Central Provident Fund (Amendment) Bill

Madam, I have three issues to raise on the Central Provident (Amendment) Bill. First, I want to talk about the enhanced enforcement introduced under the Repeal and Re-enactment of section 61 of the Act. The CPF holds the hard-earned money of every working Singaporean. We depend on it for our housing, healthcare, retirement needs and more. It is thus imperative that the Government should do more to protect working Singaporeans from being short-changed by errant employers, by sending a clear signal to these companies that non-payment, under-payment and even late payment of our CPF contributions are not acceptable, and repeat offenders will be taken to task.

It is good to know that the penalties for general offences for non-, under- or late payment of CPF contributions are finally brought in line with the Employment Act. There should be no distinction between the two components of a worker's wage. Salaries and CPF contributions must be equally protected under the law. The introduction of a jail term and a minimum fine would certainly send a clear message that CPF contributions are non-negotiable.

Although there is a rise in the number of CPF arrears cases, I note that the amount of money recovered, excluding late payments, remains relatively constant despite the rise in the number of companies and employees involved each year from 2010 to 2012.

In 2011, there was a jump of 42% from the previous year in the number of companies involved in under-payment or non-payment of CPF contributions, and a corresponding spike of 67% in the number of workers affected. But the amount recovered by the Board was unchanged at $9.5 million a year for 2010 and 2011. In 2012, the number of errant employers involved under the same offence went up by 8% from the previous year, and the number of workers affected increased by 10%. But the amount recovered actually came down slightly to $9.4 million.

These numbers are interesting as one would expect the amount of arrears recovered to go up proportionally with the number of offenders and affected workers. The two arrears cases cited by CPF in its press release in the last two years involved low-wage workers being owed CPF contributions for years and their arrears were substantial. The case cited by the Minister in his Manpower blog in May this year is also quite similar and the amount recovered for the

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worker alone was $26,000.

Are these cases common or outlier? If these cases are common, it certainly did not reflect in the amount of CPF arrears recovered despite an annual increase in the number of companies and employees involved and the stepped up effort by both MOM and CPF Board to bring about greater compliance with the CPF and Employment Acts over the past three years.

If these cases cited are outlier, what are the common cases of non-compliance? Are we seeing more new entrant low-wage workers being disadvantaged? Are we seeing more part-time or contract workers being short-changed? I hope the Ministry can shed more light on this. I also urge the Ministry to share more examples of employers and their errant practices with the public so that workers in industries where violations are rampant can better understand their employment rights and get the necessary assistance.

It was also reported that the number of inspections was increased 10-fold, from 500 inspections in 2012 to 5,000 this year. The Minister has shared that 800 inspections were already carried out from January to April 2013. Can the Minister share why there is such a drastic spike in enforcement action? How many of the inspections were driven by complaints? And what can the Ministry do to remove the fear and protect workers who decide to come forward or whistle-blow?

It was reported that the key component of WorkRight, its confidentiality and the identity of anyone who files a complaint are kept strictly confidential. Has the assurance given rise to more complaints and enforcement action in 2013?

Second, the Bill seeks to expand the scope of inspectors' power of obtaining information, documents or records in the course of an inspection. I would like to ask the Minister about the safeguards put in place to prevent inspectors from going overboard in carrying their duties, now that they are armed with extended powers. What would constitute reasonable cause for an inspector to exercise the power conferred under the new section 5 subsection (3A)?

Third, I welcome the increase in withdrawal frequency for the CPF members above the age of 55 but I am of the opinion that there is no need to empower the Board to assess such application for withdrawal.

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The amendment to section 15 subsection (4) specifically deals with members who have already set aside the Minimum Sum, so retirement adequacy is no longer an issue to these members. A member should be allowed to withdraw his CPF savings at any time if the need arises. What is the purpose of controlling the condition and frequency of withdrawal of a member's CPF savings beyond the Minimum Sum after age 55?

We spend a lifetime building our CPF retirement fund. We certainly do not want to spend the remaining years of our life quibbling with the Government of the day on how to spend the rest of our hard-earned money after setting aside the Minimum Sum at age 55. Allowing the Board such broad power to impose conditions and restrictions on the withdrawal frequency of a member's CPF account beyond what is legislated for retirement and medical use just does not sound right.

