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.”
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“" It plugs a gap in our CPF system and will give security for the many Singaporeans who are expected to live very long. The CPF system has helped Singaporeans achieve social and economic security and equity because it is based on individual savings, not taxes. This is a critical principle underlying our CPF system and it explains its strength. It is fair to all because each person saves for his own needs, including for his own future needs in old age. We must be careful, stringent, to adhere to this principle. But even with these comprehensive changes, not all problems will be solved. The disabled and poor or those who meet unexpected mishaps or misfortunes will continue to need assistance. But if able Singaporeans have made provision for their own needs, then Government can provide more resources to help those who deserve it most. We have never shied away from problems that can affect our nation's future, no matter how big or difficult. Singapore is one of the very few countries tackling this problem head-on, with eyes wide-open and the public engaged. The problem of retirement adequacy is a looming challenge for many countries. Most countries know that they are ill-prepared for their ageing populations. But not all have been able to act to avoid the impending crisis. Some countries have debated a long time, but have not moved. Reform commissions, one after another, such as those in France, Ireland and the United States, spell out the changes that need to be made. The Irish commission failed to agree on a conclusion. Even China admits that it needs to move faster as the problem is growing. In Italy, pension reform has been a major stumbling block for successive governments even after 20 years of deliberations.”
“Let us hear their views. What are the needs? How do we explain it? How do we put this into place? Professor Lim, as you know, is the Chairman of the National Wages Council and Bioethics Committee. So he is experienced in handling complex issues. When I asked him if he would chair this Committee, he joked that he was old enough. Professor Lim Pin is not old but gold (good and old) - experienced and still actively contributing and working. He understands the needs of the elderly and is the right man for the job. But I have asked that the report be ready within six months. I have given them enough time. Conclusion In my opening remarks, I asked that we keep in focus the ultimate goal of these changes: why are we doing all this? It is to put in place a better and sustainable CPF system. Our CPF system is unique. A strong and fully-funded CPF system has been a major pillar and will continue to be a major pillar of our nation's economic prosperity and social progress. Through CPF savings - just think about it, what our CPF system does - nearly 90% of Singaporeans are able to own their homes - one of the highest home-ownership rates in the world. Because of the three Ms - Medisave, MediShield and Medifund - no Singaporean is denied good basic medical care. Homes and CPF savings together provide retirement security for the majority in their old age, even for low income households. These are major accomplishments for any country, and something that we can be proud of. The changes we are making will strengthen the CPF system further. Longevity insurance is the missing critical piece that we are now putting into place. It answers the question which this resident asked: "What happens when my CPF savings run out?”
“Instead of 20 years, they ask, "Can I stretch it out to 30 years instead of 20?" They are prepared to draw less every month. But they say, "I am prepared to stretch this out, draw less and reduce my need for longevity insurance." I think we should accommodate all these groups if we can. We should be flexible in accommodating the different circumstances of CPF members and offer different ways to provide for their full life expectancy. He can do this by buying a longevity insurance or by stretching out his Retirement Account money over a longer period and reduce his dependence on longevity insurance. So long as he has provided for his old age, and will not run out of savings prematurely, we should all be satisfied. How can we design a National Longevity Insurance Scheme to ensure that CPF members are adequately provided for financially, for the rest of their life, and do not run out of CPF savings? How can we accommodate these various needs and circumstances of members? I propose to form a committee to study this problem, and to take in public and professional views. The committee will then recommend the best way to provide basic, affordable and flexible longevity protection for all CPF members. The recommended plans should provide various options for members to protect themselves. It should also allow members to opt-in to this scheme early, when it is less expensive to do so. I have asked Professor Lim Pin to chair this committee, and he will be supported by other able and knowledgeable persons, including those from academia who understand this financial problem and the financial modelling. I have also included people from the grassroots because they understand their needs, and some from non-governmental organisations from the social groups. Unions will be represented.”
“This explains why commercial insurance providers already charge higher premiums for women buying longevity insurance. It is practised worldwide. Actual premiums will be correctly calculated by professional actuaries. So there should be no reason to fear that this scheme is loaded against anyone or any group. It is meant to be fair to all. It is risk-sharing. Some have asked about costs. The extra interest that members will get in the new CPF system will be more than enough to pay for this longevity insurance. I have already given the example that a member with $60,000 in his CPF savings will get $7,200 more in 10 years, and nearly $18,000 more in 20 years. This will be more than enough to pay for the longevity insurance. The National Longevity Insurance Scheme will strengthen our CPF system as it takes care of extreme longevity. However, we also recognise that CPF members will have different needs. We have received many suggestions from members of the public on various options that are more suited to their own needs. Some younger members want to participate in annuity schemes because it is cheaper to come in early. The earlier you buy, the cheaper, and they want to come in. Some who are older also want to be included, because they have no dependants and their savings are for themselves. So it does not make sense to put aside for someone else and say, "Can you convert it to an annuity? Can I join your scheme?" There is a third group. These are those who have dependants who can take care of them, or have other savings apart from CPF. They want the balance in their Retirement Accounts to go to their dependants when they pass away. They are prepared to stretch out their Retirement Accounts to last longer.”
“If you want your dependants to get some money back when you pass on prematurely, then it is possible for the upfront premiums to go to them. It is possible for some of the money to go back to them but you have to pay higher upfront premiums. There are many variations possible, just like insurance policies. Basically, it is an insurance product. A National Longevity Insurance Scheme It is right to require CPF members to make financial provision for the eventuality that they live longer than expected. By then, they certainly will not be able to work and may not have any family members to depend on. And this is the basic goal in devising a national longevity insurance scheme. We will therefore require CPF members to take up some form of annuity, or longevity insurance scheme, using a small part of their Retirement Account. But most of the CPF balance in their Retirement Account will still be available to be drawn down from the draw-down age. Our main objective is to put in place a national scheme that provides basic longevity protection for CPF members, starting with those who are aged 50 years and below now. Some members of the public have written to the press to support this idea and suggested that it should be modelled after the MediShield concept. This is indeed our thinking. Like MediShield, the CPF Board can administer the basic tier of longevity insurance. For members who want more than basic protection, they can buy additional insurance, or what we call riders, which can be provided by commercial insurance providers. The National Longevity Insurance Scheme, as a risk-pooling scheme, will be fair to all. This means that premiums will be adjusted according to risks. Women generally live longer than men, other things being equal.”
“If we did it ourselves, it must mean that we must put aside for many more years. If you start from 65, you do not know whether you are going to live to 95. So you have to put aside your savings for 30 years or longer. Because if you reach 95 and you are still alive, your savings would have run out. So longevity insurance is the cheapest way to ensure that the member does not run out of savings prematurely. He will receive an income for as long as he lives. Many of us buy insurance to provide for our dependants, in case of premature death. It is money spent and gone if nothing untoward happens. And we pay for this insurance willingly just in case something happens and to provide peace of mind. But buying insurance for ourselves in case we live longer than expected is new to Singaporeans. So let me briefly explain how it works. When you buy a longevity insurance, which is a deferred annuity, in other words, you take on the stream of income later, a deferred annuity, you will receive a monthly income from a pre-determined age, at the "tail-end", and for as long as you live. To simplify the issue, it is assumed that the start age of the deferred annuity is 85 (although it could start at any age). For this scheme, members pay a premium to buy a longevity insurance at age 55. So the premiums from all participating members form a common pool. The pool of money is invested and grows year by year, and pays an income to all those who are alive after age 85, for as long as they live. They are sharing the risks. Because the risks are shared, some will get more than what they put into the scheme, if they live longer. Correspondingly, those who do not live as long will get less than the premium they paid.”
