Tan Chuan-Jin
Singapore
“A step-parent who wishes to leave any part of his or her estate to a stepchild is encouraged to make a will. Intestacy law would apply in cases where a person passes on without a will.”
“Last year, we reviewed and extended the Child Development Account, or CDA benefits to children of unwed parents. The Government granted CDA benefits, to children of unwed parents born, or with an estimated date of delivery, from 1 September 2016. It is generally good practice to implement our policies prospectively.”
“The Ministry of Social and Family Development (MSF) does not track the number of persons who choose to remain homeless instead of being admitted into shelters. When MSF receives information on persons who may be homeless, we initiate contact with these persons on the ground to offer assistance.”
“Our law places the child's welfare and interests at the heart of an adoption decision. We must not forget that such an adoption is a life-changing event because when an unwed mother adopts her child, the duties, obligations and liabilities of the biological father are terminated.”
“The Early Childhood Development Agency (ECDA) works closely with the Housing and Development Board (HDB) to plan for preschools in upcoming Build-To-Order (BTO) developments, including Bidadari new town. To better meet the needs of young parents, new preschools will have larger capacities and also be completed earlier where possible.”
“The Silver Support Scheme under the Manpower Ministry provides an income supplement to seniors who had low incomes through life and who now have little or no family support. Beyond ComCare, we are also expanding upstream intervention to strengthen the resilience of vulnerable families and their children to set a good foundation.”
The complete record
Every one of 1,137 lines we hold for Tan Chuan-Jin, in date order, each linked to its source. Free to read, in full, without an account. Page 14 of 23.
“The Maritime and Port Authority of Singapore (MPA), Singapore Workforce Development Agency (WDA) and the e2i (Employment and Employability Institute) have been working closely on the efforts to attract Singaporeans to join the Harbour Craft sector. However, not many Singaporeans are keen on the job, which involves long periods of performing physically arduous tasks in open waters. Given that piloting harbour craft vessels is an essential part of our port operations and the difficulty in recruiting locals, the harbour craft operators' access to foreign workers is controlled more by manning requirements, rather than by how many locals they employ. The manning requirements would be determined based on the type of craft, operations and purpose. For reclamation work, it is also difficult to attract Singaporeans to join the sector. Workers are expected to labour for long periods under the sun in the open waters. Yet, reclamation is similarly essential to Singapore; it provides us more land for Singaporeans' economic, social and recreational needs. Like for harbour craft operators, we control reclamation contractors' access to foreign workers based more on the scale of their reclamation work, rather than by the number of locals they employ. Page: 91”
“Employers are required to make CPF contributions for all their local workers, including those on term contract, part-time or casual work arrangement, so long as there is an employer-employee relationship. The CPF Board conducts proactive audits on employers to ensure that their workers receive the correct amount of CPF contributions. CPF Board also investigates whenever a worker lodges a complaint or provides feedback that they may be underpaid CPF or not paid CPF by their employers. MOM and CPF Board also jointly launched the "WorkRight" initiative in 2012 to improve compliance with employment laws. As part of this initiative, a "WorkRight" hotline and email were set up for workers and members of the public to alert the authorities about any non-compliance with the CPF Act or Employment Act. The number of inspections was also stepped up by more than 10 times to more than 5,000 inspections annually. Page: 89 In total, CPF Board recovered $420 million of late, under- and non-payment of CPF contributions for more than 250,000 workers in 2013.”
“Mdm Speaker, we will be quite happy to look into the specifics of this situation. I think what the Member has illustrated is that employers specify a smaller basic component and they specify allowances, which may be regular and, in totality, meet the salary thresholds. But as a result of that, when you calculate OT and so on, you use only the basic quantum to calculate OT and, therefore, making them cheaper. This is something that we can look at. I cannot recall whether we have a specific composition as to the amount of allowances and basic pay, but I think this is something that we can take a look to see whether it is a loophole that is exploited on a consistent basis and we can explore that further.”
“We do encourage employers to look at the approach of having allowances, bonuses, commissions and so on to incentivise higher productivity and better performance. They can still provide that to S Pass and also EP holders to motivate them to attain better performance. They can structure salaries such that S Pass holders commit to deliver a certain minimum level of performance each month and the associated bonus or commissions can be built in as a fixed allowance. Variable allowances can be given in addition for performance that exceeds the minimum level. But for all intents and purposes, in the calculation of salary eligibility for S Pass and EP, we look at the fixed monthly salary.”
“Mdm Speaker, we need to raise the minimum qualifying salaries for both S Pass and Employment Pass (EP) from time to time, in large part, to keep pace with local wages. Foreigners who are older and more experienced should have a higher salary threshold to qualify for the S Pass or the EP. This is to ensure that we can provide a level playing field so that foreigners, whether they are at S Pass or EP levels, will not undercut Singaporeans with lower pay. This helps to level the employability playing field for Singaporeans. At the same time, we also need to strike a balance in helping to keep our companies competitive and enabling them to have access to a diverse workforce. Employers can meet the new thresholds either via the basic salary or via fixed allowances, or any combination of the two, as long as whatever increment is a fixed quantum that does not vary from month to month. Like what was asked in Mr Zainal Sapari's question, we also hear from employers asking about whether it is possible to allow them to count variable allowances, bonuses and Annual Wage Supplements as part of the qualifying salary. We have not done so because the work pass eligibility has to be based on the consistent calibre of the worker, which should not vary from month to month. It is not practical to have a situation where a worker is eligible for S Pass in one month, and then, in the next month, because his performance is not so good, he does not get as much bonus or add-ons and, therefore, he is not eligible; and therefore, his Pass is revoked, because he has not accrued enough variable commissions or bonuses to qualify. This is why only salary components that are paid on a fixed monthly basis – whether it is basic salary or allowances – may be included in work pass eligibility criteria.”
“Mdm Speaker, as mentioned, we are open to suggestions. We will take the Member's suggestion on board.”
“Mdm Speaker, the SRS is a voluntary scheme to encourage individuals to save for retirement over and above their CPF savings. Members can contribute any amount to the SRS account, subject to a cap. In general, members can enjoy tax deferment on their SRS contributions where every dollar of their SRS contributions will reduce their taxable income. Members also enjoy a 50% tax concession where only 50% of the accumulated SRS savings will be taxed upon withdrawal after reaching the statutory retirement age. With regard to the annuity purchase by the SRS, I think that is something that we can look at. But, as a whole, the SRS system, as it is, will strengthen individuals' provision for their own retirement. Apart from the CPF system, we will look at other areas to improve as well as to strengthen the SRS system. I think that is something that we will also look at over time.”