I seek clarification from the Minister that the previous condition for further withdrawals from CPF by any member upon setting aside the Minimum Sum after age 55 will remain unchanged, that is, a member being unemployed for a period of six months immediately preceding his application for the withdrawal. This is because the explanatory statement accompanying the CPF (Amendment) Bill is not clear on this. I also seek clarification from the Minister that the new section 15(4) will make the withdrawal of a member's CPF savings beyond the Minimum Sum easier and not harder going forward.

One last point. I call upon the Ministry to relook into the Withdrawal Limit and the Valuation Limit affecting some CPF members. The Minister has said that the number of CPF members who have reached their Valuation Limit and must use cash to service their housing loan is at less than half a percent of members who are using CPF savings for their housing loan. The question then is: why would the Government want to impose so much anxiety and hardship on a small group of HDB flat dwellers?

The Minister has also said in Parliament that the Valuation Limit and Withdrawal Limit continue to serve an important purpose in ensuring that CPF members purchase a property they can afford. I am sure affordability was not an issue at that point in time when some of these members purchased their HDB flat, but life is never certain.

I hope the Minister can look into this and, in the interim, exercise as much flexibility as possible to allow CPF members who have difficulties in servicing their housing loan in cash, due to the Valuation Limit, to continue to draw down

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on their CPF savings for housing loan repayment.

In conclusion, it is vital for the Government to ensure that the publicity of their WorkRight initiative be sustained until such time when vulnerable groups like low-wage workers can fully comprehend their employment rights under the law and responsible employment practices can be a way of life in our society.

Mdm Speaker, much of the feedback on the amended Bill has already been passionately articulated by my parliamentary colleagues. The CPF is an integral part of our retirement scheme and the recent reinstatement of the CPF contribution rates that was hard-fought by the Labour Movement is a case in point. I, therefore, welcome the tougher penalties for defaults on CPF contributions, especially by recalcitrant employers. The move to introduce a jail term of up to six months will definitely align the CPF and Employment Acts.

However, while the compliance of the CPF Act will now be strengthened and contributions made more constant with the enforcement of payments from employers, the withdrawal of funds by members is still perceived to be somewhat a challenge. As pointed out by the hon Member, Mr Laurence Lien, sometimes perceptions have become a reality for the public. As such, I will focus my attention on two elements that I think are not within the system at the moment and are not covered in the amendments this round.

Firstly, in my Parliamentary Question on 21 October 2013, I made an appeal to the Ministry to consider a tiered approach to the transfer of funds from CPF members' Ordinary Account to their Retirement Account, especially when they have outstanding housing loans. In the reply, the Ministry indicated that this was likely to be unnecessary as a vast majority of current CPF members have sufficient savings for housing or have completed their housing loan repayments. However, there is no smoke without fire. I have come across a number of cases recently where the Ordinary Account to Retirement Account Minimum Sum

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transfer has turned some families' lives topsy-turvy.

To the layman, the current system presumes a somewhat perfect scenario, where issues only occur in silo. In Chinese, we have a saying: "祸不单行" or trouble rarely visits alone. For those families finding themselves suddenly cash-strapped when the sole or primary breadwinner has to transfer his/her Minimum Sum to the Retirement Account, they often face other issues that compound their problems.

In one case, Mr L, who I just saw yesterday, has had almost all his Ordinary Account transferred to his Retirement Account. He is currently left with $896 in his Ordinary Account. He has over $70,000 left in his housing loan and, unfortunately, he has just been diagnosed with Stage 4 cancer. He is struggling. In another recent case, Ms H's father just turned 55 and they were unaware that the Ordinary Account had been transferred to his Retirement Account until a letter came from HDB. He, of course, was deeply troubled by this. He approached HDB and was told that he needed CPF's approval to transfer money back from his Retirement Account to his Ordinary Account. Not entirely conversant in English, he found the process hard to comprehend and it went on for a period of time. That was not the end. After he made his appeal to the CPF, he was reassured that it would be taken care of very shortly. However, he received not one, but two reminders from HDB and, therefore, resulted in him being in months of arrears. Thankfully, the matter has been resolved, but these are just some of the many examples.

