Parliamentary Pensions (Abolition) Bill

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the Parliamentary Pensions (Abolition) Bill seeks to put into effect the recommendation in the White Paper on "Salaries for a Capable and Committed Government" to remove pensions for office holders and Members of Parliament. This will be done through amendments to the Parliamentary Pensions Act, or PPA in short, and other related Acts, as well as the eventual repeal of the PPA.

In January this year, this House had an extensive debate on the White Paper which contained the recommendations of the Ministerial Salaries Review Committee chaired by Mr Gerard Ee. This House endorsed all the recommendations in the White Paper as the basis for setting the salaries of the President, office holders and Members of Parliament. This included the recommendation to remove pensions for new office holders and freeze pensions for eligible office holders and Members of Parliament with effect from 21 May 2011.

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The PPA contains the pension provisions for office holders and Members of Parliament. The PPA was first introduced in 1969 to establish a pension scheme for office holders and Members of Parliament who have devoted a considerable portion of their working lives to public service. Then Deputy Prime Minister Dr Goh Keng Swee had explained that the pension scheme aimed to help encourage future leaders of calibre to take up positions by lessening the financial sacrifice in pursuit of a political career. Since then, there had been periodic amendments of the PPA to refine the scheme. One important amendment made was that Members of Parliament elected after 1 January 1995 ceased to be eligible for pensions.

Under the pension scheme, an office holder is required to serve at least eight years before he can be eligible for a pension. The pension amount depended on the length of service. The maximum pension would be reached after 18 years of service. The pension is based not on the total monthly salary, but only on the pensionable component of monthly salary, that is the Basic Salary and Monthly Variable Component. To contain pension costs, all salary increases since 1994 have not been pensionable. Therefore, the maximum annual pension is about 11% of an office holder's salary prior to retirement. The value of the pension that an office holder may receive upon retirement is fully taken into account when ministerial salaries are compared against the benchmark. These are not new points; these points have been made several times in Parliament already.

Members from both sides of the House supported the removal of pensions for office holders and Members of Parliament when this issue was debated in January this year. This will bring their remuneration framework in line with the current practice where the Central Provident Fund is the basic retirement scheme for Singaporeans.

After Parliament endorsed the White Paper, the recommendation on the removal of pensions has been administratively put into effect. The pensions for eligible office holders and Members of Parliament, who by their service prior to 21 May 2011 had become eligible for pensions, have been frozen since 21 May 2011. They will only receive a pension when they step down, for the period of service prior to 21 May 2011. Since 21 May 2011, no serving office holder has begun receiving pension upon turning age 55.

As pensions for office holders and Members of Parliament are provided for under the PPA, this Bill formalises the White Paper recommendation through legislation. The Bill will first amend the PPA and other related Acts to remove pension provisions retrospectively from 21 May 2011. The PPA will eventually be repealed, through a Notification published in the Gazette, after all office holders and Members of Parliament, who by their service prior to 21 May 2011 had already become eligible for pensions, have been granted these frozen pensions. The Schedule of this Bill will then be brought into effect to set out saving and transitional provisions.

Let me now elaborate on what the Bill sets out to do. Clause 3 of the Bill provides that no pension or gratuity under the PPA can be granted for service as a Member of Parliament or office holder on or after 21 May 2011. Clause 5 (a) of the Bill also amends the PPA to this effect. The impact of these two clauses is as follows:

a) New office holders appointed on or after 21 May 2011 will not be pensionable;

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b) Serving office holders who had less than eight years of service before 21 May 2011 will not be eligible for pensions; and

c) Serving office holders with eight years or more of service before 21 May 2011 and serving MPs elected before 1 January 1995 will not be able to accrue additional years of pensionable service for service on or after 21 May 2011.

Clauses 5 (e) and (i) further amend the PPA such that pension benefits will not be enhanced by any future increases in the pensionable components of salaries, if any. Taken together, these amendments freeze the pensions to the value as at 20 May 2011.

The existing PPA allows office holders to start receiving their pensions at the age of 55 so that those who continue serving in public office will not be worse off than their colleagues who step down from office earlier.

Clause 4 of the Bill removes this provision, by prohibiting the grant of pensions or benefits under the PPA unless the person ceases to be a Member of Parliament or office holder. Clauses 5 (j), (k) and (l) also amend the PPA to the same effect. Serving office holders with frozen pension entitlements who turn 55 years of age on or after 21 May 2011 will not be able to draw their pension unless they step down from office. For those who have already been drawing a pension upon turning 55, the pension will stop with effect from 21 May 2011, and only be drawn after they step down from office.