“Mdm Speaker, we would be happy to continue to look at the scheme. CPF LIFE is a relatively new scheme. It has been in operation for about four years now. We will continue to look at it and see how best to improve it. Certainly, we are looking at measures to strengthen the system as a whole. What we do know is that going forward as well, the present calculation for the quantum that we catered for, in terms of the Minimum Sum, really deals with a slightly lower middle income and it caters to couples. What we do know, going forward, is that increasingly, more women are also working, so there are dual-income families. Be that as it may, I think with increasing wages over time, you will find that more families are able to provide for themselves in a much more comfortable manner. But I think CPF LIFE will provide at least a basic level of assurance for people going forward as well.”
“Under CPF LIFE, a portion of a member's RA savings is used to purchase the premium on an annuity. It is the interest earned on the life annuity premium that is pooled and shared Page: 27 amongst surviving participants and allows the CPF Board to continue to make monthly payouts to members even if they live to 90 or 120 years, as the Member highlighted. While the interest earned is pooled, the premium itself is not. Therefore, upon a member's death, the life annuity premium committed minus any monthly payouts that an individual has received, the whole amount will still belong to the member and this amount will be refunded to the member's CPF account and will go to his or her beneficiaries. The default setting is that it will go in cash, although members can choose to put it into their CPF accounts as well. The life annuity premiums are calculated by the CPF Board's professional actuaries to ensure that the system is fair and sustainable. We believe that CPF LIFE is an important scheme, especially in view of the fact that life expectancy is increasing significantly. This, I think, would go a long way in providing assurance. I know that many Singaporeans may not feel that they will live that long, but the reality is that many Singaporeans are beginning to live a long life. And I think CPF LIFE will, in time, be shown to provide actually a good degree of assurance for people, so they know that even if their accumulated premiums have depleted, the payments will continue.”
“Mdm Speaker, with regard to the Member's first question, which is also sort of related to the last question, the CPF LIFE system is designed to help Singaporeans meet their basic needs in retirement. The returns earned on CPF LIFE balances are higher than what most private commercial entities are able to provide. As far as we know today, what CPF LIFE provides, there are very few, if any, private commercial entities which are able to provide an equivalent amount for the same premium. Our priority is in designing this system to help ensure that those with retirement savings of up to the Minimum Sum have sufficient payouts in retirement that are able to last them for life. It is important, particularly with life expectancy going up quite significantly. For middle and higher income Singaporeans with retirement savings in excess of the Minimum Sum, they do have the flexibility to use other investment options outside the CPF system to meet their retirement needs. We believe that this is a more progressive and flexible approach that will allow us to target our resources on those Singaporeans who need it most. So, it is sort of related to the last question of whether we should open up. I guess that is something that could be possible, but we believe that for those who do earn a lot more and who have CPF account balances higher than the Minimum Sum, they have other options that they could explore. And we would like to focus the system to have better provisions for those at the lower income level. With regards the second question on the mechanism, the reason why CPF LIFE is able to ensure that CPF payouts do not run out for those who live very long is because the CPF LIFE is essentially a longevity insurance scheme. It operates on the principle of risk pooling.”
“Mdm Speaker, if I may ask the Member to repeat her last question?”
“Mdm Speaker, CPF members aged 55 today who set aside their cohort Minimum Sum of $155,000 will receive about $1,200 in monthly payouts in 10 years' time when they reach the age of 65. Members who would like to enjoy higher payouts have the option to top up their Retirement Account to the prevailing Minimum Sum subsequently, through the Minimum Sum Topping-Up Scheme. For example, for those who turned 55 years old previously, their Minimum Sum was lower. But the present-day cohort's Minimum Sum is $155,000. So, those who turned 55 previously can make a top-up to the higher amount, even though their particular cohort's Minimum Sum may actually be lower. And members will receive tax relief for the top-up amount of up to $7,000. Members can also save for their retirement through the Supplementary Retirement Scheme (SRS) and enjoy tax benefits. They can use their SRS savings to purchase annuities in the private market to boost their retirement income.”
“Mdm Speaker, we will be quite happy to take on board any suggestion or approach that will help us to enhance the system.”
“Mdm Speaker, I would like to thank the Member for his question. The CPF Board has several measures in place to ensure the timely and accurate payment of CPF contributions. This includes an automated system to detect late payments, as well as proactive audits on employers. CPF Board cannot carry out its audit exhaustively on each and every one of the 140,000 employers on a yearly basis. With every system that covers such a wide-ranging number of companies, what we do is we take a risk-based approach. We target our enforcement effort at higher risk industries and firms, and complement it with an investigation regime on complaints that are lodged by employees or whistle-blowers. Through this approach, in 2013, CPF Board recovered $420 million in late, under- and non-payment of CPF contributions for more than 250,000 workers. CPF Board's audit checks include CPF contributions for NSmen's make-up pay. Among the reasons for underpayment or non-payment of CPF contributions, errors made on NSmen's make-up pay contributes a relatively small factor. We do take the AGO's findings seriously. It is important that these findings are surfaced. CPF Board has strengthened its audit process to better detect employer CPF liabilities arising from NS make-up pay. It now further requires employers to declare which of their employees have gone for reservist training and provide supporting documents, including an acknowledgement from MINDEF, on the NS make-up pay amount. CPF Board also works with MINDEF to educate and remind employers that they are required to make CPF contributions for the period that their employees are on NS training.”
“The Home Protection Scheme (HPS) is a separate, mortgage-reducing insurance that protects the insured member and his family against losing their HDB flat, in the event of the member's permanent incapacity or death before the housing loan is fully paid up. Under HPS, an insured member can already be covered up to 65 years old. Page: 131 Beyond DPS and HPS, CPF members who wish to have life insurance coverage beyond age 60 may consider obtaining it from private insurance insurers.”