We may, therefore, need to be cogent of the reality that Singaporeans are now: one, marrying later, yet making their first home purchase much earlier, and then having children much later. This has, therefore, changed the spending patterns of our citizens quite significantly. If we compare this generation with the generation just before us, the hope of an early retirement with kids already well settled in their education, graduated and probably starting their own families, was somewhat a possibility 20 years ago but is very much a pipe dream today.

Cost of living has also gone up, education is becoming comparatively more expensive, and housing is also becoming a bigger part of household expenditure. In just 10 years between 1998 and 2008, expenditure on housing has gone up 4.2%.

So, while CPF has been around since 1955 and it is a part of everyone's working life, the complexities of the system mean that some are still not fully

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aware of the different schemes as well as different requirements. People may not remember the importance of the 55-year-old gateway. Yes, the system allows for a property pledge, as mentioned by the hon Member Mr Gan Thiam Poh earlier, and the Board does practise some flexibility when the case extraordinarily warrants. However, it is still somewhat troubling for many ordinary Singaporeans to understand the full complexity of the issues.

It is, therefore, my view that a staggered or tiered transfer of the Minimum Sum over a course of five years may just be a change that could benefit many future families. It helps families better prepare for cash payments for any outstanding housing loans and also better plan their purchases. The staggered end state is that the Minimum Sum will still be committed to the Retirement Account and that continued employment will mean that the Ordinary Account will still be topped up subsequently. The change may not be felt by most, but I am certain that it will be appreciated by the many who may benefit with its introduction.

The second issue that I will mention quickly is with flexibility and implementation. The Home Protection Scheme (HPS) and the Dependants' Protection Scheme (DPS) are two cornerstone schemes for families whose insured members unfortunately become permanently incapacitated or die suddenly. HPS pays out the outstanding housing loan while the DPS helps the family tide over the first few years.

Yet, there appears to be some inconsistencies with the definition of permanent incapacitation. I have received feedback during my house visits that some of my residents have had to jump through hoops because of permanent incapacitation.

Under the DPS and HPS, as defined by section 28 of the CPF Act, "Permanent Incapacity" refers to someone who is physically or mentally incapacitated from ever continuing in any employment. However, a sole breadwinner losing two limbs is a major challenge for any family. The capability to earn a normal living is, of course, heavily diminished because of these and, in many cases, the family will have to face multiple other issues as well. And therefore the current situation, in the words of one of my residents, is akin to saying that better for me to die than to lose a limb because at least it guarantees a payout! So, this is somewhat incomprehensible.

As such, I hope the Ministry will consider loosening the definition of permanent incapacitation to indicate any form of impediment to continuing in

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formal employment as previously held by the insured member.

We have here in the CPF, a good retirement savings plan that cannot be denied. The DPS and the HPS are two good schemes. So, let us ensure that it is a compassionate and accessible one. It is a noble thing to help someone to save for their future, but we must all be alert to the chorus of feedback that is coming from the ground.

Therefore, I sincerely hope that the proposals can and will be considered at some point. I do not hold out the hope that it will be adopted at this sitting, but I can certainly count on the listening ear of the Minister and his compassion in coming down easy on my suggestions. Therefore, Mdm Speaker, I reiterate my support for the CPF system and support the amendments.

Mdm Speaker, the Central Provident Fund (CPF) is a key institution in Singapore. I warmly welcome the proposed amendments in this Bill to safeguard and strengthen the CPF system, especially in light of the changes in the employment landscape and the changing demographic realities. The amendments will also provide for greater clarity to the CPF Act. Keeping the CPF relevant, consistent and sensitive to the needs of members is essential.

In this regard, I welcome the proposed amendment in clause 18 of the Bill to provide for an increase in penalties, including imprisonment terms, for offences under the CPF Act. The enhancement of penalties for CPF offences, hopefully, will be a stronger deterrent against non-compliance.

Could the Minister inform the House whether there have been more employers defaulting in their CPF contributions in the last few years? What is the total quantum involved and is the amount involved increasing as well? And what were the recovery rates like?