“Our commitment to Singaporeans is substantial. It would be more than $1.1 billion every year to help them achieve this. (IV) LIVING LONGER THAN EXPECTED Longevity Insurance Let me now talk on longevity insurance. I know there has been much discussion on this aspect. And I am glad that there has been much discussion because this is something new and people need to get used to it. Some of you will remember when the Prime Minister talked in the National Day Rally, he mentioned a particular constituent that he had in Teck Ghee whom he met at Radin Mas. This was a lady who had some back problems, went for a spinal operation and now she is recovering. And she asked a pertinent question to our Prime Minister. She said, "Savings are running out. What do I do?" We have to ask ourselves, "What do we do if the 900,000 Singaporeans, among them a large portion, have their savings run out?" So, in addition to the changes that I have talked about, we need to improve the CPF system so that members will not run out of their CPF savings in their extreme old age. Some say that they will not be so fortunate to live so long. And there are indeed those with serious illnesses who are certified by doctors to have severely shortened life spans. And the CPF rules now already allow these members with limited life spans to take out their CPF money early. But most of us cannot predict when our time will be up. We have to go by actuarial data that tell us that many Singaporeans will live beyond 85, to 90 and even to 100 or older. Any one of us could be in that group. And the CPF scheme should therefore ensure that members make provision to support themselves so that their CPF savings will not run out prematurely. And the way to do this is through longevity insurance.”
“These changes proposed will significantly improve the retirement sums of older workers, even for those who are in their 50s now. And the gains for younger members will be even more. So, MPs should advise their constituents to continue to work and delay their draw down for as long as they can, while topping up their Retirement Accounts. Because if they do so, they can benefit fully from all these changes and it will make a big difference to their retirement savings. Total cost to Government Many have asked what is Government's role in improving the retirement adequacy for Singaporeans. How is Government helping in these reforms? How is Government helping all Singaporeans? Government is committed to helping Singaporeans, and the total cost of the entire package of CPF reforms and measures for secure retirement is substantial. The Workfare Income Supplement (WIS), in total, will cost over $400 million each year. The higher CPF interest will cost $700 million more in the first year, and more in subsequent years as balances grow. Higher Workfare and CPF interests are long-term commitments. It is not a one-off exercise, in other words, this is recurrent cost and the Government will have to spend more each year. In fact, we have to spend more than $1.1 billion every year. And this is equivalent to members receiving half a Progress Package every year, or one Progress Package every two years. The one-off package of D- and V-Bonuses will cost more than $1.2 billion. I think it is right and fair that each person makes provision for his own retirement needs, but we are not asking Singaporeans to do this alone. Because Government will be expending considerable resources every year to help Singaporeans to work longer and improve their retirement savings.”
“Let me now put together all the gains that I have talked about from the changes - the higher CPF, Workfare, the Deferment Bonuses - and give you an example that you can see the substantial magnitude and how it will improve the CPF retirement savings of a typical worker by a large amount. I will use a 57-year-old worker, a low-wage worker, who indeed these changes are aimed at, although all CPF members will gain. Let us call him Mr Tan, and I have chosen 57, not someone younger in the 40s, because these changes also will help those in their 50s. Mr Tan earns $1,200 a month, such a member would have typically $21,000 in his Retirement Account now. Under the current rules, if he works till 62, stops work at 62, he would have about $36,000 in his Retirement Account. $36,000 is not a large sum and may not last his retirement period. But with the changes - the higher Workfare, the higher CPF and the Deferment Bonuses - if he is re-employed even at a lower pay of, say, $1,000, and he works one year more and draws down one year later at 63, how much would he have accumulated under all our changes? $11,000 more, just for one year of work and one year of draw down. In other words, he gains 30% more on his Retirement Account savings, which means three more years of payout, at $330 a month, compared to $270 a month, with just one year more of work and deferment. But if this same worker, Mr Tan, decides that he will work till age 65 and also draws down his CPF at age 65, how much will he have? He will have $60,000 in his CPF savings. $24,000 more as compared to age 62 under the old system. That is a 60% increase on his principal sum which is a terrific rate of return for any investment. So, someone who is aged 57 can increase his CPF savings substantially from these changes.”
“We want to encourage members to voluntarily defer their drawdown, even if they are allowed to start drawing down from their Retirement Accounts their Minimum Sums before 65 because the later you draw down, because that whole sum is capped and receives interest, the longer the payout. It is not just one for one. It does not mean that if it is delayed for one year, you will get one year of payout. In fact, if you delay for one year, you get three years more payouts. That is the way the Mathematics work. So we want to encourage this. A Voluntary Deferment Bonus, or V-Bonus, will be given for each year of voluntary deferment up to the age of 65. So members aged 54 to 63 this year who have not started drawing down are eligible. The V-Bonus would be set at 2% on the members' RA balances, capped at $30,000. And therefore a member will get $600 for each year deferred, in other words, if he defers for three years, he receives up to $1,800. The Voluntary Deferment Bonuses alone will cost the Government up to $570 million. I have put down in the table what the total bonuses are. It ranges from $600 to $2,700. If members will agree, that can substantially improve and that can translate to many years of payouts. The D- and V-Bonuses will also be given to those who have bought or will buy annuities, since they have provided for their full life expectancy. Total gains What is the impact of all these changes on Singaporeans? This is the most important question. Singaporeans will ask: how can I benefit? Will it make a difference? Working longer, more Workfare, higher CPF interest and Deferment Bonuses will improve retirement savings substantially for all Singaporeans.”
“Those aged 57 or younger today will be affected by the later DDA. If you want to know whether you are affected if you are 57 and younger, the new draw-down age will apply to you. For those aged 50 to 57, who have a shorter runway to adjust, we will help them with one-off bonuses. These bonuses will be paid into their Retirement Accounts to help them increase their retirement savings. It would not be in cash. It would be into their CPF accounts. There are two types of bonuses - the Deferment Bonuses and the Voluntary Deferment Bonuses. D-Bonus Let me talk about D-Bonus. All those aged 50 to 57 this year will receive D-Bonuses, because they will start their DDA later. The D-Bonus will be in the form of a bonus interest, based on the members' balances in their Retirement Accounts, but it will be capped at $30,000. This means that 86% of all members, nearly 90%, will get the bonus interest on the full amount in their Retirement Accounts. Older members will receive larger D-Bonuses. Those aged 54 to 57 will receive 5% on their Retirement Account sums. What it means is that if you have $30,000 now and you are aged 57, you will receive 5%, which is $1,500, substantial. Those aged 52 to 53 will receive 4% on Retirement Account balances, which means up to a maximum of $1,200, and those aged 50 and 51 will receive 3% on their Retirement Account balances, up to a maximum of $900. I hope you are doing your own calculations to see how much you will receive. For those above 55, they will receive their D-Bonuses on 1st May 2008. For the rest, they will receive it when they turn 55. The Deferment Bonuses alone will cost the Government up to $650 million. V-Bonus Let me talk about the Voluntary Deferment Bonuses (V-Bonuses).”
“But, we will keep this general structure that fulfils the objective of paying a good and fair interest to all CPF members for their retirement needs, while benefiting lower and lower-middle income CPF members more. For those with more than $60,000, who want to be exposed to greater risks for possible higher returns, we can consider options to help them invest their CPF monies in the future. But, I think, it is better to settle the present major changes, put in place a sensible framework, a fair and generous framework, so as to give certainty and higher returns to those with less savings. (III) MAKING SAVINGS LAST LIFE EXPECTANCY Later draw-down for longer payouts Let me now talk on the third aspect - making savings last life expectancy. Even with higher CPF interest and Workfare, many members will run out of savings if we start the draw-down age (DDA) at 62, the current draw-down age. Why? Simply because, 60% of members will live longer than 82 years. By then, most would not be able to work. So I think it is better to work longer when you are younger and able, and to draw down later. We will raise the draw-down age to 65 and eventually to 67, in line with the re-employment law. But we will increase the draw-down age progressively, after the re-employment laws take place. In fact, the draw-down age will reach 65 only in 2018, and this is six years after the legislation would have been in place. From the current 62 years, the draw-down age will be first pushed up to 63 in 2012, to 64 in 2015 and then to 65 in 2018. So the re-employment law comes into effect in 2012. The draw-down age at 65 comes into effect in 2018, six years later. I think this provides enough time for everyone to adjust to the new conditions.”