“The Dependants' Protection Scheme (DPS) is a term insurance scheme that mitigates the impact of a loss of income to an insured Central Provident Fund (CPF) member's family, in the event of the member's permanent incapacity or death. It provides his dependants with a sum of money to tide over the initial period. To help CPF members remain covered under DPS, DPS premiums are kept low and affordable. The need for DPS declines as the breadwinner approaches retirement. His children are likely to be less financially dependent or are already working. Furthermore, the breadwinner would also likely have accumulated significant CPF savings, which would go towards supporting his dependants, in the event of his permanent incapacitation or death. Several Members of Parliament had similarly suggested extending the maximum age of coverage under DPS and we had shared our considerations. Between the ages of 25 and 60, the total DPS premiums over 35 years paid by a CPF member will amount to about $4,000. Extending DPS coverage beyond age 60 would mean significantly higher premiums, as mortality rates are higher. The DPS premium for coverage from age 60 to 65 is estimated to cost about $3,500 over just five years, or $700 per year. This is almost the same quantum as the sum of all the DPS premiums over the preceding 35 years. The additional premiums for a further DPS cover would be better reserved for the CPF member's retirement instead. Setting the DPS age limit at 60 strikes a balance between providing insurance protection for the insured member's dependants and his retirement adequacy.”
“Where there is prima facie evidence of discrimination, TAFEP refers cases to MOM for investigation. Employers found to have been discriminatory in their hiring practices would have their work pass privileges curtailed. For the first half of this year, MOM has curtailed the work pass privileges of 41 errant employers and issued warnings to 34 other employers. Being fair is the right thing to do. Employers who practise fair employment will also benefit two-fold – firstly, through having access to a wider talent pool and, secondly, through a boost in the morale and productivity of their employees. Employers who need help in implementing fair employment practices at the workplace may approach TAFEP for assistance. Jobseekers and employees who perceive that they have been discriminated against may also approach TAFEP for advice and assistance.”
“The Tripartite Alliance for Fair & Progressive Employment Practices (TAFEP) and MOM work together to promote fair employment and address discriminatory employment practices. TAFEP receives different types of complaints on workplace discrimination. Traditionally, the top three types of complaints received by TAFEP relate to Singaporeans' concerns for nationality-related discrimination, which accounts for about half of total complaints, followed by age, which accounts for about one-fifth of complaints, and language or race, which also accounts for about one-fifth of complaints. In 2011 and 2012, TAFEP received 277 and 303 workplace discrimination complaints respectively. In 2013, this number rose to 475. This is primarily due to a sharp spike in complaints from Singaporeans concerned with nationality-related discrimination. We believe this was driven by greater public awareness arising from TAFEP's promotional efforts and the announcement of the Fair Consideration Framework last year. For the first half of 2014, the number of nationality-related complaints have dropped back to the 2011/2012 levels and we will continue to monitor the number closely. The number of complaints related to other issues has remained stable over the past three years. For all complaints, TAFEP engages and advises the employers concerned on the Tripartite Guidelines on Fair Employment Practices, educational publications and training programmes, as well as to identify areas where employers can improve their employment practices. So far, the employers approached by TAFEP have heeded TAFEP's advice and made adjustments to their employment practices. I understand that some complaints may arise Page: 118 due to differences in expectations or misunderstandings, rather than genuine discrimination.”
“A member on Central Provident Fund (CPF) Lifelong Income For the Elderly (LIFE) commits his savings from his Retirement Account to CPF LIFE to provide monthly payouts for life. Under the CPF LIFE Standard and Basic Plans offered today, upon a member's death, the CPF savings committed minus any monthly payouts received will be refunded to the member's CPF account. The refunded amount together with his remaining CPF savings will go to his beneficiaries. His beneficiaries will receive the bequest in cash. However, should members prefer, they could request the CPF Board to transfer their CPF savings to their beneficiaries' Special or Retirement Accounts to be streamed out in retirement. This can be done under the Enhanced Nomination Scheme. There are other ways members can provide for their family through the CPF system. We have enhanced the Minimum Sum Topping-up Scheme over the years to encourage Singaporeans to make cash top-ups into the CPF accounts of immediate family members and enjoy tax relief at the same time. Singaporeans can also use their own CPF savings to top up their family members' CPF accounts if they have already attained the applicable Minimum Sum. This will help boost the CPF savings of family members who have lower balances, so that they, too, can enjoy payouts through CPF LIFE. Page: 115 Widows who have co-owned a home with their deceased husbands can also choose to unlock their housing equity through monetisation avenues, such as the Silver Housing Bonus and the enhanced Lease Buyback Scheme, to supplement their retirement income if necessary. For those groups who are unable to tap on any of the mentioned schemes, have little family support and require financial assistance, we will help them through other social safety nets, such as ComCare.”
“We will closely monitor the impact of the PWM on cleaners' wages and outsourcing practices, and continue to work with our Tripartite Partners to promote wider adoption of best sourcing. The Tripartite Cluster for Cleaners will also regularly review the PWM to ensure its continued relevance. Page: 105”
“Mr de Souza would recall that the payment of basic wages according to the tripartite-negotiated Progressive Wage Model (PWM) was included as a licensing condition for cleaning businesses this year. Under the Environmental Public Health Amendment Bill that just came into force in April 2014, all cleaning companies have until September this year to be licensed. Resident cleaners deployed under new cleaning contracts entered into from 1 April 2014 will have to be paid according to PWM wage levels from 1 September 2014. By 1 September next year, all resident cleaners must be paid according to the PWM. Given this timeline, it will take a while before we can observe the full impact of the mandatory PWM on our resident cleaners' wages, but we are starting to see improvements. Since the PWM recommendations were released by the Tripartite Cluster for Cleaners in October 2012, cleaners' median basic wages have risen by 16% from $820 in June 2012 to $950 in June 2013, compared to a 5% increase in the previous year. Going forward, we can expect the professional standards of the cleaning industry to improve as a whole. Service providers will have to meet minimum training requirements for their cleaning workforce under the licensing regime. At the employee level, cleaners would also be encouraged to up-skill and progress along the PWM wage-skill ladder. Service buyers will also be driven towards quality-based instead of headcount-based procurement practices, as the mandatory PWM will help address the prevalent cheap-sourcing that had previously depressed wages and compromised employment conditions in the sector.”
“During the Debate on the President's Address in May this year, I have mentioned that the Tripartite Committee on the Employability of Older Workers is looking at the appropriate time frame for extending the re-employment age from 65 to 67, together with other outstanding implementation issues and measures to prepare the ground. We are finalising the proposals with our tripartite partners and should be ready to share these plans later this year.”