Errant employers should not be let off lightly and I hope that the Ministry will not hesitate to titrate upwards the sanctions if the circumstances warrant it. Non-payment, under-payment, or late payment of an employer's CPF contributions is an assault on the dignity of work. Workers are entitled to get what is provided for under the law for the work they put in. The asymmetry of power and information between the employer and employee means that punitive sanctions should be the order of the day where there is flagrant

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disregard for the law and the employment contract.

I hope the Ministry and the CPF Board will beef up the enforcement efforts as well as public education efforts. A Singaporean worker's ignorance or misapprehension of the law should not be preyed upon by the employer. The better employees know their rights under the CPF Act, the less likely would employers try to circumvent the law.

Madam, besides the affront to the dignity of work, non-payment of employers' CPF contributions can have other repercussions, such as affecting a CPF member's ability to service his housing loans. For the lower-income workers, if employers connive to have their employees fall outside the CPF system, such employees will not be able to receive Workfare Income Supplements as well as top-ups to their CPF Medisave accounts. Does the Ministry have any data on how CPF members have been impacted by such consequential repercussions flowing from the non-payment of an employer's CPF contributions?

The Bill also provides for the CPF Board to have greater powers in the conduct of investigations relating to an employer's obligation to make CPF contributions. Such powers in clause 3 of the Bill, enabling the CPF Board to obtain information, documents or records from third parties, are necessary, given the variety of employment arrangements in today's labour market, including subcontracting and outsourcing of employees. It is likely that sometimes employees may not even be aware of who their real employer is.

I, therefore, welcome the provision to enhance the powers of the CPF Board's inspectors. My only query here is: what are the safeguards in place to ensure that the documents and records obtained by the CPF Board from a third-party source are only used for the sole purpose of enforcing the payment of CPF contributions?

Clause 5 of the Bill, which will give the CPF Board added flexibility to allow members to make more than one withdrawal per year, will be welcomed by CPF members. This flexibility – through empowering the CPF Board to assess each case on its own merits – is timely and necessary.

While CPF funds are primarily meant for retirement use, there may be extenuating circumstances in which an additional drawdown is necessary to tide over a challenging period – in this case, of allowing more than one withdrawal a year for members above 55 years of age where retirement

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adequacy is not affected, since the withdrawn amounts must be in excess of the CPF Minimum Sum and the prevailing MediSave required amount. However, we should be prudent not to create too many exceptions such that they would collectively undermine the purpose of the CPF.

In two years' time, the CPF will celebrate its diamond jubilee. Despite close to 60 years of existence, many of us tend to too often misunderstand the purpose of the CPF and underestimate the role of the CPF system. Can the CPF Board do more outreach so that its role as the comprehensive social security savings system addressing not just retirement adequacy, but also healthcare, home-ownership, family protection and asset enhancement is better appreciated?

Madam, some Singaporeans see the CPF as a "Curi ("steal" in the Malay language) People's Fund": that the enforced savings deny them the opportunity to spend their hard-earned money. Some see it as a levy of sorts imposed on employers, making Singaporeans more expensive to employ. Some Singaporeans would rather not have to make CPF contributions so that they can have a higher take-home pay. We also have employers who view CPF payments as an additional and unnecessary cost of doing business.

Could it be that in our quest to make the CPF relevant, given the longer life spans of Singaporeans and the concern with retirement adequacy, has resulted in our seeing CPF contributions by employers and employees alike as mere transactions where compliance with the law is primarily due to the fear of sanctions? How can we view the CPF as a pivotal institution, one which helps Singaporeans, employers and the Singaporean state to create a stakeholding society?

We should remember that an employer's CPF contribution is not just a mere legal obligation. Embedded within that legal obligation is a social obligation, a social responsibility, which helps to maintain the social compact as well as keep industrial relations on an even keel. There is a tendency to look at the social compact as something that exists merely between the state and the citizenry. But that would, in my view, be too narrow a conception of the social compact. Our social compact is not merely about the fundamentals of governance but it also embraces the rights and responsibilities of the key stakeholders and, here, we are talking about the Government, citizens, civil society, the corporate sector and the trade unions.