“We have put in place a long-term framework which provides a fair rate of return on CPF monies that compares well with any offer from private pension plans. Most importantly, our CPF system minimises the financial risk to members. The new system has to be justified to the President, that the Government can afford it, and that it will not draw on past reserves. Minister Tharman, Second Minister for Finance, will say more on this. The new interest rate system is more than fair since it is still essentially risk-free. The extra interest is structured so that it will benefit all, but those with small and middle-size balances will benefit more. The SMR rate will float with bond yields. This allows members to gain when interest rates go up, but ensures that what the member has accumulated in his accounts is totally protected and guaranteed. Even if the interest rates come down, the member will not lose any of his savings - in fact, he will always earn at least 2.5% per year on his savings and the extra 1% for the first $60,000. We have decided on this as the new long-term CPF interest rate structure. This is the framework that we are adopting long term. We have used previous long-term market trends to guide us in formulating this new structure. But, of course, no one can predict how the financial markets will behave in the future. As the caveat says, past performances do not predict future earnings. And in particular, no one can predict how the interest rates will behave in the future. So, we will therefore review the formula for CPF interest rates after five years, to finetune it if necessary.”
“Reasons for new interest rate system People have asked why and how we have chosen this new interest rate system. Some of you will remember that in 2002, the Economic Review Committee had recommended that CPF monies be managed in private pension plans so that we can achieve higher returns. We studied this proposal thoroughly. We held extensive discussions within Government and with industry experts. We looked at the problem from many angles but always came to the unavoidable conclusion - to get higher returns, members must expose their CPF money to more market risks. That is what the experts say - cannot compensate for market risks. We tried to devise many schemes to shield members from volatility yet delivering higher returns - stabilisation funds, trying to round it, very technical, sat through all those meetings. But we decided it was neither possible nor right. Because it would mean subsidising losses using other members' or taxpayers' money. We decided that, for now, it would be unwise to go the full investment route because the majority of members do not have large balances, and it would be too risky for older members. The recent financial market turmoil serves as a timely reminder of the risks that exist. Hence, we should retain the risk-free framework but with a more appropriate SMRA peg. Some have asked if this system is fair. Are rates of return set too low or too high? Why is the extra interest only 1%, not more? Why not apply the extra interest on an amount greater than $60,000? The CPF system is not meant to be subsidised. It is a system based on savings. It is not a tax system. If it is subsidised, it must mean that we tax one group to give another group more. Subsidies should be given in other ways and even then only to those who deserve it most.”
“Part or all of the SMRA balances will also receive an extra 1%, depending on how much a member has in the OA balances. For example, if he has $20,000 in his OA, the first $40,000 in the SMRA will receive 5%. If a member has less or no OA monies, up to the first $60,000 in the SMRA will receive 5%. This higher CPF interest will increase members' CPF savings substantially. Compared to the current system, a member with $60,000 in his combined accounts will get $7,200 more in 10 years and $17,900 more in 20 years in his CPF savings. This is more. So, if you look at his total balance, the total balance will go up. But compared to the current system, this is the amount that he will get more in 10 or 20 years. It is substantial. Members might be asking, well, that is for the individual members. But for the current CPF members, what proportion will benefit from this? First, under the new system, all CPF members will receive higher interest payments. All, and I mean all; no one will receive less. In fact, 70% of all CPF members will receive the extra 1% on all their CPF monies they have, because they have less than $60,000. So, 70% of all our CPF members will receive that 1% on all their CPF monies. In the handouts to be distributed to MPs and the press, I have listed more examples so that you can understand this. I have listed members with different balances, how much they will get. We will give you time to try to absorb this, and I know that it is technical. But with the new interest rate structure, Government will pay at least $700 million more interest per year, and $700 million more per year is equal to about the Government's annual grant to HDB, which is about $750 million a year.”
“In other words, we take the daily yields of the preceding year of the 10-year SGS benchmark and derive a number. The average 10-year SGS yield computed on this basis would now be 3.0%. But because we said the SMRA rate would be 10-year SGS plus 1%, the SMRA rate will be 4.0%. For members' information, had the new SMRA formula been in place since the first issue of the 10-year SGS - in other words if we had this formula in 1998 when the first issue of the 10-year SGS was in place - the SMRA rate would have averaged 4.5%. It is more important to look at the long-term rate rather than just the daily fluctuations because this is a long-term account, and this is the duration that members' monies stay in. So, that will be the effective rate. Our new interest rates system will start on 1st January 2008. To help members adjust to the floating SMRA rate, we will keep the 4% floor for the SMRA rate for the first two years. This 4% floor will also apply to the extra interest tier, in the very unlikely event that the 10-year SGS rate falls below 2%. After two years, the 2.5% floor rate will apply for all accounts as prescribed under the CPF Act. In other words, 4% floor will be there for two years, after which the 2.5% floor as prescribed under the Act. Gains from higher CPF This can be very technical. So, let me now explain how members will benefit from the new interest rate structure. I will try to make it easy because there are many figures to absorb. The OA formula remains unchanged but the first $20,000 in the OA will receive the extra 1% interest and will therefore receive at least 3.5%. Now, 3.5% compared to 2.5% is a 40% increase. The new SMRA rate calculated now based on 10-year SGS yield plus 1% would be 4%.”
“The OA rate formula remains unchanged and will still have a guaranteed floor at 2.5%. There is also no change to the HDB concessionary loan interest rate. SMRA - long-term market rate Money placed in the SMRA for the long term ought to enjoy a higher rate of return than the Ordinary Account. We had previously announced in 2002 that we would re-peg the SMRA rate to an appropriate long-term bond yield. We will now do so together with the other CPF changes. How do we choose the new peg? The new peg for SMRA should be financially sound. It should be based on market returns for the same risk and duration that the SMRA monies stay in their accounts. It should be simple to understand and widely quoted. There should also be no currency risk. These are some of the parameters that we set out. The ideal peg would be a 30-year Singapore Government Security (SGS), because this is about the average time the members' SMRA monies stay in those accounts. "Long bonds" of such duration are issued by countries like Japan, the United States and Europe. Singapore's longest duration bonds are the 15-year and the 20-year SGS, but these are not actively traded and therefore not suitable as a peg. The 10-year SGS (10Y SGS) is, however, actively traded. We have therefore decided to set the SMRA rate as the yield of the 10-year SGS plus 1%. Why plus 1%? Because this will adequately provide for the difference that we would expect between the interest on the 10-year SGS yields, which we are using as a peg, and the 30-year Singapore Government Securities, if it did exist. The SMRA rate will be set quarterly, as before. A month before the next quarter, we will compute the new SMRA rate from the average daily yields of the 10-year SGS benchmark of the previous year.”
“There will be two structural changes made to the CPF interest rates system - an extra interest of 1% and re-pegging of the rate on the Special, Medisave and Retirement Accounts (what we call the SMRA). Extra interest tier An extra 1% of interest will be paid on the first $60,000 of a member's combined balances, with up to $20,000 from the Ordinary Account (OA). This means that either $20,000 can come from the OA and $40,000 from the SMRA or all $60,000 can come from the SMRA (if he has nothing in his OA, for instance), or something in between. Those amounts will receive an extra 1%. The extra interest from the Ordinary Account will go into the member's Special Account or Retirement Account to improve his retirement savings, but the 2.5% of the Ordinary Account will go back to the Ordinary Account. New CPFIS restrictions All OA monies can still be used for existing housing, CPF insurance, and education schemes. But in view of the extra interest being paid, the first $20,000 in both the Ordinary Account and Special Account will no longer be allowed for use in the CPF Investment Scheme (CPFIS). These restrictions on CPFIS will apply from 1st April 2008 because we need some time for product providers and CPF Board to make the changes. Money already invested in CPFIS will not be affected. Even after these restrictions, $42 billion of CPF monies will still be available for use in CPFIS. So, I do not think there will be any adverse impact on the markets. OA rate unchanged The Ordinary Account contains short-term money, like a savings account which members can withdraw on demand to invest in housing or other assets. They are in there for a shorter duration. And this is the reason why the OA interest rate is lower than that for SMR accounts which contain "long-term" money.”