Clauses 5 (d), (f), (g) and (m) of the Bill also make a number of amendments to the PPA to remove provisions which are no longer relevant, as there are no Members of Parliament or office holders who are affected by these provisions as they have all exceeded the age or length of service specified in these clauses.

I now move on to a non-pension related provision in the PPA. The PPA provides for a death gratuity for office holders and Members of Parliament, regardless of whether they are pensionable. Unlike a pension scheme, the death gratuity is a service benefit for office holders and Members of Parliament who die in office or within one year of drawing a pension. The death gratuity provision should be retained as it recognises the contributions of those who pass away while in service. As the PPA will be repealed eventually, the provision for the death gratuity will be transferred to the Parliament (Privileges, Immunities and Powers) Act.

In transferring the death gratuity provision to the Parliament (Privileges, Immunities and Powers) Act, no office holder or Member of Parliament will be better off compared to the current provision in the PPA. Specifically:

a) The death gratuity for a non-pensionable Member of Parliament will continue to be 12 months of the Basic Salary and Monthly Variable Component. The death gratuity for a non-pensionable office holder will become the same; and

b) The death gratuity for an office holder or a Member of Parliament who has frozen pension benefits will be 12 months of Basic Salary and Monthly Variable Component or the commuted pension gratuity, whichever is higher. There is no minimum service period for a death gratuity to become payable.

To conclude, this Bill puts into legal effect the recommendation to remove pensions for office holders and Members of Parliament, as contained in the White Paper on "Salaries for a Capable and Committed Government" which was endorsed by this House. The removal of pensions will further strengthen the principle of clean wage and align the retirement scheme of office holders and Members of Parliament to the Central Provident Fund system. Mr Speaker, Sir, I beg to move.

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Question proposed.

Mr Speaker, Sir, I rise in support of this Bill. Before proceeding to discuss the substantive changes proposed by the Bill, I would like to highlight how these changes are a culmination of a deliberate and widely debated, consultative process between the Government and the many stakeholders involved, as reflected in the White Paper titled "Salaries for a Capable and Committed Government".

I would like to highlight this as I believe the process evinces an attitude of responsiveness and the willingness to be persuaded by rational, well-thought-out views put forth by our citizens. This falls in line with broader principles of public administration, such as that of transparency and accountability, and is to be lauded. The changes proposed today must thus be appreciated in this light.

Prime Minister Lee appointed a committee to review the basis and level of existing political salaries. The report of the committee was itself a result of seven months of deliberation with feedback garnered from a spectrum of stakeholders. Therefore, I rise today, not just in support of the substantive changes proposed by the Bill but also in support of the Government's sincere efforts in engaging our citizens.

The effect of the Bill being debated today is such that the pension scheme for political appointment holders, including Members of Parliament, will be removed. The rationale for the pension scheme was to reflect the role and impact of political office holders, and encourage appointment holders to serve longer periods of time so as to develop instincts and an understanding of how the Government works with the objective of serving Singaporeans even better.

The scheme has been refined over the years with a 2007 review ensuring that pensions were part of, and not an addition to the total remuneration package of office holders. This brings politicians in line with the current practice where the Central Provident Fund (CPF) is the basic retirement scheme for Singaporeans, and, more importantly, strengthens the principle of clean wage by adequately paying political appointment holders during their time in office, as was pointed out in the White Paper.

The abolition of the pension scheme is part of a series of more broad-based changes recommended in the White Paper, with concrete changes being made to existing policies and pay structures. Members of Parliament are affected by these changes. I am glad the Government has paid attention to the people's call for review, as it shows that we want to engage Singaporeans, we want to hear their views on the matter. We are committed to partnering them in steering Singapore's future together. This is the essence of public service, and it is this fundamental notion of public service that of serving the people that is the crux of today's debate.

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I believe most, if not all of us, present at today's debate will agree with me that political office is a calling. Those who want to serve must have that sense of duty to the nation as well as the desire to contribute to public good in Singapore. For Members of Parliament, we are in this business because we believe in the ethos of sacrifice the public service entails to serve our residents. Meeting with residents, listening to them, caring for them, offering encouragement in times of difficulty and mapping out real ways of progress for themselves and their children − that is fulfilling, and that is politics. This was echoed by Deputy Prime Minister Teo at the opening of the parliamentary debate on political salaries at the start of this year, where he said that the most important criterion for anyone seeking political office is, first and foremost, the motivation to serve our country and our people.

