because it is only a small fraction of your retirement savings, your monthly payments under your Minimum Sum can be more. Some Members have called for larger payouts, or linking payouts to inflation - I think Prof. Mehta asked for this - or for some amount to be returned back to his dependants if the member dies earlier. Dr Amy Khor and Mr Lim Biow Chuan asked about this.”
“But let us put in place this structure first because it assures a high rate of return, a generous rate of return, a fair rate of return to most members - 70% of all our CPF members. I think it is a smart thing to do. The third question is: why must longevity insurance be compulsory? Have we moved from self-responsibility to shared responsibility? Members have expressed the concerns on the ground the compulsory longevity insurance which Government intends to introduce. Mdm Halimah wondered if we are adopting risk-pooling, whether we are moving away from the core principle. Mr Liang Eng Hwa and Mr Inderjit Singh were concerned that it was compulsory. Mr Liang Eng Hwa and Mr Lim Biow Chuan, who spoke just before me, said, "Give education a chance, educate people instead of making it compulsory." Let me make it fundamentally clear. We are not moving from self-provision to shared responsibility at all in introducing compulsory longevity insurance. Indeed, we are strengthening the very principle of self-provision. What is required, and has always been the case, is that each person must save enough to last his lifespan. That is the cardinal principle on which our individual accounts in our CPF is based, that each must save enough to last his lifespan for his own needs. This is indeed the basis for the Minimum Sum, why you have to set aside the Minimum Sum in your account, and it gets drawn down after a certain age. But because the lifespan has stretched, the question is how long then should the members' Minimum Sum in their Retirement Account be drawn down over? We have set for 20 years. But the problem is if we stick to 20 years, we know that 60% at age 62 will outlive 82. In other words, 60% will run out of savings by 82. If at 85, 50% will have run out of savings.”
“We cannot design a long-term structure for our CPF system based on occasional advertisements because we have to read the fine print in these advertisements. For our system, there is no fine print. That is the bottomline, and that is the system that we will deliver. The sensible thing would be to take full advantage of this system. For example, what a young CPF member should do under this new system is to maximise his returns. He should transfer his OA monies very early to his Special Account. Because if he transfers, for example, $10,000 at age 35, he would have at age 55, 20 years later, $10,000 more in interest compared to if he had left it in the OA Account. That is a big difference. For every $10,000, he doubles it basically. Basically, he doubles his money for every 20 years if he transfers his money from OA to SA. So those of you who have children, top up your children's accounts, as I have allowed it, and it would make a big difference to their future retirement. What about the 30% with balances above $60,000? Members have asked for choice. Mr Seah Kian Peng and Mr Ong Kian Min have asked whether we would consider these investment options. Mr Sin Boon Ann also talked about this. For members with above $60,000, if they think they can do better than the CPF interest rates, they can still invest sums above $20,000 in the OA and SA through the CPFIS. They are allowed to. We have not removed that. We only cap it at $20,000 for both accounts. Some Members have asked whether CPF Board can help them invest. We have not ruled this out. I think Members may have mistaken that we have ruled this out. We said that we can contemplate this later. Indeed, we should. Ms Sylvia Lim is correct. We should revisit this.”
“5% guarantee through members' contributions that would completely eliminate the risk of a shortfall arising. You cannot completely guarantee this system that you are providing now. This was because there is no any 'risk-free' asset that can be certain to achieve the 2.5% per annum minimum return, let alone a 3.5% minimum return. I asked the fund manager as well, "You take our funds and you guarantee it at 4%." He laughed. I said, "Let me try another one, 3%." He said, "All right. If you give me 3% of all your funds, I will find an instrument that will guarantee me 3.3%. I don't take any risk. I just cream off and fulfil your liabilities." This is a rational man; this is a person that manages billions of dollars, and not some advertisement or some figure that you pluck out and look at the report and say, "You should give me this." This is not the way to plan a long-term structure. Take Aviva's "BIG e" fund, for example, which NMP Siew Kum Hong asked about. This guarantees members' returns above CPF-OA rate. When I saw the advertisement, I liked it most, very excited. I said, "If this is a product, perhaps the CPF Board might even put some money with them." I asked my staff to check it out. The reality is that should the "BIG e" returns fall below 2.5%, Aviva will return the money back to you. Aviva does not provide the guarantee in periods of very low interest rates. The Government does not have that option. In other words, if their returns fall below, they say, "I will give you the money back. Thank you very much. You do not sue me. I do not sue you." Can Government do that? Government will have to bear the risk of providing the guarantee that we say - what we promise, we will deliver.”