“" We can find jobs for older workers. Our economy created 180,000 jobs last year. In the first six months of this year, a further 114,000 jobs were created. Our economy can surely absorb 20,000 older workers. Minister of State Gan Kim Yong will say more about our on-going efforts to achieve higher employment rates for older workers. More Workfare for older workers Another slide to help older workers work longer is Workfare. Currently, the maximum Workfare income supplement is $100 a month, or $1,200 a year. We will increase the Workfare Income Supplement for older workers. For those aged 55 to 60, the maximum payout will be increased by 50% to $150 a month ($1,800 a year). For those above 60, we will increase the maximum payment by 100% to $200 a month (or $2,400 a year). This means that for a worker earning $1,000 a month, the Government, through Workfare, will top up 20% of his wages. It is significant. The self-employed above 55 years will similarly get higher Workfare Income Supplement. The changes will be implemented immediately. This means for those above 55 years, they will receive higher Workfare Income Supplement payments in January 2008 when the scheme starts and for work already done in the first half of this year. More than 50% of older workers are expected to get WIS. Higher WIS will cost $80 million more and will bring the total cost of WIS to over $400 million per year. If more older workers join the workforce, as I believe that they will, it will cost even more for WIS. II) INCREASE CPF RETURNS Next, increasing CPF returns. Let me, first, describe the changes, and then explain how they will benefit members.”
“We will not be able to depend on so few economically-active persons to shoulder the full burden of supporting the elderly, themselves and their children. Each of us must set aside enough for our own retirement needs. Then, the income from our children can be extra. Let me now touch on the three fundamental changes that the Prime Minister outlined that will help better prepare us individually and as a nation for our ageing population - working longer, improving CPF returns and making savings last for one's life expectancy. I) WORKING LONGER First, working longer. The re-employment legislation will kick in by 2012 to 65, then 67 years. Mr Gan Kim Yong's Tripartite Committee will work through the practical aspects. They will produce guidelines for employers and employees, and this will be ready within two years. The guidelines will serve as a reference manual to provide clarity on terms and conditions for re-employment and platforms for dispute resolution. Under these guidelines, the majority will be offered re-employment. But it may not be in the same job or with the same pay. Even with legislation, the best assurance for a worker to remain employable is to stay healthy and economically productive. The Government will step up its efforts and assistance programmes. We have the ADVANTAGE! Scheme to make work easier for older Singaporeans. Some Members may have seen this advertisement. Through the efforts of NTUC and WDA, many companies have already adopted re-employment practices voluntarily. What they say is, "We know that the law is coming in. It doesn't make sense to wait till then, because our HR practices will have to scramble. Better to do it now before the law comes into effect." So they are well prepared by then. As Mr Lim Swee Say says, "Let's get moving.”
“Today, many old people look to their children for support. This is good and right and why we recently made it easier to top up the CPF accounts of family members. We must continue to hold firmly to the value of filial piety where children support their parents. Children must support their parents emotionally and financially. As Bertha Henson of the Straits Times recently wrote - if parents are not receiving income from their children, they should just ask. But fewer babies now and in the past decades will mean smaller families and more single households in the future. If there is a clear graphic representation of how increasing longevity and fewer babies have affected Singapore, I can think of none clearer than our demographic profile that Members see on the screen right now. In the 1970s, it was the Eiffel Tower. Now, it is the middle bulge. In 2030, it will be heavy at the top. Economists usually use statistics called a support ratio. It is that green bar supporting the ones on the top - those aged 15 to 64 supporting those who are on the orange bar. Members will note that those in the green ones are aged 15 to 64 but, in our circumstances, the economically active ones really begin from 25, but to standardise, we say we start from 15. But recognise that those 15 to 64 will also have to support those who are on top as well as children. Let us look at the support ratio. In 1960, 23 people aged 15 to 64 supported one person aged 65 and above. Now, it is eight; by 2020 it will be five, and by 2030 only four. As I said, you have to support those above 65 and younger Singaporeans as well. This is nearly a six-fold reduction compared to 1960.”
“We must not construct a national plan for our retirement needs based on how long each individual thinks he might live or on anecdotal incidents or wild theories, because it would be seriously flawed. We must build our retirement framework on solid facts, not subjective opinions. We must rely on actuarial data that the insurance companies use and reliable information from the Department of Statistics (DOS) that is updated constantly to give the true picture of how long Singaporeans are living as a whole. According to DOS, of those aged 62 in 2006, one in two will live beyond 85; one in seven to age 95; and one in 20 to age 100. Sir, in this House, half the Chamber will live to 85. We may be sitting on the right or wrong side of the House, half will live to 85. One in seven, it means that the Frontbench may contain as many people who are 95, and there will be a few, if the House has 100 Members, one in 20, that means there will be five of us who will live to 100. Of those numbers that I have cited, more of them will be women, because women do live longer than men. But, generally, of those who stop work at age 62, it means that more than half will have to provide for more than 20 years of retirement. Because if one in two will live beyond 85 and they stop work at 62, more than half will have to provide for more than 20 years of retirement. Twenty or more years of retirement is a long time. Even if one works for forty years, he has to plan early to make sure he has saved enough. This is why making provision for unanticipated longevity is a priority for us now. Make provision for your own retirement needs There is another important reason why each of us must set aside enough for our own retirement needs: there will be too few younger people to depend on.”
“This group of disbelievers concedes that the present life expectancy of 80 years is correct. I think they saw the slides that the Prime Minister showed during the National Day Rally on Radin Mas. It cannot be a fake. It must be true that there are a lot of old people living around. They say, "This is because the elderly that we have now were born in China, India or wherever they came from. They were farm-folk. True Singaporeans, born and bred in modern Singapore, won't live as long!" I am not sure if we should include this definition, because if we did, just imagine our burial places - one section, true Singaporeans, and another, not so true Singaporeans. The price for membership for the true Singaporeans will be very high, literally cost you your life. All of the urban myths are not founded on facts. It is precisely because so many individuals do not anticipate how much longer they will live, that we have to act now and ensure that all Singaporeans make provision for their old age. Left to themselves, we know what many would do - too many would leave things to chance, prepare inadequately or, worse, not at all. It is neither fair nor sustainable to expect others and society to assume the full burden of meeting our needs. Government must always help those who are poor but it would be too heavy a burden for society if each of us has not prepared for our own retirement needs. By 2030, 23 years from now, we will have nearly 900,000 residents above 65 years, one in five Singaporeans then. So, imagine 8 1/2 Toa Payoh Towns. If we go house-to-house, in every home, there will be residents, the youngest of whom will be 65 years.”
“Some of us certainly want to be around to see the future Singapore as a modern thriving cosmopolitan city. And I will tell you that for those in their 50s now among us, some will even be around to see with their own eyes what the World and Singapore will be like in 2050. Yes, this will be humanly possible, because one in seven now will live beyond 95 years. But if we are to look forward to and enjoy our golden years, we must prepare early, to ensure that we have enough savings for our old age, so that we can cope with infirmity or illness, that we will not be left stranded because the children are unable or unwilling to take care of their parents. We do not want this to happen. We do not want children not to take care of their parents. But you and I know that when they see us at our meet-the-people sessions, it does happen. These changes to the CPF system will help us achieve better retirement security for Singaporeans, and it can be done. It will mean adjustments for each of us, but we are in a far better position than many countries which have waited too long and the problem grown too large. Otherwise, instead of growing old being a cause for joy, it can be the opposite. When Singaporeans were told that the average life expectancy at birth had increased from 61 years in 1957 to 80 years now, many were surprised. Some, I know, still do not believe that Singaporeans will live so long. They must have had their fair share of reasons. But if we ask them why they do not think that they will live so long, we get a potpourri of urban myths, and we can trade myths and collect them and write a book or something. Some of the theories are very fascinating. But one that I heard recently from my resident deserves a prize, at least, for being the most innovative.”