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Self-reliance is a core value that pervades the CPF system. The CPF's importance will grow in the years ahead with an ageing population. I hope the Government will do more to ensure that the three key needs of retirement expenditure, healthcare and home ownership will continue to be met, to a large extent, by one's CPF savings. While they constitute the basis of financial security in retirement, the CPF is a vital institution in our stakeholding society.

In this regard, I hope that the Government will also articulate the circumstances and the conditions by which it would return the employers' CPF contribution rate to be on par with that of the employees' contribution. Madam, I warmly support this Bill. I sincerely hope that the passing of this Bill will also have the necessary signalling effects I discussed earlier to both employers and CPF members.

Mdm Speaker, let me thank the various Members of Parliament who spoke through their thoughtful speeches and who have extended their support for the Bill.

Obviously, some of the issues that have been raised pertain to general CPF policy and not to the Bill itself, amongst them, CPF contribution rates, CPF returns, housing withdrawal limits and so on. These are important concerns and we are looking into how best we can address them and we will take these up separately at other forums as appropriate.

But if I may just briefly talk about the adequacy issue raised by Mr Laurence Lien: I fully agree and the Government shares his concerns – in fact, many Singaporeans' concern – about providing for all Singaporeans in terms of their retirement needs. It is important to also look at it from a holistic perspective.

The CPF is a very important pillar of our social security system but it is part of a larger whole. There are still the healthcare, housing and other different measures that have been put in place, as explained by my colleague Minister Chan Chun Sing yesterday as to how we address different people in different categories who are in different circumstances.

While the CPF covers a vast majority of Singaporeans, it does not catch everyone because, as rightfully pointed out, not everyone works. Some have dropped out of the workforce for various reasons. How then do we provide for

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them? There are other measures that we have put in place to address this.

But I think that is a valid point. I would add that for many countries, ageing demographics is a serious issue – providing for healthcare and especially retirement needs through pension systems is something that all countries are grappling with. What we do have in place is a very solid, stable platform and that is something we will continue to build on and improve.

I will now address the comments that have been made on the various aspects of the Bill.

Firstly, on Enhanced Enforcement: allow me to first elaborate briefly on the rationale of the changes to enhance enforcement of the CPF Act. Let me assure the Members of Parliament, specifically Assoc Prof Eugene Tan and Dr Chia Shi-Lu, that compliance with the CPF Act is high and the number of non-compliant employers remains low, relative to the total number of employers. I will give some of these details later.

It is not unexpected that as we step up enforcement and education efforts, we will discover more cases of non-compliance in the near term. The increase in penalties under the CPF Act is to support our enhanced enforcement and outreach efforts. We will not hesitate to take actions necessary to recover contributions owed and impose penalties to ensure sufficient deterrence against future offences. Let me also assure Dr Chia that we have dedicated the necessary manpower resources and training to these efforts and will continue to do so.

On this note, I agree with Dr Chia's point that CPF contributions are part of the overall wage package and employees should not be shortchanged. We have introduced a minimum fine under the CPF Act, and introduced a jail term for non-compliance, in alignment with the Employment Act. These measures, combined with the doubling of penalties under the CPF Act, mean that penalties under the CPF Act have been enhanced significantly and are not trivial as they apply on a per charge basis. We will monitor the non-compliance situation closely to see if further increases in penalties are required.

I would also like to thank Assoc Prof Tan and Mr Zainudin Nordin for supporting our move to increase inspector powers. Under the CPF Act, our inspectors are only allowed to request for documents and records related to the investigation, and must be able to justify how such information will assist in the investigation. Our inspectors also receive professional training in using any

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information obtained only for the purposes of their investigation and, in addition, are bounded by the Official Secrets Act and have to follow a strict internal code of conduct.

Mr Laurence Lien raised the issue of employers who may be negligent but not necessarily wilful or egregious. That is an important point. Allow me to just briefly explain that, in general, employers are keeping to their responsibilities under the CPF Act. Under our investigations, we have uncovered about 4,000 employers who did not contribute or have underpaid the CPF for their employees. This is for those who have not contributed or underpaid the CPF.