“You can reduce the cost of distribution and administrative cost. You can diversify your risks, yes, indeed, through a balanced portfolio but no one can insulate you from market risk. It is easy to claim that your investments should do better, but who dares to promise you this. And how are they accountable? Under the CPF system, the risks are minimised and the minimum guarantee can stand up to market scrutiny and competition. There is no equivalent product in financial markets that offers such assured rates at no risk. How do I know? Because there are no suitors asking to take over our funds and guaranteeing equivalent returns. No one is willing to underwrite this system simply because it is more than fair. That is the market test, not lugging it to some company or some show of returns at any one point of time. Is anyone else willing to underwrite this system? The CPF Board does not lend to Government. That is the wrong analysis. Government takes over CPF Board's liabilities. And if we have more suitors who are willing to take over our liabilities, we would be happy to. But no one dares. Nobody would guarantee you this. It is not cheap money. It is assured returns. In fact, we were advised by consultants that there was no approach. Let me explain. When we were studying the many options, we hired consultants, professional ones. We were trying to find a way to insulate members and to smoothen it. And we said, "Look, can you study and do your simulations?" They ran about a thousand simulations of different market conditions, full of parameters, look at the back projections, back tested it, forward tested it, stressed it and, finally, they gave us an answer. They said there was no approach to funding a 2.”
“But we could have paid the extra 1% on larger sums, but reduce the SMRA rate. Instead of plus 1%, we could have given less. But the most important point to remember is that under the new interest rate structure, we are paying $700 million more per year. And it will grow more because balances will grow. All CPF members will get more, but it was designed so that those with small and middle-sized balances will benefit the most. Another point which may have been missed, and Minister Tharman mentioned it yesterday, is that 70% of all CPF members will effectively enjoy 3.5% for the Ordinary Account and 5% for the Special, Medisave, Retirement Accounts because they have less than $60,000. So, in effect, they are being paid 3.5% and 5%. Even after the 4% floor is removed after two years, we have projected that the interests paid will be better than the current system. The 3.5% for Ordinary Account and 5% for SMRA, with the extra 1% here, are more than fair. It is essentially risk-free. Furthermore, interest once paid belongs to the member which means that unless you withdraw, your CPF sums will never decrease. In fact, it will always be increasing every year. Because even if the rate falls, for a short period, the gains which you previously made are already locked in. This is the distinct difference compared to equity and even bond investments where you can suffer capital loss, or only have your principal protected. This is truly risk-free. Some Members have asked whether we can give a higher interest rate. There were quite a few. I would like to add my voice to that too. All of us want higher interest rates. Why not? It is easy to ask. But higher returns come with higher risks - that is the standard caveat and remains true.”
“And if they depend on their CPF savings, other than their personal savings, the end result is that they basically bring forward the problem. They run out of their savings when they need it. He would not be able to enjoy the higher interest that the CPF Board pays, had he left this money. So we will have to assist them in other ways, as we did during the economic downturn in 2002. However, if a worker is unable to work because of his medical condition, the Act already allows members to take out their money. So the system has already the flexibility to cater to their needs. We have already said that in a prolonged recession, it is possible for a systemic response to allow members some use but only in extremis. Second question: is the new interest rate structure fair? Some MPs asked if this system was sustainable. Others asked if this was fair, why not pay more? Yesterday, my colleague, Second Minister for Finance, Mr Tharman addressed this point comprehensively – from the fiscal perspective and, more importantly, how we must not shift our CPF system to one that takes away the responsibility of self-provision. I will add only a few salient points here. Some have voiced concerns about the floating SMRA rate, pegged to 10Y SGS plus 1%. The SMRA peg and the extra 1% on the first $60,000 are to be taken as not two separate components but as one essential whole for the new interest rate structure. That was how we conceived it and designed it to be fiscally prudent and sustainable. You cannot say, "Well, I like your 1%, but can you also bring up the other one?" It was designed as a piece. For example, we could have provided a fixed SMRA rate, as some Members asked, but pay the extra 1% on smaller sums. It is a possibility.”
“We have to work with companies. We have to wean through the processes, engage employers, convince the unionists, convince the workers, train them, set the framework, and then things will move. So we will work on the guidelines first and gauge the progress. The law will be in effect by 2012, but I will listen to the NTUC Secretary-General. As Eunice Olsen says, it is not a panacea. She is right. You can create the laws but there are many loopholes, and that includes discrimination against older workers, as we have seen in other jurisdictions. It is very simple to pass a law. I bring a Bill to this House, nobody would oppose it, but does it work? The best assurance of remaining employable is for the worker to remain healthy and productive. And I think Sin Boon Ann has rightly pointed out that we need to give positive examples, show employers who are models and, indeed, we are doing this. The Tripartite Alliance for Fair Employment Practices headed by Mdm Halimah Yacob and Bob Tan will ramp-up their activities and there is moral suasion. We can do something about egregious offenders. We can both shame as well as praise those who are doing well. But the best protection for any worker, old or young, is to grow the economy. If we grow the economy, we have the resources to help those who cannot find jobs, and we can find jobs for older workers. That is why when some of you mentioned about what we do for those who cannot find jobs, should we allow them to withdraw their CPF earlier, in case they are unable to be re-employed, we should be cautious. Because with rapid economic restructuring, there will be episodes that they may face periods of unemployment.”