“We are living longer as a result of good healthcare, nutrition and a clean and good living environment, and this is a good thing. This is something that we should celebrate. Longevity is a blessing, something that everyone hopes for. It is all in our culture. That is why we wish each other a long life. My wife is a peranakan and during every Chinese New Year - it is a ritual - the children will have to go to the parents, the girls will have to kneel and offer tea and then say, "selamat tahun baru - umor panjang panjang" (Happy New Year, long life). The men will just have to bow and say the same thing. The children learn it very quickly even though they do not speak Malay, because if they do not say it right, they do not get an ang pow. And the prospective son-in-law must also say it correctly. Otherwise, he would not get the biggest prize of all! We wish our elders long lives and celebrate their birthdays. We want to see our children graduate, get married and play with our grandchildren, and, better still, see our grandchildren graduate and get married. And, indeed, that was what happened last night. I was at a dinner. One of our former MPs was gracious enough to invite me and I was honoured to attend. His daughter was getting married. So, at the yam seng stage, the whole clan trots up to the stage. This former MP brought along his grandmother. She stood there with the grandchildren - three lovely daughters, one son. The grandmother must have been happy to see the son has a successful career in business, now seeing her granddaughter become a doctor marrying the grand son-in-law who is also a doctor, and all their friends creating a "ruckus" and celebrating. It is a good life to live long and to see all of this.”
“Whether it is SARS, economic recession or terrorism, our approach is to think long-term and act quickly before a problem becomes unmanageable. This collective and enlightened approach explains much of Singapore's success today. It has helped us avoid many pitfalls that afflict other countries that are unwilling or unable to confront similar challenges decisively. We must tackle the challenges of our ageing population with the same spirit of resolve and perseverance. In this Statement, I will fill in the details in the National Day Rally speech to present the complete picture of how we can improve the retirement security of Singaporeans. Amidst many views, different opinions and competing needs, we must remain focused and remind ourselves of the ultimate purpose for these changes. The ultimate goal is to put in place a better and sustainable CPF system that will help Singaporeans save enough for their full life spans. This surely must be the most important task at hand. This surely must be something that we need to do that will help generations of Singaporeans that will follow to better prepare for retirement. Singaporeans - living very long We should begin by asking: how much longer are Singaporeans living? How many more years do we need to save for? We are already among the longest-living globally. Another UN study puts Singapore with a life expectancy at 80 years, close to the top of the table. Guess who is at the top? It is Japan at 83 years. The global average is about 67 years. So we are about 13 years ahead of the global average. That we are living longer than most other populations is yet another indication that we have arrived as a First World country.”
“They can see themselves and those around them ageing. This reality is clearly visible and hard to escape. Take, for example, my constituency at Toa Payoh Central. It is an old estate and has many elderly residents. During each house-to-house visit, I invariably meet a few residents in their 80s and 90s - it is no longer a novelty. I am though looking forward to meeting someone above 100. So one day, I said to my residents, "Why not maybe for the next Lunar New Year dinner that we have, to put up a notice that we will give prizes to those who are over-100 and still active." They came back and said, "I think you have to prepare for not one, but a few prizes." Because they know that even in Toa Payoh, there are a few over 100 centenarians. Foreigners, who come here, especially from younger ASEAN countries, note quickly that we are a greying population. These impressions of Singapore being a fast ageing society were confirmed by a recent UN study. So if you have noticed, looking around and all of us are growing old, it is true. This UN study projected that by 2050, Singapore could become the fourth oldest population in the world. If you look at the slides, we are climbing very high, from 116th position in 1950, projected to be fourth, above Europe, Asia and the world in 2050. Singaporeans must come to terms with our longevity, both individually and as a nation. And the quicker we do this, the better. Because whether we are ready or not, the inevitable consequences from increasing needs as more grow old within our society will be upon us soon. We must therefore tackle this challenge now, as we have done with other national issues which can affect our nation's well-being and future.”
“Mr Speaker, Sir, during the National Day Rally (NDR), the Prime Minister focused on our ageing population and the widening income gap. Singaporeans are living much longer than before. To ensure that we have enough retirement savings, we have to work longer and make changes to our CPF system. Facing our challenges squarely Since then, there has been much public discussion on this important national issue. Rightly so, because having enough savings to last our lifespan affects us all. Many of us have dependants who are elderly. All of us want financial security when we grow old. So I think it is a good thing that Singaporeans are talking about this important issue openly. Many wrote to CPF Board and MOM directly. I know that NTUC and other MPs had lively dialogue sessions with their constituents. REACH received emails and SMSes. The press - and you must have read some of them - published well-written letters from Singaporeans who were financially savvy and understood what the proposed changes were trying to achieve. And some of them gave good suggestions. Let me thank the public for their inputs, some of which have been very helpful. We will adopt workable ideas to accommodate the different needs of Singaporeans, wherever possible. Some Singaporeans did however find the proposed changes to be complicated. A recent Straits Times ' poll also showed that a significant proportion did not fully understand the CPF system. I have taken this feedback to heart and, over the next few months, we will communicate simplified messages to the masses to better explain the new CPF system. While reactions to the changes have varied, Singaporeans, by and large, understand and accept the need to address the challenges of our ageing population now.”
“BILLS INTRODUCED TERRORISM (SUPPRESSION OF BOMBINGS) BILL "to suppress terrorist bombings, to give effect to the International Convention for the Suppression of Terrorist Bombings and for matters connected therewith", presented by the Deputy Prime Minister and Minister for Home Affairs (Mr Wong Kan Seng); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed. PENAL CODE (AMENDMENT) BILL "to amend the Penal Code (Chapter 224 of the 1985 Revised Edition) and to make related and consequential amendments to certain other written laws", presented by Mr Wong Kan Seng; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed. CHEMICAL WEAPONS (PROHIBITION) (AMENDMENT) BILL "to amend the Chemical Weapons (Prohibition) Act (Chapter 37B of the 2001 Revised Edition)", presented by the Minister for Foreign Affairs (Mr George Yong-Boon Yeo); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed. EDUCATION ENDOWMENT SCHEME (AMENDMENT NO. 2) BILL "to amend the Education Endowment Scheme Act (Chapter 87A of the 1993 Revised Edition) and to make related amendments to the Children Development Co-Savings Act (Chapter 38A of the 2002 Revised Edition)", presented by the Minister for Education (Mr Tharman Shanmugaratnam); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed. CPF REFORMS AND OTHER MEASURES FOR A SECURE RETIREMENT (Statement by the Minister for Manpower) 3.05 pm”
“Sir, I would like to make two clarifications on the CPF (Amendment) Bill which was passed by Parliament last month on 27th August 2007. Firstly, I would like to clarify that all the changes will apply equally to Muslim divorces. Section 27A specifies that the new laws will apply to court orders made under the Women's Charter as well as to court orders made under the Administration of Muslim Law Act (AMLA) in respect of divorce or nullity of marriage under AMLA. Secondly, I would like to clarify the refund of CPF monies on the sale of property in the division of matrimonial assets. The courts can order a transfer of property and portions of CPF monies used for the purchase of that property to the ex-spouse. Upon the future sale of the property, such monies will be refunded, with accrued interest, to the ex-spouse's CPF account. This was the correct position that was set out in my Second Reading speech. But during the subsequent debate, I incorrectly mentioned that the refund was to the member's account. As the property has been transferred to the ex-spouse, it should be to the ex-spouse's account. [Please see report on 27th August 2007*.] *Col. 1418, 27th August 2007. > ORDER OF BUSINESS (Motion) Resolved, That, in accordance with Standing Order 10(2), the Ministerial Statement by the Minister for Manpower be taken after the Introduction of Government Bills listed in the Order Paper for today. - [Mr Mah Bow Tan].”