“Mdm Speaker, as a result of restructuring, it is inevitable that some companies merge and consolidate; some will move offshore, some may close. In terms of data, while we do have companies closing, we do find that there is a net formation of companies. To follow on with the second question, what is important is: are we generating sufficient jobs for Singaporeans? While we have individuals who may transit from one sector to another, jobs are being created, opportunities are being created. So, that is a plus point. The next step that we need to take is to equip workers with relevant skills so that they are able to take on these new jobs. For those workers who are laid off, and for those who are looking at switching sectors, that is where our continuing education and training efforts come in to help them. Upstream, our education system needs to equip our students who are entering the job market with skills that are in demand by industries. So, that is being done. We have relatively low youth unemployment. The last step really is to help facilitate job placements. That is what WDA does, along with close collaborations with tripartite partners. That is the system that we have in place to support all segments of our workforce. By and large, while we have frictional unemployment and you see variations from quarter to quarter, we do have fairly low unemployment rates in Singapore. Page: 39”
“And, of course, we need to maintain a strong and vibrant economy to create quality jobs for Singaporeans. Page: 38 Second, for economically inactives who are returning to the workforce, being able to find a job that allows them to balance their work commitments and family and care-giving responsibilities is a key concern. We have recently enhanced the Work-Life Grant under the WorkPro scheme to provide greater support to employers to implement and sustain good work-life practices, such as flexible work arrangements. MOM will continue to monitor the unemployment rate closely and work with tripartite partners to help unemployed Singaporeans find jobs.”
“Mdm Speaker, although the quarterly unemployment rate for citizens rose slightly from 2.8% in December 2013 to 3% in March 2014, it remains low and has been largely stable for the past three years. The slight increase in quarterly unemployment rates could reflect higher job search activity, as higher wages, more vacancies, and greater availability of flexible work arrangements in a tight labour market encourage more citizens to enter the labour market to look for jobs. As the job search process may take some time, some slight increases in quarterly unemployment rates are expected. Slight fluctuations in the unemployment rate are also to be expected across quarters and we have seen that varying from quarter to quarter over the last several years. But, in the main, it revolves around this plan. The profile of the unemployed is varied. About one in two of the unemployed citizens in March 2014 were aged 40 and over. In terms of educational qualifications, about half had Secondary education or below. About one in five is long-term unemployed. The key challenge faced in helping some of these unemployed Singaporeans find jobs is in ensuring that their skills remain relevant to evolving industry needs. To help them upgrade their skills, we provide substantial subsidies for the upgrading of skills through our Continuing Education and Training (CET) system. Jobseekers receive between 70% and 90% course fee subsidies depending on the type of courses, and we also have the Place-and-Train (PnT) programmes to help jobseekers find jobs and pick up the skills they need in their new jobs. Individuals have a part to play, too – to learn new skills, and be open to different job opportunities in growing industries.”
“We have been working on that for some time. The details are being ironed out. We would be able to make some announcements on some of the steps going forward in the next month or so.”
“Mdm Speaker, what the Member has shared is indeed at the crux of the issue that many countries face. We all know that we do need to provide for our retirement and many of us are concerned about it, but are we taking active steps to provide for that? The experience has been shown in many countries and surveys have shown quite clearly that there is inadequate preparation, which is why some form of a pension system or retirement system is required. It is why every country, probably most countries do have some systems or other. But as shared by the Deputy Prime Minister earlier, many of these systems are facing a lot of challenges because they are promising things which cannot be sustained. For us, as we have mentioned, the CPF system is not a perfect system but it is a sustainable system. It is a sustainable system because it can provide for our retirement needs and it can provide for other needs as well, which are important for retirement, housing particularly, and also in terms of healthcare. What we do intend is to continue to strengthen it. There have been many suggestions that have been provided by the public over the years and these have contributed to strengthening the CPF system. As you will realise on a yearly basis, each time I come to Parliament, we do and will make tweaks to the Bills accordingly because we look at Page: 39 improving the system in terms of the operational part of it. From a structural standpoint, as the Prime Minister has highlighted, this is something that we have been working on for some time. Earlier this year, we have announced the Pioneer Generation Package. We have announced and talked about MediShield Life. But retirement adequacy is a big part of providing that sense of assurance for Singaporeans.”
“Mdm Speaker, in response to the first question raised, we have, on a case-by-case basis, allowed CPF members to use savings in their Retirement Account (RA) that originated from the Ordinary Account (OA) to meet their housing needs, should there be that need. However, this option means that their retirement savings will be depleted and should be used sparingly. In assessing whether to allow CPF members concessionary use of more RA savings for housing, we do consider whether the member will continue, even after that assistance, to have difficulties in meeting his outstanding loan even after allowing the concession. In some of the instances when we meet residents who have those challenges, even if we make those concessions, they will continue to have problems servicing the loan thereafter. Page: 38 This is because we want to avoid a situation where a member has no CPF savings and no roof over his head in retirement. But I would also add that I think in those circumstances where there is a need, we have made those exceptions and we have assisted members accordingly. We understand that members may wish to use their RA savings that have been committed, for housing purposes. As we had mentioned, we will look at each case, exercise flexibility on a case-by-case basis but, certainly, we do approve in certain instances for members to draw on their RA savings in order to pay their housing loan requirements.”
“For those who do have challenges, meaning that they do not meet the Minimum Sum, they do not own their properties for whatever reason – perhaps because of the low wages earned or their personal circumstances and they do have challenges – that is where the other arms of the Government step into to provide for them. The Minimum Sum is one construct. I think it is a useful construct to at least ensure that individuals do have a monthly stream out. Those who do not meet the Minimum Sum do not need to top it up. What it means is that their monthly payout will be lesser. But if they are able to manage on that payout, supplemented by other schemes that are available, then that is not a problem. But if they do have challenges, that is where the State would come in through the social safety net to augment and to provide for their other needs.”