“They completed their report. During these sessions, there was much airing of practical issues. The Minister of State Gan Kim Yong has given a report of the progress of the Tripartite Committee working on this. I need not reiterate except to say that there are positive signs that companies are already adopting re-employment practices. Many examples were given by Gan Kim Yong, and Cham Hui Fong gave a very sensitive feel of what actually happened on the ground. She gave a good sense that unions know what they are doing and what they are handling, and Josephine Teo and Seng Han Thong gave the examples. Employers are supportive, as shared by Edwin Khew. But there remains much work to be done. There is no doubt about it. As Cynthia Phua, Geok Choo and Biow Chuan reminded us, none of the tripartite partners under-estimate the practical issues that have to be dealt with. No country has been successful in this yet. Japan has started, but we are at the front edge of the envelope. And because we do not under-estimate this challenge, I think it is a good start. We know the hurdles, and we know what needs to be done. Some Members suggested that the re-employment law be enacted earlier than 2012. Yesterday, the NTUC Secretary-General Lim Swee Say counselled that laws would not be sufficient to achieve our full targets. I want you to take in the import of what the NTUC Secretary-General said. Here is a man who is dependent on his unionists to vote him back into power. It is the least popular thing to say that laws will not solve the problem. Because it is the easiest thing for him to deliver - to say that the law has been passed. This is a man without guile. This is a man with courage and determination. Laws assist but they do not mean short cuts. There are no short cuts.”
“It is a blessing. Would you rather be, say, in Russia, where the life expectancy is 66 years instead of 80? Singaporeans can look forward to a peaceful and fulfilling life here. And with more savings, they can look forward to the future with confidence. They can see their children graduate and marry, and even see their grandchildren graduate and even marry, and play with their great grandchildren. This is what we are trying to achieve. We are not trying to make it difficult for older Singaporeans. How can this be? Why go through this whole exercise to inflict pain? Surely, that does not sync with the reality that is presenting itself. Help me to communicate these messages. The Members of Parliament have also provided many inputs. We will adopt the suggestions on how to better implement these measures. But, for this rounding-up, I would like to directly address five key points, and I think these are the important points to focus on. And I will phrase them in terms of questions: (1) Will re-employment work? (2) Is the new interest rate structure fair? (3) On Longevity Insurance (LI) or annuities, why must it be compulsory? Have we moved from self-responsibility to shared responsibility? (4) Why not fund a national pension scheme from reserves? (5) Has our CPF system delivered economic and social progress for all? These are not trivial matters. Every one of them is a substantial issue. Let me take the first point. Will re-employment work? I take your points that re-employment has to work; otherwise, Singaporeans will face hardship with the later draw-down age. It is a given. MOM knows this. NTUC, our partner, is acutely aware of this, which is why we had started work much earlier. The Tripartite Committee was formed in March 2005. It has been two-and-a-half years.”
“You do not consider that at 55, 62 or 65, how much money you need to put aside at 85, in case you live so long. We all know that. This is the reality we live in. And I think it is better to plan our system based on reality rather than false hopes. Yes, we have to adjust it. Yes, we have to finetune it. But the core, the structure of that system, must be stable and sustainable. We are not changing because we are running out of money. Nobody who comes to Singapore will believe that we are running out of money. We are changing the CPF system because we want to keep our promise so that Singaporeans can have savings for as long as they live. But MPs should also comfort and reassure Singaporeans under their care. Yes, each Singaporean must make provision for his own needs. This is right and this is fair, but it is not true that we are leaving them to fend for themselves. No responsible person should accuse the Government of this. We are expending considerable resources to help them. We will spend at least $1.1 billion each year to build up their CPF savings through Workfare and higher CPF. We will provide up to $1.2 billion in Deferment Bonuses. These changes are real, as Ellen Lee says. They are not mirages. CPF members will see their accounts grow, and the reality is if we did not do these changes, the reality is that they will run out of savings. That is the hard reality. Reassure your residents that we are fully committed to help them work till 65 years. There remains much work to be done but it can be done. Laws will be passed, mindsets and practices changed and we can find jobs for them. We created 180,000 jobs last year. This year, I think we will create about 200,000 jobs. We can absorb 20,000 older workers. It is wonderful to live that long in Singapore.”