“I take it that there are other measures. Basically, I take that these liberalisations are adequate. But even apart from this, there will be the great satisfaction that you would have provided and sustained another family member's retirement adequacy. But, notwithstanding that, I will pass his comments to the Ministry of Finance. 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. CARRIAGE BY AIR (MONTREAL CONVENTION, 1999) BILL 5.55 pm Order for Second Reading read.”
“And the courts can decide actually that the member puts in X amount, but they are not hamstrung by the CPF Act. When the ex-wife sells the house, how much the ex-wife must put back into the member's account is again for the courts to decide. The courts can decide, for example, in division of matrimonial assets that no refund needs to be made. Again, that is up to the courts. Basically, we are saying that as long as it is impact within the CPF system, it is okay by us, because I am neutral as to which party is more or less protected. I just want to make sure that your retirement sums are protected. And I think that is the most sensible way to approach it, and that it protects both members. Previously, the Act was skewed against the spouse or it was preferentially enacted to favour the member. What I am doing now is making it more equitable for both members because, to me, they are both CPF members. I should not be made to decide who gets what more and leave it to the courts to decide. Mdm Ho asked for a pointed clarification whether this was so, that, indeed, the member does not need to set aside the Medisave and Medisave Minimum Sum, and that is indeed so. This is under section 27B(6) which allows the transfer, and that particular section allows for this. There have been some suggestions made on the SRS. I take the point that Dr Magad has been pushing for this. But this is under the Ministry of Finance and, in terms of tax reliefs, as some other Members have also said, I take that the current tax relief for $7,000 is the limit that is set by MOF. It is an annual limit. It is not a lifetime limit. So, technically, you can do $7,000 every year. Honestly, I do not think that is a restrictive clause. I do not think that is the reason why people are not topping up.”
“First of all, people do not know. And I think the second limiting factor was the fact that there was a cohort Minimum Sum limit which until this new Bill was in operation. Because even if you want to top up the account of somebody who was 55 years old in 1987, who is older now, you can only top up to that amount. Because of these amendments, if the House passes the Bill, it will be raised to the prevailing Minimum Sum. So that is one reason. The other reason is the fact that you can top up only specific members and, as I said, I have expanded the list of recipients. Mr Liang asked why do we not make it less restrictive, and allow some leakage. I think, on that score, I would be a bit careful. I want to make sure that there is an equitable distribution of matrimonial assets but, at the same time, I want to preserve retirement adequacy of both members. In the current Act, it was skewed against the spouse. So even if the court decided on the division of matrimonial assets, and here, I move on to matrimonial assets, the court did not have, as Mdm Halimah explained it clearly, the power. I know that division of matrimonial assets in themselves can be very tricky, and I do not intend to let the CPF distort that or to even prescribe how it should be divided. What basically we are trying to do is to say that, within the CPF system, you have the liberty to decide who gets what in a divorce. Now, there were some questions asked about how much must be put aside by the member before you can transfer. Mdm Ho was saying, and she actually believes, that the spouse or the member should still be required to set aside his own Medisave and Minimum Medisave amount. What we are now saying is that the courts can decide who gets what.”
“When we go to the schools, they tailor it to the students. So we are getting better, but I think we need to ramp it up. We need to step up our communications. And we have now launched "My Retirement Account". I welcome Members to go on the website. It is a bit jazzy, it has a tropical island theme. It tells you how to go to the spa, the gymnasium - these are retirement equivalents of spa, gymnasium - how to plan. And I think we need to do more about it. Mdm Halimah made a good point. She said even after all this change, well and good, but people do not even understand it. They do not know how to do it. So I have challenged the CPF Board instead and said, "Instead of waiting for people to come to your website for information, can you push? And if that person has met the eligibility criteria, can you send a targeted letter to him or her and say, "Look, you've crossed 1.5, we think you have settled your own retirement needs. Do you want to transfer some of your funds to your family members?"." That is more targeted. Mrs Josephine Teo asked how many. About one in four, aged 40 to 55, are potential donors, and that is a substantial number. Certainly, we can do that, and I agree with Members that that is something that we want to do. Mdm Halimah asked some other points about the Home Protection Scheme. The Home Protection Scheme, capping at 65, is not pegged to the draw-down age. It is pegged to the HDB loan scheme, that is the liability, because, currently, the term of the HDB scheme is up to the age of 65, or whichever is earlier. So we are pegging our liabilities to that. If the HDB loan moves, we are quite willing to follow it, but we are pegged to that. Mr Liang Eng Hwa made some points and asked why there was a low take-up. I think there are some reasons.”
“For example, the CPF already allows a family member to use his CPF Medisave savings to pay for the hospital bills of his immediate family members - in other words, spouse, children, parents and grandparents. If your family member goes to hospital, you can already use it. In addition, we also allow the use of Medisave savings of a member to pay for the MediShield insurance premiums of family members, as well as non-immediate family members, ie, siblings, cousins, aunts, etc, but on the condition that the person whom you are paying for does not have enough Medisave savings to pay for his premiums, and that is logical. But the point is that we already allow Medisave savings to be used for hospitalisation and to pay for premiums. I suppose some would say, "What happens if the person who can help me conks first? He can't help me." That is something we can consider. But the reason why we have looked at Special Account or Retirement Account is because most members have more Medisave savings than their Retirement or Special Accounts. So let us focus on this. In principle, I do not object to this. But this does not seem to be an area of focus for me at this point of time. Mdm Halimah and Mdm Ho Geok Choo, and I think Mrs Josephine Teo, also mentioned that our CPF schemes are complex, and I agree with them. Even as the Minister, I have to, sometimes, take time over the minutiae. I have challenged the CPF Board, and they are getting better at it. I said, "Look, you understand it. I understand it after some time. Can you make it simple so that everybody understands it and there is something easy that they can click on?" So they are using cartoons. We are going on roadshows, and I have launched a roadshow recently in a shopping centre.”
“Sir, let me thank Members for their support. Many of them have said that they look forward to the Ministerial Statement on September 17th - I look forward to it too - and I will answer Dr Ahmad Magad's and other questions related to that. I think that is a more appropriate occasion. Dr Magad asked whether we should allow those with serious illnesses to opt out of whatever longevity insurance schemes. Let me say that already is in existence. In other words, currently, if a person has terminal cancer or serious illness which the doctor certifies that he has truncated life expectancy, he is already allowed to withdraw his CPF or part of his CPF monies. So, that already exists and, in that sense, there is no need for that to be confused with what we are doing next. Let me address some points that Members have brought up. Firstly, on broadening the list of recipients. As Dr Magad pointed out, can we also include caretakers? We have expanded the list of recipients quite substantially in this review. We have now included siblings, not only of the donors but of the recipients. So, for the donors, we have said, siblings, and the recipients, if you are below 55, we increase the amounts. I think that is an extension, and let us see what happens after this. Should we now include caretakers? It is a little bit trickier because then I will need to have a legal definition. But there may be instances where someone says, "Look, I am willing to do so. Can I, indeed, be allowed to?" I think we can consider that. Dr Magad and Mdm Halimah also asked why is it that we do not allow people to top up Medisave accounts. The reason is that we already allow members to use their Medisave accounts to pay for the healthcare needs of other family members.”
“Clause 21 enables the courts, upon a member's conviction in connection with the investment, to order the refund or transfer of any shortfall to the member's CPF account caused by manipulated trades. These changes will take effect from 1st October 2007. Sir, I beg to move. Question proposed. 5.01 pm”
“In particular, section 27B provides for the immediate transfer of CPF monies to the CPF account of the ex-spouse. Sections 27C to 27F provide for the immediate transfer of property to the ex-spouse. Section 27G provides for the immediate transfer of CPF investments to the ex-spouse. Other related amendments are clauses 5, 6, 16 and 19. Clause 5 facilitates the transfers made under section 27B. Clause 6 exempts contributions to the ex-spouse's CPF account made under sections 27B to 27H as a result of division of matrimonial assets from counting towards the Voluntary Contribution limit. Clause 16 amends section 24, which provides for the protection of CPF monies and investments from member's creditors, to make it subject to sections 27B to 27H. Clause 19 makes consequential amendments to give priority to transfers of CPF monies in relation to matrimonial division under section 27B over the deduction of Home Protection Scheme premium from the member's CPF account. The changes that I have announced pertaining to the division of matrimonial assets will apply to court orders made on and after 1st October 2007. It is not retrospective. Deter manipulative transactions under CPF Investment Scheme The last set of amendments, Sir, is to deter manipulative transactions under the CPF Investment Scheme. The intent of the CPF Investment Scheme is to provide members investment options to enhance their savings for retirement. But, sometimes, manipulative transactions that lead to the leakage of CPF savings have been reported and indeed should be prohibited. So these amendments will strengthen the CPF Act to deter such manipulative transactions. Clause 20 of the Bill creates a new offence for any person to manipulate any CPF Investment Scheme transactions.”