“Some CPF members who do not meet the Minimum Sum also do have spouses who have either CPF balances or own property and can provide for them. Taken together, the so-called 50% figure that we have today is a conservative number. It does not take into account the full value of the property which the member owns and can rely on for retirement or for future CPF contributions from employment. Certainly, it does not mean that 50% of the cohort will be inadequately prepared for their retirement. But what we have also noted is that the Minimum Sum attainment figure has been improving in the past few years and we expect this trend to continue. In essence, what we are saying is – the Minimum Sum is something we have assessed that for the slightly below middle income family, the monthly payout basis would meet their basic needs. Now, does it mean that individuals survive solely on the Minimum Sum itself? No. For many of us, we do have other forms of savings. Many Singaporeans own their housing, which is why housing remains a very important part of retirement adequacy. In many other countries where public housing is not provided for in the way we have provided, it takes up a very large part of their retirement, in terms of the retirement funds going into funding their housing needs. In Singapore's context, with the various housing grants, with the various subsidies and to provide public housing for the vast majority of Singaporeans, that is one way of Page: 36 contributing to providing their adequacy and on top of that, that is something that individuals can draw on, should the need arise. Many Singaporeans, even though they may not meet the Minimum Sum, for example, today, many of them actually own their own properties, and they also have other alternative sources as well.”
“Mdm Speaker, one of the concerns raised – which I think is a fair concern – is whether the Minimum Sum accumulated is sufficient, especially when we look at the data. For example, about 50% of active members turning 55 today and in 2030 meeting that Minimum Sum. Allow me to explain the context of this statistic and in that sense also to Page: 35 explain what Minimum Sum means and what it does not mean. We adopt a fairly stringent definition of Minimum Sum attainment. We kept that portion of the Minimum Sum that can be met through the property pledge at 50% of the Minimum Sum or $77,500 for members turning 55 today. In reality, the value of the property owned by CPF members would usually far exceed $77,500 and the Minimum Sum attainment rate would be higher if the full value of members' properties is taken into account. In addition, many Singaporeans should continue to work beyond 55. Fifty five was the retirement age when CPF first started. The retirement age today is 62. The Re-employment Age has gone up from 62 to 65 years. We are in the midst of discussing how to move up to the next milestone of 67. Singaporeans continue to work beyond 55. With employment rate of residents aged 55 and 64 steadily increasing – in large part also due to the tight labour market and also in terms of the employers becoming more receptive to taking on older workers who do want to work – these members will continue to receive CPF contributions as they work which will further boost their retirement adequacy by the time they start receiving CPF payouts at 65. This means that even as we look at the Minimum Sum at age 55, they continue to accumulate monies in the CPF accounts after that.”
“The reason for the property pledge is that we recognise that when you come to retirement adequacy, it is not just solely dependent on the monies in your CPF account. Your Minimum Sum is one component. That is a calculation upon what we think a monthly payout reasonably would afford a couple. At the same time, the property remains an asset. As I had mentioned earlier, because of the stringent way in which we define it, half of that value, even though you may have a property worth several millions of dollars, only half of the Minimum Sum amount, which in today's terms is $77,500 will be computed as part of the Minimum Sum. A recognition of the property pledge is an important part of that equation. It is part of your retirement adequacy. What I would assure is that when you pledge your property, that property belongs to you. If you do need to liquidate the property in order to provide for your retirement needs, that remains possible. It is an option. You are not compelled to do so. For those with HDB flats, the options we provide – and we will be strengthening these – there will be the Silver Housing Bonus as well as the Lease Buyback Scheme. And lastly, with regard to the Minimum Sum for 2015 and beyond and whether the announcement of the amount will be "akan datang": it is a plan. As we mentioned in 2003, each year, we will have to look at what the prevailing inflation rate is. Once that is clearer, we will announce it. There is one more increment left to announce, basically for next year. We have no present plans to increase from that at the moment.”
“Mdm Speaker, with regard to the Member's suggestion on the lump sum withdrawal, even the present system allows a lump sum withdrawal. Basically, monies above the Minimum Sum can be withdrawn. As I had mentioned earlier, with the property pledge, for those who are turning 55 this year, for example, you can withdraw half your Minimum Sum if you pledge your property. That remains available. Independent of whatever quantum you have in the Minimum Sum, members upon turning 55 can also withdraw $5,000. Obviously, one of the suggestions is that whatever the life expectancy age may be, say, 82, 85, we should work backwards five to seven years like the example cited earlier. Back then when the retirement age was 55, you withdraw your lump sum at 55, life expectancy was about six to seven years. People live to about 60 to 62 years old. Assuming we work backwards from whatever the life expectancy would be at that prevailing age and, therefore, allowing members to take out lump sum, again, as I mentioned earlier, the more we allow flexibility at this stage would really deplete the amount that can be withdrawn. What we have provided in terms of the possibility of withdrawing lump sum via the property pledge and the $5,000 is something that is supported and that is provided Page: 34 for. We do not know how long each individual is going to live, but as a whole, individuals will live longer. The more you take out, the more you reduce that monthly payout that you will have available, and are you able to stretch that for a long period? Secondly, I do agree with the Member that we do need to perhaps publicise more and to educate the public more on how exactly the property pledge will be made.”
“My second question is: can the Ministry do more to educate, to talk more on property pledge, including how easy or how difficult it is to pledge their property and, after pledging, does that flat still belong to them because a lot of Singaporeans would like to own their own flat. So, if you ask them to pledge their flat, they have a fear. The third question is: what would be the Minimum Sum for the year 2015, because I see on the CPF website, the Minimum Sum for 2015 is labelled as "To be announced". A lot of residents are having fears as to what the amount is in 2015. And, after 2015, will there be any more increase, because the table on the website does not show anything after 2015? Does it mean no more increase or is it "akan datang"?”
“And this is what many countries are facing. As to Mr Seng's second question, even though the numbers may be small, we do want to take a look at each individual specific case. It is very difficult to generalise because every individual has very unique circumstances – why they are in a particular situation. As I mentioned, about two-thirds of the appeals are approved. We will look at them earnestly and, if we are not able to provide a solution via the CPF route, we will endeavour to work with HDB to make sure that other options are provided. In all circumstances, I will mention again, the social safety nets remain. The CPF will not solve all problems. There will be individuals who have financial challenges that are beyond CPF and HDB solutions. That is where the other arms of Government will step in to provide the assistance and support. And that is something we will endeavour to do. So, it is important for Members of this House, when you encounter these problems, do surface them to us and Page: 33 we will do what we can to solve these problems. Er Dr Lee Bee Wah (Nee Soon): Thank you, Mdm Speaker. I have three supplementary questions. Earlier, the Minister mentioned that when CPF started 60 years ago, we were allowed to withdraw a lump sum upon turning 55 years old and it was because life expectancy then was five to seven years beyond 55. I would like to ask whether the Minister can consider giving options, that means, working backwards. Now it is 82 years' expectancy, so five to seven years from 82, can they be given the option to withdraw their money in a lump sum, because many Singaporeans would like to see lump sums and manage their own money?”