“The CPF system needs to be updated and strengthened. We are not acting irresponsibly, as Mr Low Thia Khiang has accused. Far from it. Even Mr Chiam recognises the fact that we have little choice but to raise the draw-down age (DDA). After the National Day Rally, he was asked for his response. I saw him on television. In a calm and almost clinical way, this is what he said, and I quote him: "Well, it's a fact that people are growing older. So the Government will have to delay in the paying out - there's no other way. The lifespan of a person is going to 82 or above 80 - people are living longer. So the CPF is not inexhaustible. I mean if it's too long, people don't save enough money in the CPF, they just don't have enough for their old age, as simple as that." "There is no other way." When each examines the situation truthfully, the things that have to be done become plainly obvious, as Mr Chiam so honestly put it. The simple truth is, we need to save enough to be able to enjoy our golden years – it is, as he said, "as simple as that". Anything else we promise to Singaporeans would be less than truthful. No one can deliver on false hopes. I wish it is like what some Members have expressed. I think Biow Chuan just recently said, "Why don't you leave it to Singaporeans? Leave it to their better nature and enlightened selves?" I too, like you, would like to believe that. But you and I know the many cases we see in MPS, the stories we hear from our grassroots where they are taking out their money at 55, having a fling here and having a fling there, they get enticed here and enticed there. It is human nature. You get a sum of money, you treat your friends. And then somebody else asks you and you decide to do this thing.”
“So, Members, I do need your help to communicate these changes to your residents. As you have done in this House during this debate, I need you to spout poetic lines to convince your constituents that these measures are meant to help them. Spew forth with passion your Hokkien lyrics and poetic metaphors. To illustrate, let me recap what some Members said: "lao le hao, kao shu shu dao, kao ren ren pao, kao zi ji zui hao", ala Mr Yeo Guat Kwang, to illustrate that we are growing older and it is better to depend on yourself. Mr Ong Ah Heng had a better one. He said past Singaporeans, "bo lui, bo mia" - not enough money, short lives. If you do not change your CPF system, "bo lui, wu mia" - you are living very long, not enough money. But if we change our system, "wu lui, wu mia". That was his simple way of communicating. I am not sure whether he approves this. I am paraphrasing him. Dr Amy Khor has a slightly different one and I am going to take some liberty with it. Longevity insurance is like a Geylang D24 durian - it looks thorny on the outside but when you open it, it is "pau chiah, pau ho". So, in whatever form you are going to communicate these messages, you have to explain to Singaporeans why the Government could not leave the CPF system unchanged. If we could, we would have. But we are changing the CPF system because we are compelled to, by circumstances unimaginable and unanticipated when the CPF system was created 50 years ago. Who then could have predicted that people would live this much longer? A system designed in 1955 for an average life expectancy of 61, left unattended, would falter under the weight of needs as more grow old. The CPF system then was never meant to support 20% of a population above 65 years old, and numbering nearly 900,000 by 2030.”
“Mr Speaker, Sir, let me first thank the various Members of Parliament who have spoken for their support. Many MPs affirmed with deep conviction that these CPF reforms have to be carried out to better prepare us for an ageing population. Knowing full well the radical demographic shifts that we are now experiencing, that more will grow old with fewer younger people to depend on, it would be irresponsible for this Government not to reset our CPF system to respond adequately. It is this Government's responsibility to govern well, not only for today but to make sure that we are building a strong Singapore that can withstand the pressures for many more years ahead of us. This is the abiding philosophy of the PAP Government. Yes, it would have been convenient and tempting to pass these challenges to the next generation, since as Members have noted, many of us would not be around to be accused. Politically convenient but still a dereliction of our duty if we had succumbed to that temptation, because it would heap insurmountable problems upon future generations if we do not strengthen our CPF system now. Therefore, I am proud to stand with Members who have supported these changes. I am gratified by their unflinching support, because I know that their constituents will face some difficulty adjusting to these changes. Some MPs said we need to be better at PR. Ms Denise Phua, Dr Lily Neo, Dr Fatimah and Dr Faishal said that we have to have a knack at selling our policies. Dr Lily Neo said that "these are diamonds but you present them like graphite." They are right. We have to communicate the why, the what and the how of these measures. We have to engage hearts, hold hands and assuage fears. It is not enough to have pristine policies, no matter how well-crafted.”