“In such an instance, the CPF Act currently requires the requisite CPF refunds to be made to the member's CPF account before the transfer can take place so that there is no leakage of CPF monies. In other words, with these amendments, the court will have the option of ordering the member to transfer the property to the ex-spouse without all or even any of the refunds being made to the CPF member's CPF account first, provided that a charge is placed to secure the refund of such CPF monies into the ex-spouse's CPF account should she sell the property later. In other words, even if the member who is a male now wants the property to be transferred to the ex-spouse, the current CPF Act does not allow that. The court does not have the ability. It says, "You will have to refund all the money that you have used to buy this house even if you have agreed to." What we are doing now is to amend it to say you can transfer the house, but we place a charge on the amount that was used to buy that house so that when she sells it later, that money is refunded back into the member's account. In effect, the CPF used by the member, and the accrued interest on that CPF, will be refunded to the ex-spouse's account in the event the property is sold. Finally, the amendments will also enable the member's CPF investments to be transferred to or be liquidated to allow the ex-spouse immediate access to CPF assets which she is entitled to. The transfer of CPF investments is only allowed for an ex-spouse who is a citizen or a PR. Clause 18 of the Bill inserts new sections 27A to 27I to facilitate the smooth and equitable distribution of CPF monies arising from the division of matrimonial assets.”
“The Minimum Sum and Medisave Minimum Sum at the point of withdrawal in the future may also be substantially different from that when the court order was made. Therefore, the new principle underlying these amendments is that the CPF Act should facilitate the division of matrimonial assets under the Women's Charter, provided there is no leakage from the CPF system. But between members, if both members are within the CPF system, I consider it no leakage, and we can facilitate the rules under the Women's Charter. Hence, amendments will be made to, firstly, allow an immediate transfer of CPF monies to the ex-spouse's CPF account, if the ex-spouse is a citizen or Permanent Resident (PR). This shall be done without the Minimum Sum or Medisave Minimum Sum first having to be set aside once the court has ordered a distribution of CPF monies in a divorce. The CPF money to be distributed will be channelled to the ex-spouses' CPF accounts according to the accounts they originally resided in. If the ex-spouse is not a citizen or a PR, immediate transfer of CPF monies is not allowed. Instead, the court can order the Board to pay the spouse when the member becomes eligible to withdraw his CPF monies. The member will not be required to set aside the Minimum Sum and Medisave Minimum Sum before the ex-spouse can receive her entitled share. Secondly, the amendments will also facilitate the immediate transfer of immovable property to the ex-spouse, if the ex-spouse is a citizen or a PR. Transfer in this context would refer to a transaction where there is no cash consideration at fair market value other than the refund of CPF monies withdrawn for the purchase of the property.”
“Smooth and equitable division of CPF monies in matrimonial proceedings Sir, this set of amendments is intended to help divorcing couples achieve a smooth and equitable division of CPF assets acquired during a marriage. Subsequent changes that I have described will be effected in terms of a male CPF member and a female ex-spouse. But the law is quite gender-neutral and the laws also equally apply to a female CPF member and if the male was an ex-spouse. CPF savings form part of matrimonial assets that are governed by the Women's Charter which provides powers to the courts to divide matrimonial assets. But under the existing laws, the current CPF Act, a court order to divide a member's CPF money between him and his ex-spouse is enforced only when the member is eligible to withdraw his CPF and has set aside his Minimum Sum (MS) and Medisave Minimum Sum (MMS). So there are two conditions under the current Act. You can only withdraw when you are allowed to withdraw and only after you have set aside the Minimum Sum and Medisave Minimum Sum. [Mr Deputy Speaker (Mr Matthias Yao Chih) in the Chair] 4.55 pm The current practice may be inequitable to the ex-spouse for two reasons. Firstly, the ex-spouse's access to these monies is delayed till the member is eligible to withdraw his CPF. In other words, even if the court makes a division and the member is, say, 40 years old, the ex-spouse can only take the money when that member reaches 55. Secondly, the member's retirement needs take priority over that of the ex-spouse, as only the balance of funds after the member has set aside the prevailing CPF Minimum Sum and the Medisave Minimum Sum when he turns 55 is available for distribution to the ex-spouse.”
“This is an existing clause and I am just reiterating it as an existing practice so that it actually goes back to the donor rather than to the estate. Clause 8 in the Bill will enable the topping-up for grandparents using CPF funds as well as the expansion of the list of recipients to siblings above and below age 55, and spouses below age 55. The increase in the top-up limit from the cohort Minimum Sum to the prevailing Minimum Sum will be done by way of an amendment to the CPF regulations. Clauses 6, 7, 9, 11 and 12 make consequential amendments to the Act arising from this policy. Clause 6 of the Bill sets the limit of cash top-ups to a recipient's SA at the recipient's Voluntary Contribution (VC) limit. Consistent with top-up limits for family members, clause 9 makes it possible to allow members to top up their own Retirement Account with their Ordinary Account or Special Account monies up to the prevailing Minimum Sum. As in the current Act, clauses 7, 11 and 12 enable the transfer of the balance of any unused top-up monies to the donor's CPF account on the death of the recipient. Other related amendments are clauses 2, 5 and 25. Clause 2 makes technical amendments to the definitions of "minimum sum" and "retirement account", while clause 5 facilitates the transfer of top-ups received before age 55 from the recipient's Special Account to his Retirement Account when he reaches 55. Clause 25 of the Bill enables the making of Regulations for top-ups to the SA for siblings and spouses who are below the age of 55. The changes to the top-up scheme will take effect from 1st October 2007, except for top-ups to members below the age of 55, which will take effect from 1st January 2008. These are just some technical adjustments and software changes that we have to make.”
“Currently, members can only top up their grandparents' Retirement Accounts using cash but not CPF funds. We will now allow grandchildren to transfer funds from their CPF Ordinary Account to their grandparents' Retirement Accounts, subject to both meeting the top-up criteria. There are instances, because people are growing older, where the grandchildren are financially well-off and they can help support their grandparents. To help those who are single and who do not have children to build up their retirement savings, we will also now allow, as a new initiative, members to top up their siblings' Retirement Accounts with savings from their own CPF accounts, or in cash. As announced by the Ministry of Finance previously, a tax relief for cash top-ups of up to $7,000 a year will be given if the sibling receiving the top-up earns not more than $2,000 a year and is 55 years old or above. In addition, we will allow top-ups to spouses and siblings below the age of 55 using CPF or cash. Previously, it was only above 55. We are now allowing below the age of 55. The top-ups can be made into members' Special Accounts (SA). In keeping with the intent of the scheme to build up the CPF of recipients for long term needs, the top-up monies can only be used to provide a steady income stream during the recipients' retirement, and cannot be withdrawn as a lump sum. In other words, since we allow them to top-up below 55, at 55, they may be able to withdraw some. But because this is meant to provide a steady stream of income, you cannot remove it or take it out at age 55 as a lump sum. In the event of the recipient's demise, any remaining balance from the top-up sum will revert to the donor.”