There are also figures for those who, for example, have paid the CPF late, that is, made late payments. The numbers are about 3,100 per month and the total amount of CPF contributions recovered for this late payment category amounts to about $283 million. If we add this to the $9 million-plus of CPF contributions recovered from employers in the non-payment and underpayment category, that effectively adds up to the figures that we shared earlier.

However, in the main, what we find is that most employers are keeping to their responsibilities and, for the minority that are not, that is where we will take action. The degree of compliance has remained fairly stable over the years, at about 3% of total active employers in the CPF Board's database in a given year – 3% have displayed non-compliance and that has remained stable. Total contributions recovered from non-payment, underpayment and late payment have also remained fairly stable at about 1% of total amount of contributions collected by CPF Board in a given year.

However, as I mentioned earlier, we are stepping up enforcement and inspections tenfold. What we will expect, as a result of that, is that we would find possibly an increase in numbers. We will see how that pans out in the next couple of years.

Now, in the course of investigations, let me just briefly explain the approach we take and this will, in part, address the issue of negligence. We do recognise, especially for the Small and Medium Enterprises and the small companies, that despite the fact that CPF is an established practice in the employment realm, some employers are not necessarily very clear of their responsibilities.

We take a calibrated approach in dealing with non-compliant cases. Before prosecution action is taken against employers in Court, CPF Board will provide

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opportunities – and that is a key priority – for the employers to pay up their CPF arrears. Prosecution is not meant to be the first resort in recovering CPF. As we all know, prosecution in court would take time and is laborious. And when prosecution is taking place, you might end up with the companies disputing that and delaying the payment altogether.

Most employers, by and large, are cooperative upon notification by CPF Board on their non-compliance. Nevertheless, defaulting employers are still required to pay late payment interest for violating the CPF Act and composition sums which will be doubled from $500 to $1,000 on a per charge basis. And this will be imposed. Therefore, it is really for the recalcitrant employers and those that are egregious in nature that we will take prosecutorial action against these employers.

This is to help set the stage in terms of understanding the approach that we are taking. The priority really is to make sure that the monies are recovered for the individual, and that composition sums are put in place. For those who are recalcitrant, that is where prosecution will take place. We will track the situation as it evolves over the next couple of years.

In more general terms, I would agree with the emphasis that is provided by Assoc Prof Eugene Tan, Dr Chia Shi-Lu, Mr Zainudin Nordin and Mr Laurence Lien on the importance of employers making timely CPF contributions for their employees.

As I have mentioned, in response to issues with regard to the WorkRight campaign, workers who particularly need the CPF contributions are the low-income workers. They are the ones that are probably more vulnerable and they are the ones that need the CPF most.

Some employees do rely on the CPF contributions to make their monthly housing loan payments from their CPF Ordinary Accounts. We will also only be able to provide Workfare payments to low-income employees who receive the contributions. So, the CPF, as an institution, is important.

However, I would like to reassure Assoc Prof Tan that our statistics show that the percentage of households in arrears on their mortgage payments is generally very low. Only about 5% of households with an outstanding HDB loan are in arrears of three months or more. There are a variety of factors that may cause households to fall into arrears on their housing loans, and given high employer CPF compliance rates, it is unlikely that CPF non-compliance is a key

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factor. However, when individuals do not receive their rightful CPF contributions from their employers, they should come forward and report the cases, and we will rectify it.

The CPF is a key component of our social security system and helps Singaporeans save for their retirement, housing and healthcare needs. It is also a key avenue through which the Government provides assistance to low-wage workers. Through the CPF, Singaporeans gain access to a range of schemes targeted at benefiting lower-income Singaporeans, such as the Workfare Income Supplement (WIS), Workfare Training Support (WTS) and the 1% Extra Interest paid on the first $60,000 of their CPF balances.

Hence, in order for the lower-income Singaporeans to benefit from many of the Government assistance schemes, not all, but many of the Government assistance schemes, we need them to be in the CPF structure. That is why our enforcement and education efforts are so important, as Assoc Prof Tan also pointed out. That is something that we are enforcing through the WorkRight campaign, which is targeted not just at CPF alone but also adherence to the Employment Act. It is also targeted especially at lower-income workers who need it most.