“CPF Board is, therefore, looking at improving the presentation of schemes' information on the CPF website and adding visual aids, such as infographics and videos. A dedicated website and Facebook page are also being developed to share CPF-related information and relevant tools to help members understand and make informed decisions about the use of their CPF monies at different life stages. We will also push out more information to the public through the mainstream media channels. Online is one platform, but we also fully recognise that there are many Singaporeans who are not necessarily online or who are not comfortable with that medium. Traditional modes of pushing out information remain important. I would very much like to call on Members of the House to help us clarify any misconceptions of the CPF that your constituents might have and refer those who need more information assistance to the CPF Board. This is important. We all recognise that the CPF is a very significant and important pillar. And it is important to have debates and discussions based on facts, based on what it is and what it is not, and not on speculation for whatever reason that individuals choose to distort this and create fear and anxiety. As the Deputy Prime Minister and I have shared, while the CPF system is not perfect – it is not going to cater to every single person's individual specific needs – as a system, it has provided us well. Going forward, one of the things that we are particular about is that this system must be sustainable not because we want to shift the risk to the people or not having the Government bear the risk. By not being prudent and not keeping it sustainable, we are going to shift that risk and that burden to our children's generation.”
“Mdm Speaker, I had assumed that my response was also sufficiently clear, apart from the Deputy Prime Minister's response [Laughter]. But it is okay. I do agree with Mr Seng that we can always do better with communications. We have come to realise that CPF has been an institution for a very long time. As with many things, there are many policies that the Government has, and one of the things that many of us realise in our dialogues is that even we ourselves, as Members of this House, do not always pay attention to these policies until perhaps when it impacts us. For many Singaporeans, it is upon turning 55 that we begin to think about what are the policies that confront us and about the decisions we have to make. CPF Board continuously seeks to identify simpler and clearer ways of communicating CPF schemes to members through different channels. We have online magazines, thematic educational talks, including monthly talks to members turning 55. They are fairly well-attended but they obviously do not cater to everyone. Not everyone comes forward for that. We send out email blasts to members as well. CPF Board works with partners, such as the Institute of Financial Literacy and the Financial Planning Association of Singapore, to ensure that the right information and explanation is being given on the CPF schemes through training courses and sharing of resources. This means that apart from the members themselves, it is also important to enhance the understanding amongst professionals who can in turn then advise members. Page: 32 Beyond this, more needs to be done to help members have a better appreciation of our CPF policies and improve knowledge on scheme details.”
“For example, if they do have a slightly bigger flat, there is the possibility of renting out spare bedrooms for additional income to supplement them in moments of need. Or, ultimately, they can refer them to the Community Development Council for employment, financial or social assistance. In those situations where the individuals find themselves in dire financial circumstances, that is where the social safety nets kick in. For flat owners who can no longer afford to keep their flats, for one reason or another, HDB will help them explore longer term solutions. For example, in some instances, they can include their children as joint owners to help service their loan. They can also consider selling their flat, downgrading and moving to a smaller one. We have various schemes to allow individuals to monetise through the Silver Housing Bonus and Lease Buyback scheme, and, Page: 31 if necessary, HDB can offer them a loan to help them to do so as well. There is a range of measures that we want to put in place. Ultimately, if all these things do not quite work out and families are in difficulties, that is where the social safety nets come in.”
“Mdm Speaker, I would like to thank the Member for the points raised. Many of us do face similar personal examples of families who come forward with various challenges. There are many reasons for some of these individuals and their families in facing difficulties. Perhaps, it would be useful for us to consider. One of the points I would acknowledge is that we would endeavour – certainly between CPF and HDB – to make sure that the process is as streamlined as possible so that the help can be expeditiously provided. It is important for us to understand the ways that we can help individuals. One, the numbers who are caught and having difficulties paying their mortgage loans as a result of turning 55 are small. On average, we have about 500 a year. Following the appeals, we approve about two-thirds of them. We do consider their cases in quite a detailed fashion. But there are other steps that we can put in place to assist members. For example, upstream, housing counsellors in HDB branches play a very important role in providing financial counselling and proactively helping owners with mortgage arrears to tailor solutions to their circumstances. They do look at the personal circumstances of each individual family and to structure programmes to help manage their transition. For flat owners who are in temporary financial difficulties, HDB does work out measures, such as reducing or deferring their mortgage instalments for a period of time or working out instalment plans to repay their arrears. Many of us who are Members of Parliament in this House, we have made similar appeals to HDB as well, and we have found that that has worked out quite well. HDB may also, in some circumstances, advise flat owners of other options.”
“Mdm Speaker, I would like to thank the Member for his suggestions. The issue of flexibility is really a question of choice – meeting present-day wants and addressing future needs. It is a trade-off. The more flexibility we allow, the more we deplete the CPF account. What it means is that the monthly stream-out for the individuals would be reduced. As it is, as Deputy Prime Minister Tharman has mentioned, the CPF system does afford certain level of flexibility. Many Singaporeans do draw on their CPF for housing needs. In fact, many of us draw on the CPF for our housing needs. If we did not have that flexibility to use that, we would otherwise have to rely on cash. It also allows us to address some of our medical needs and, in some limited form, our own investment schemes through the CPF Investment Scheme and some limited use for our children's education as well. Page: 29 The more flexibility we allow in terms of allowing individuals to withdraw more money at the age of 55, or at the drawdown age, it would mean that it would reduce correspondingly the amount that the individual would receive on a monthly basis when the stream-outs happen. But we take on board the various perspectives shared by the Member. This is not unique. Many Members have shared this request for more flexibility. We will take a look at this. Our view is that it is important to remember that the present Minimum Sum, as is computed, is meant to provide what we believe is a basic level of requirement for a couple at a slightly lower than middle-income level. I think when you reduce that further, your monthly payout would correspondingly be less.”