“Clause 7(c)(d) and (e) extends the pledging of HDB flats in lieu of retaining the full Minimum Sum to properties sold by approved developers which include Design, Build and Sell Scheme flats. Clause 10 makes clear that the amount of Ordinary Account savings that a member can transfer to his Special Account is the difference between the prescribed amount and the sum of the cash amount in his Special Account and any amount he may have withdrawn under the CPF Investment Scheme - SA. Clause 17 empowers the Board to make rules regarding nominations. Expansion of Minimum Sum Topping-Up Scheme Sir, as our Prime Minister has said, our population is fast ageing. The proportion of Singaporeans aged 65 and above is expected to grow from 8% in 2005 to 19% in 2030. Correspondingly, retirement and healthcare needs will also increase. As the family unit remains the primary social support structure for Singaporeans, the amendments to expand the Minimum Sum Topping-Up Scheme will provide more ways for family members to take care of and help one another financially. To facilitate this, firstly, we will increase the top-up limit to the prevailing Minimum Sum. At present, under the current Act, top-ups are limited to the Minimum Sum specific to the cohort of the recipient. For example, if the member had turned 55 in 1987, this would only be $30,000. If someone wanted to top up his account, he could only top up to $30,000. What we are doing now is to change that so that the top-up can be to the prevailing Minimum Sum which is $99,600 today. Thus, members can increase top-ups to recipients so that their family members will receive a regular income over a longer period. Secondly, we will expand the list of recipients.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Bill before this House seeks to amend the CPF Act. There are four large groupings. Let me take the House through each of these broad categories. Firstly, amendments are introduced to strengthen the administration of the Act to clarify certain existing policies, basically, housekeeping and tidying up various aspects. Secondly, the Bill expands the CPF Minimum Sum Topping-Up Scheme. This will provide more ways for family members to support one another financially. Thirdly, the amendments will facilitate a smooth and equitable distribution of CPF monies pursuant to a Court Order division of matrimonial assets in a divorce. Finally, amendments are introduced to deter manipulative transactions under the CPF Investment Scheme. Measures to strengthen the administration of the Act and to clarify certain existing policies Clause 3 extends the powers of CPF inspectors to inspect and to take possession of documents in all mediums, including digital and electronic forms. Clause 4 gives the Board the exclusive right to use any symbol or representation device by the Board and makes it an offence for any person to use the symbol or representation that resembles the CPF symbol or representation in a manner that is likely to be deceptive or cause confusion. It provides for a fine not exceeding $10,000 or to imprisonment for a term not exceeding six months, or to both. Clause 5 makes clear that transfers from a member's savings in the Ordinary Account (OA) and Savings Account (SA) to the Medisave account, and deductions for Home Protection Scheme (HPS) premiums are permitted withdrawals.”
“Mr Speaker, Sir, can I beg the Member's indulgence? She has asked for data for the last five years' cohorts, but because CPF rules with regard to Minimum Sum and other aspects may be different for each cohort, I will give information for the most recent cohort who reached 62 years last year. First, let me provide data for those who are active members who have been contributing regularly. Of the 7,100 active members who reached the drawdown age of 62 last year, 55% were able to meet their Minimum Sum which was set at $60,000 when they turned 55 in 1999. For the remaining members who did not meet the Minimum Sum, their median shortfall was about $34,500. On how many of them delayed taking out their Minimum Sum, about 42% delayed the drawdown of their Minimum Sum by at least one year For all members, ie, about 22,600 CPF members, who reached the drawdown age of 62 last year, 34% were able to meet their Minimum Sum, when they turned 55 in 1999. For the remaining 15,000 members who did not meet the Minimum Sum, their median shortfall was about $49,300. Again, about 40% delayed the drawdown of their Minimum Sum by at least one year. Currently, members are allowed to withdraw 50% of their CPF savings at age 55. This is, in fact, one important factor why many members fall short of the Minimum Sum. As announced in 2003, withdrawals below the Minimum Sum at age 55 will be progressively phased out from 2009 to 2013. These measures, together with the broad range of changes to the CPF system announced by PM at the National Day Rally, will further increase retirement savings for members.”
“Employment in the services sector grew by 33,700 in Q1 2007, accounting for 68% of the 49,400 jobs created for the whole economy in the quarter. For the whole of 2006, 65% (73,700) of the 112,700 jobs created in services went to locals. In fact, four out of every five local job gains in 2006 came from the services sector. In short, the services sector continues to provide good employment opportunities for locals. To ensure its continued vibrancy, all tripartite partners have to play their part. Workers should upgrade their skills, especially through WDA's Workforce Skills Qualifications (WSQ), for the services sector. This will make it easier for employers to recognise qualifications relevant to their sector. To further raise standards in the services sector, WDA has built on the Go the Extra Mile for Service (GEMS) movement, launched in 2005, by extending the Customer-Centric Initiative, which originally covered the retail sector, to now include the food and beverage sector. In this tight labour market, employers are encouraged to explore ways of tapping on other sources of local labour, such as older workers or women. WRITTEN ANSWERS TO QUESTIONS ADMINISTRATIVE OFFICERS (Figures on grades) 1. Mr Siew Kum Hong asked the Prime Minister and Minister for Finance how many Administrative Officers are on (i) grades MR4 and above; (ii) grades SR9 up to, but excluding, MR4; and (iii) timescale.”
“For example, an experienced machinist can earn up to $2,500 per month, including overtime pay, after working for a number of years. WDA will continue to work closely with industry and NTUC to roll out WSQ in more sectors and encourage companies to adopt it. EMPLOYMENT OF WORKERS IN THE SERVICE INDUSTRY (Figures for Integrated Resorts and Formula One) 34. Dr Ahmad Mohd Magad asked the Minister for Manpower in light of Singapore's upcoming projects, such as the Integrated Resorts and Formula One (a) whether he will provide an update on the recruitment of workers in services sector jobs; and (b) what are the take-up rates for services sector jobs in the last one year and whether Singaporeans are taking up these jobs.”
“The Workforce Skills Qualifications (WSQ) was introduced in 2004 and officially launched in 2005. It is a national skills certification framework developed by WDA in conjunction with industry and validated by employers. WDA has implemented 12 WSQ frameworks, in industries, such as Food & Beverage (F&B), Finance, Tourism and Precision Engineering, and will be developing WSQ in other sectors, such as the Creative Industries, Human Resources, Aerospace and Process Cluster Industries. WDA has been working closely with NTUC, various economic agencies and industry associations to promote the adoption of WSQ. The take-up has been encouraging. The implementation of WSQ in industries like Tourism and Retail is in full swing and many companies are embracing the WSQ standards. In 2006, over 41,000 workers upgraded their skills through the WSQ system. This increased to over 70,000 by May this year. In some industries, like Finance and ICT, the delivery infrastructure, such as training programmes, is still being developed so it will be several more months before we can see results. For Precision Engineering, the WSQ framework was launched in August 2006, with the first training intake admitted in April this year. In the first two months, eight workers obtained their WSQ qualification in Precision Engineering. As the Precision Engineering WSQ is relatively new, we will need to monitor and refine the implementation over time. WDA is working with agencies, such as SPRING and EDB, to promote careers in Precision Engineering through career & education fairs, as well as scholarship programmes to attract local talent into the industry. This is an industry which presents good job opportunities for locals.”
“I had mentioned that the foreign employment level was 756,000 as at December 2006. We do not publish the specifics of the breakdown to ensure that we maintain flexibility and access to labour sources. But we can provide rough percentages of our foreign workforce composition. About 85% are R pass holders. 4% are on S passes and the remaining 11% are P and Q pass holders. This should be contrasted with the overall distribution in our workforce, of which 47% are PMETs as at June 2006. As previously indicated, locals take up the majority of higher skilled and PMET jobs while foreign workers form the majority of the less-skilled workforce. AFFORDABILITY OF HDB FLATS 28. Mr Zaqy Mohamad asked the Minister for National Development in light of smaller HDB resale flats selling at prices above valuation and the limited supply of HDB rental flats, whether the Ministry has any plans to ensure that smaller HDB flats remain affordable for low-income families.”