“As the IDR develops, our private sector, like all other investors, will make their own assessments of the relative attractiveness of the IDR vis-à-vis other investment opportunities and act accordingly. We understand that there is interest amongst our companies to participate in the development and growth of the IDR and they are carrying out their ground assessments. They have been participating in the various seminars and site visits to the IDR that have been organised by the Malaysian authorities and our business chambers over the past few months. TRANSPORTATION OF WORKERS IN BACK OF LORRIES AND PICKUPS (Steps to ensure safety) 34. Dr Fatimah Lateef asked the Minister for Transport (a) what steps are available to ensure the safe transport of workers in the back of lorries and pickups; and (b) how many errant companies and employers have been warned/given summonses over the last three years for going against the Land Transport Authority's requirement of providing at least 0.372 square metres of space for each of these workers.”
“Mr Chiam See Tong asked the Minister for Trade and Industry what approach will the Government take with regard to the Iskandar Development Region (IDR) in Southern Johor and whether Singapore will commit large investments in the IDR. Mr Lim Hng Kiang: Following an agreement between our two Prime Ministers at the Leaders' Retreat in May this year, Singapore and Malaysia have set up a Joint Ministerial Committee (JMC) to explore ideas for bilateral cooperation in the Iskandar Development Region (IDR). This is based on our assessment that it would be good for Singapore if the IDR develops and takes off successfully. A thriving and dynamic South Johor region next to Singapore will generate greater opportunities and attract more talent and ideas to this part of the world. This will be good for both countries. The JMC on IDR cooperation is co-chaired by Minister (National Development) Mah Bow Tan and Malaysia's Minister in the Prime Minister's Department, Dato' Sri Effendi Norwawi. Other members include Minister (Transport) Raymond Lim and the Chief Minister of Johor, Dato' Abdul Ghani Othman. At the JMC's inaugural meeting in July 2007, four work groups were set up to explore cooperation in the areas of immigration, transport, tourism and the environment. The JMC will be meeting again later in the year. Whilst the two governments can encourage and help facilitate economic cooperation and linkages, the private sector must make their own investment decisions based on commercial considerations. Singapore has traditionally been one of the top investors in Johor, due to our proximity and our companies' familiarity with the market. With East Asia growing rapidly, there are many investment opportunities in Malaysia and other countries.”
“Currently, employees in the uniformed services are exempted from the Retirement Age Act due to the physical demands and hazardous nature of the jobs. Despite this exemption, the Ministry of Home Affairs (MHA) has selectively offered re-employment to some of their retiring employees from the uniformed services. The Home Affairs Uniformed Services (HUS) Departments have the discretion to re-employ staff beyond the retirement age, subject to criteria such as health and fitness, experience and expertise, as well as performance and conduct. Officers may be re-employed in their current or a different uniformed job, or even re-deployed to a civilian job; either on contract under new terms and conditions or an extension under existing terms and conditions. MHA is currently reviewing its re-employment policy to enable more retiring officers to be re-employed as long as they are physically able to continue in the job, have demonstrated good performance and are willing to continue working. The Singapore Armed Forces (SAF) is retaining its policy of keeping the SAF young as timely leadership renewal is key if we want to keep the SAF dynamic, vigorous and forward looking. However, as is the case currently, officers could be re-employed on a contract basis to fill specific organisational vacancies. Retired officers can also apply for non-military jobs in MINDEF under the Defence Executive Officer (DXO) scheme and may be hired if found suitable by the organisation. Warrant Officers and Specialists retire at a later age and may also be re-employed as DXOs upon retirement. ISKANDAR DEVELOPMENT REGION (IDR) IN SOUTHERN JOHOR (Singapore's approach) 30.”
“Another group of countries postpone the solution to the next generation. In the case of the United Kingdom, their state pension age is already at 65 for men, and between 60 and 65 for women. So they have actually moved faster than us. The UK now intends to move the new pension age to 68 for both men and women. I think it is laudable, but they want to reach there only by 2046, nearly 40 years in the future! Singapore cannot afford to wait another 40 years to tackle this problem. We should not pass these problems of an ageing population to the next generation, because it will only get worse. Far better to make adjustments now, while we are able and have time on our side. If we wait and are ill-prepared, then the consequences for Singaporeans when they are old and dependent will indeed be more painful. We should work together now, move decisively, and turn these reforms to our advantage. With higher CPF interest, all CPF members will be better off, especially the lower and middle income groups. Everyone will have more savings for retirement. Working longer, later draw-down, deferment bonuses and longevity protection will ensure that as many as possible will have savings for as long as they live. These changes will strengthen our CPF system. It will improve retirement security and help Singaporeans face the future with greater confidence.”