“Among the members who joined CPF LIFE upon turning 55 years old in 2013, about 70% are on the Standard Plan. To sum up, the CPF remains a key pillar to help Singaporeans cater for their needs in old age. There are areas that certainly can be improved, and I welcome different views and perspectives on this. While it is not possible to meet every single member's specific needs, I can assure Members that we will look into all feedback and make changes where warranted. As Prime Minister Lee Hsien Loong mentioned during the recent debate on the President's Address, our focus over the next few years will be on two key challenges: first, helping members cope with the rising cost of living during their retirement years which could erode the value of their CPF LIFE payouts; secondly, helping low-wage workers who may have accumulated lower CPF balances over their working lives. We will also put in more resources to help Singaporeans better understand the CPF system.”
“We also do not want – and I think is important to note this – we do not want to encourage rash and imprudent housing purchases by members who think that they can automatically draw down fully on their Retirement Account funds to service their loans. You could end up with over consumption on housing as a result of that. Any member can get Page: 17 overstretched. Mr Ang Wei Neng raised a separate point on whether we can remind CPF members at age 54 about the impending transfer of members' monies from their Ordinary Account to their Retirement Account when they turn 55. Currently, CPF Board informs members two months before they turn 55 years old. Since January this year, HDB has been sending letters to households with outstanding HDB loans and with at least one HDB lessee age 50 to 54, to remind them to plan ahead for their housing payment before 55 years old. Nonetheless, I think more can be done in this area and Mr Ang's suggestion is a good one. We will look into how CPF members can be reminded to make sufficient arrangements for their housing payment in advance. Mr Ang also asked whether the CPF Drawdown Age will be increased when the re-employment age is increased. This is an issue that we are studying carefully. The drawdown age today is 63 and will be raised to 65 years old by 2018. Whether it needs to be raised further, will depend on life expectancy and the need to maintain retirement payouts at a reasonable level. We have not reached any conclusions yet. One way that we protect Singaporeans from the risk of outliving their payouts due to increasing life expectancies is through our CPF LIFE annuity scheme. Mr Png Eng Huat asked about members who opt for the CPF LIFE Standard Plan.”
“Let me first state that in the 10 cohorts aged 55 and above, only one in 10 are still using their CPF for monthly instalments, and only one in 20 may have to meet their monthly instalments with some cash. For CPF members who do face difficulties with their housing loan repayments, we have exercised flexibility where a case merits it and allowed them to use part of their Retirement Account savings for housing, even if they do not have half the Minimum Sum. I have shared with Members of the House that we receive an average of about 500 appeals annually from members 55 years and older who request to use more Retirement Account savings for housing. We have approved about two-thirds of these appeals. The number of such appeals – 500 a year – is not large, considering that there are more than 60,000 CPF members turning 55 every year. For cases that are not approved, we also work closely with HDB to explore alternative financing or housing options for the CPF members. And there are various steps that can be executed to assist them. I would like to assure Mr Seng that we are ready to exercise flexibility in the use of CPF for housing after 55 years old because we recognise that helping a member maintain a roof over his head is an important part of our overall retirement adequacy goals. To address Ms Irene Ng's point, I do not think we want to make it automatic for members. Some of these members would be able to service their housing loans using cash, instead of drawing upon their Retirement Account savings and hence compromising the monthly payout in retirement.”
“For example, we have the Lease Buyback Scheme and we also have the Silver Housing Bonus. Those who take advantage of these schemes typically get enough in proceeds from the sale to top up their CPF accounts up to the Minimum Sum, with cash to spare. Our current seniors also receive additional support from the Government through measures such as the Pioneer Generation Package (PGP). The CPF is founded on the principle of self-reliance and work. Those who do not work and do not contribute regularly to the CPF, are naturally less likely to attain the Minimum Page: 16 Sum. To give you a sense of the numbers, which Mrs Lina Chiam has asked for, we know that 23% of Singaporeans who turned 55 in 2013 were inactive CPF members, while the remaining 77% were active members or self-employed. For the group of inactive members, many of whom have not worked regularly, family support will have to come in and other social safety nets are in place to provide assistance – for example, through the various ComCare schemes. We have been strengthening the social safety nets over this in recent years. Ms Tin Pei Ling asked whether a more flexible use of CPF savings for housing can be allowed. Mr Seng Han Thong specifically asked whether more flexibility could be exercised for members with less than half the Minimum Sum. Ms Irene Ng asked whether it can be made automatic for these members to continue using their CPF for their housing loans without interruption. I understand that there are concerns about CPF members' ability to continue servicing their housing loans with CPF savings after age 55.”
“This – for those of you who are familiar with what you may be getting in your respective deposits – is far superior to what is earned on our bank deposits today and very comparable and far higher than many comparable financial instruments. Second, Singaporeans earning lower incomes also enjoy boosts to their CPF savings through Workfare. Third, we have also been raising CPF contribution rates for older workers to help them save more and have been working with our tripartite partners to improve employment opportunities for older workers. The key group that we should really be concerned about and who may have insufficient CPF balances, are our seniors; many of whom are currently in retirement. Many have low CPF balances because they grew up working in an era where lower wages in the past was a norm; before we began to be more developed and wages became rising. And also because we have more liberal withdrawal rules for CPF earlier which were calibrated then for shorter life spans. In a sense, it depleted their CPF savings. However, we also know that the majority of current seniors do own their own homes and have fully paid up their housing loans. Mr Png Eng Huat asked about the average proportion of the Ordinary Account Savings used for public housing by older members. Among members who turned 55 years old over the past five years and had used CPF monies to purchase HDB flats, an average of 55% of their OA savings had been withdrawn to finance their flats at the age of 55. These housing assets by and large have appreciated and in many cases, quite significant and, if needed, can be tapped on to supplement their retirement incomes. Various schemes have been introduced and we will strengthen these.”