Besides educating employers about their obligations, our education efforts will also reach out to employees to help them understand that CPF contributions are part of their basic employment rights, and that they also stand to lose out on benefiting from the assistance schemes if they are not paid CPF contributions.

We need to do this. We do urge the public to help others who may not fully understand this. For some individuals, they may feel that they would rather have more cash and may decide to forgo their CPF, not realising that they are actually losing out a lot more in the long term. The education effort is particularly important, not just for them, but for all of us, so that we can, in turn, help those who may not be quite so aware.

Over time, these efforts, in tandem with other forms of assistance that are being provided on a targeted basis to the lower-income and vulnerable workers across the board, should improve the financial security of Singaporeans and provide them with better peace of mind and assurance in retirement.

Mr Alex Yam, Mr Gan Thiam Poh and Mr Png Eng Huat also commented about flexibility in the use of CPF monies. In fact, what we are moving towards

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is not less flexibility. The changes in this Bill are to allow CPF Board to have some added flexibility to allow some individuals to withdraw their monies.

Let me clarify that the changes to the Bill are for additional withdrawals and refer to the monies that are in excess of a member's CPF Minimum Sum (MS) and the prevailing Medisave Required Amount. This refers to a very specific set of cases, where the member has already set aside monies for his retirement and medical needs after turning 55.

I note that Mr Yam and Mr Gan have suggested that we exercise more flexibility with regard to the use of CPF monies for housing. As I had explained in Parliament last month, where the case merits, we do exercise flexibility and have allowed CPF members to use more of their CPF savings for housing. Part of the changes in this Bill is to enable us to allow some of that flexibility to take place.

Nevertheless, it is important to reiterate again that it is important for us to be prudent with our CPF monies, especially as we are going to live longer, and also, be prudent with regard to using it for property purchases, so that we do – apart from meeting our housing needs – have adequate savings to last through our retirement as well.

Let me acknowledge two other points on withdrawals. First, Mr Zainudin's concern on education loan scheme repayments. Most students repay their loans on time. However, in the case of default, CPF Board may take recovery action against students to ensure that loans are repaid so as to safeguard the retirement savings of the lender and in most cases, this will be the parents. It will not be fair to the rest of the CPF members if the Board were to bear these recovery expenses, although the Board has the flexibility to waive the repayment of expenses, depending on the circumstances of each case.

Secondly, Mr Yam's concern was that permanently disabled members should have access to their CPF savings quickly. I assure the Member that my colleagues at the CPF Board try their best to process applications for withdrawals of CPF savings on medical grounds expediently to ensure that eligible CPF members can get access to their savings as quickly as possible. Nevertheless, we are open to suggestions on how processes can further be improved on this and in other areas.

Finally, let me assure Members of the House that we do our best to assess each appeal case on its own merits. Ultimately, I would agree with Assoc Prof

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Tan and Mr Zainudin in this regard – we have to balance flexibility with ensuring that members have sufficient retirement and healthcare savings to last them through their retirement years.

Madam, in summary, let me emphasise that the CPF for us in Singapore is a vital component of our social security system, not only because it builds up retirement savings, but also that the Government provides much of its assistance through the CPF system as well. Therefore, enforcement is crucial, making sure that the system works is crucial, not just in ensuring that employees have access to basic employment rights, but also in bringing low-wage workers into the CPF system so they are able to benefit from the range of Government assistance provided through these schemes.

We will, therefore, continue with our efforts in engagement and outreach. We are open to ideas on how best to do it to inform employees about their basic rights and educate employers about their legal obligations. Madam, I beg to move.

Thank you, Madam. I raised the point on why we need to impose conditions and restrictions on withdrawal frequency on members who have already set aside their Minimum Sum at age 55. Why do we need to do that? Also, as the Minister has said, we can discuss it in another forum, but the transfer from OA to RA has always been a thorny issue for many people, especially those who are servicing their housing loans. Would the Minister consider allowing them to pay off a lump sum of their loan – maybe it is just a small amount, maybe $10,000 or $20,000 – before you make that transfer, so they no longer have to worry that they need to use cash to pay their mortgage?