“This means that while they may not have, in terms of cash, more than half the Minimum Sum, their property may be worth far more than half. And clearly in most cases, property would be worth more than half. But we cap it, which is why even though they may have a property worth $500,000 or $1 million, and if they have less than half the Minimum Sum in cash, they are actually considered as not meeting the Minimum Sum in technical terms. In addition to that, it is important to understand that even though some may not meet the Minimum Sum, they also would have spouses with higher CPF balances who can provide for them. Over the years, more members in each cohort reaching the age of 55 have been able to meet their cohort Minimum Sum. This is despite the Minimum Sum having increased over the years for each cohort. For younger workers, we are even more optimistic about their ability to attain the Minimum Sum. In a 2012 study, two local academics, Assoc Profs Chia Ngee Choon and Albert Tsui, estimated that about 70% to 80% of new entrants to the workforce would be able to meet the Minimum Sum for their cohort fully in cash. There are several reasons why this is so: wages have been growing and labour force participation rates have been increasing. Significantly, it is also because we have been making enhancements to the CPF system to help members grow their savings to meet the Minimum Sum. Mr Christopher de Souza asked what those are. Page: 15 First, since 2008, the CPF pays an additional 1% interest on the first $60,000 of the combined balances. As a result, about two-thirds of members earn 5% interest; I repeat, 5% interest on all their balances in their Special, Medisave and Retirement Accounts. Over half of all members earn 3.5% on all their Ordinary Account savings.”
“The more we postpone the needed changes, the more disruptive the changes will be when they are forced upon us in future. Many governments do not embark on these changes and reforms because they may be unpopular, but it is not the right thing to do. We believe it is our responsibility to make these changes when we can, so that when the changes are upon us in full, we are well prepared. What I can assure everyone is that whenever there is a policy change, the CPF Board makes an effort to try to reach out to every affected member. At the same time, we encourage members who are unsure of the rules to also step forward to request for Page: 14 assistance to navigate these rules. One request I would make following many dialogues with members of the public is, to read the materials that are put forward. I realised through many dialogues and conversations, many people get agitated and very emotional, and argue on points which are actually already clarified in the materials that are put out. But many have not read them. CPF is an important part of our lives. It behooves us to at least read those materials, to understand what it is and what it is not. Many are concerned about whether they will meet their Minimum Sum. Ms Tin Pei Ling and Mr Png Eng Huat asked about the balances that CPF members have for retirement. As I had mentioned earlier, about 50% of active members who turned 55 in 2013 achieved their Minimum Sum in cash plus property. For those who do not meet their Minimum Sum, the majority have a property that they have used their CPF savings to pay for. The reason why some of them do not meet the Minimum Sum is because we cap the amount that can be used for property at half the Minimum Sum.”
“In general, we look at the percentage of active CPF members who meet their Minimum Sum in cash plus property because home ownership, and monetisation if that is required, contribute towards how adequately we are prepared for retirement. While some members are unhappy that their CPF savings are being locked up under the Minimum Sum rules, other members have voluntarily left their CPF savings in their accounts even though they have CPF funds in excess of the Minimum Sum and can withdraw these amounts. One reason why they do so is to continue to earn the risk-free returns on their CPF savings. Mr Gan Thiam Poh would be glad to know that as at December 2013, about 20% of the entire cohort who turned 55 in 2013 had balances above the Minimum Sum that were not withdrawn. I am aware that some members may find the CPF system difficult to understand because policy changes over the years mean that different rules may apply for different cohorts. This practice of grandfathering old rules for older members is precisely to minimise adjustments to those members who already passed age 55. This was necessary so as not to disrupt the plans of older members mid-way through their retirement. I would like to add this – it would not be responsible of this Government to leave unchanged the CPF rules for those who are younger when the situation around us has changed and quite dramatically so. Singaporeans are living longer – that is a reality. The things that retired households spend on have also risen in quality. If you look at our consumption pattern over the years, it has improved in quality. That is also a testimony to the standard of living that has risen significantly for many Singaporeans. And that is a fact.”
“In the scenario where they do not have a property, they will need to pay for rent, and so a combined payout of $2,400 may not be too generous, after all. Third, if you do not meet your Minimum Sum at 55, you do not need to top up the shortfall in cash nor do you need to sell your property to make up the shortfall. Let me repeat this, you do not need to top up the shortfall in cash, nor do you need to sell your property to make up the shortfall. What it means is that with a smaller amount, your monthly payout would be correspondingly less. That is all. Fourth, only half of the Minimum Sum needs to be set aside in cash. The savings above that amount can be used to finance housing purchases, or be withdrawn through a property pledge. This means a member turning 55 this year, for example, only needs to set aside $77,500 in cash and the rest can be withdrawn through a property pledge. Seventy seven five hundred thousand dollars will translate to a CPF LIFE payout of about $600 or so per month in retirement, which is not excessive. It is important for us to remember that. As you begin to draw down or reduce the cash component, what it means is that your monthly Page: 13 payout will be correspondingly less. On that last point, to answer Mr Gan Thiam Poh's question, 50% of active CPF members met the Minimum Sum in 2013, including 15% who used their properties to support up to half of the CPF Minimum Sum. Members who had used their properties to support their Minimum Sum included (a) members who had less savings in their CPF and had their housing withdrawals pledged to meet the Minimum Sum, as well as (b) members who had met the Minimum Sum but pledged their property to withdraw their CPF savings above half the Minimum Sum.”
“This is slightly Page: 12 higher than what a person who turned 55 last year needed to set aside, which was $148,000 and which would remain unchanged for that person who turned 55 last year. To further illustrate, for someone who turned 55 five years ago, the Minimum Sum was $117,000 and that has remained unchanged for him. Second, the increases to the Minimum Sum for each successive cohort over the last decade are part of a major, planned, gradual adjustment starting in 2004, to catch up with what a lower middle-income household would need in retirement. This was announced a number of years back; it is part of a plan. How did we arrive at $155,000 for this year's cohort? That is the amount you need to get a monthly payout of about $1,200 in 10 years' time when you reach age 65, when you begin the drawdown of your CPF savings. We estimate that is how much a lower middle-income household would spend on daily living when they enter retirement 10 years from now. One thousand two hundred dollars per month in 10 years' time is not an excessive amount – it is equivalent to only about what $1,000 would be able to fetch today. Some might argue that both they and their spouses work, and so if both are required to set aside the full Minimum Sum individually, then they will have the combined payout of $2,400 which is more than what they need. Well, the answer is that if they have a property – and many do have a property – then they can pledge that property to set aside only half the full Minimum Sum in cash, so that each one only needs to set aside $77,500 for retirement – half of $155,000. The combined payout of their Minimum Sums will then be a total of $1,200 per month – or just adequate for basic living expenses. And what happens if they do not have a property to pledge?”