The White Paper has highlighted three principles in relation to salaries. First, the Government will continue to maintain competitive salaries. This is to ensure quality of talent and to take into account the opportunity cost incurred by potential office holders in leaving at the prime of their careers to enter politics and dedicate a substantial part of their lives to service in public office. Developing and nurturing a committed and capable government is especially crucial given Singapore's unique contacts as a small nation in a competitive and uncertain world. This is balanced out by the other two principles that of the ethos of public service which entails the making of sacrifices and the objectives of making and maintaining a clean wage without any perks. A debate on the lowering of ministerial salaries is ultimately about mediating between these objectives. The decision we have arrived at or tempered by the above practice is essentially undergirded by a sincere desire to hold true to the calling of public service. For indeed, politics is not a job or a career promotion, but a calling to serve the larger good of Singapore. It is in recognition of this that I rise in support of this Bill today.

Mr Speaker, Sir, I support the Bill. The Bill comes at a good time as it reflects the commitment of the Government to continue with its restructuring efforts of the compensation structure of Members of Parliament and office holders. This process was initiated last year when the Government presented the White Paper on "Salaries for a Committed and Capable Government".

I commend the Government for having seen this through and I hope Singaporeans will see this as a sign of sincerity of a responsible government. While the Government undertakes this process, it is also timely to use this opportunity to strengthen the tenets of transparency, accountability and also integrity, which are entrenched in our highly regarded system of governance.

Sir, I agree with the position that our office holders and Members of Parliament need to be paid at a level that continues to attract top talent, and that helps deter an individual in that position of power to abuse the position to seek financial or economic gains. Moreover, our Members of Parliament and office holders earn a clean wage that is free of various add-ons that their counterparts in many countries, including in developed political regimes such as the UK and the US, have. When all of these benefits and allowances are compounded, parliamentarians in many of these countries earn far more than the incomes accrued to our office holders and Members of Parliament. So, from that perspective, the salaries of Singapore parliamentarians can be justified.

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However, the Government also needs to take into account the sentiments of the country and there is a substantial number of Singaporeans who feel that there should be an inert value and pride attached with the sanctity of public office and that this should not be equated in monetary terms. They also believe that public servants such as office holders and Members of Parliament should come forward to serve to answer the call of national duty and so monetary incentives should not be the carrot, or feature significantly in the equation to attract talent in this regard.

There is merit in this argument as well and so the Government must balance carefully between both perspectives. This Bill is the right step in that direction. I would like to make a few suggestions as to how this Bill could help draw further balance between both perspectives.

Accountability and equity – Sir, I would like to highlight clause 4 of the Bill which stipulates that pension will not be paid to Members on or after 21 May 2011, unless the person has not less than the minimum number of years of reckonable service and refers to the Parliamentary Pensions Act as reference of this duration of service. Under the Parliamentary Pensions Act, the minimum number of years of reckonable service as defined in section 3 of the Act is nine years for Members of Parliament, and under section 4 of that Act, this minimum period of service is eight years for office-bearers. I would like to suggest that this distinction be done away with and that the minimum period or reckonable service be made uniform for both Members and office holders, be that eight years or nine years. I do not see the need to differentiate on this and that if a Member of Parliament has served the same number of years as an office holder, that is eight years, then there is no reason for him to be deprived of a pension payment in the instance that his service ceases. This principle of equating the length of minimum service for both Members and office holders should also be upheld in other sections of the Bill including the payment of gratuity upon the death or incapacity of a Member.

Upholding the Integrity of Service − clause 6 of the proposed Bill also includes the terms of payment of death gratuity for a non-pensionable Member and stipulates that such a payment could be transferred under a court order for the payment of periodical sums of money towards the maintenance of the person's minor child, whether legitimate or not. While I recognise and support the intention to support a minor, I do not think this should be extended to any person's illegitimate children as we should not be seen to be condoning such behaviour through the availability of monetary support. I believe this is an important contribution towards helping to ensure the integrity of the position of public service.

In this regard, clause 3 of the schedule in the proposed Bill details the treatment of pension payment should a Member be found guilty of a corruption charge. While I understand the clause conferring the President with the power to reduce or withhold pension payment to any Member found guilty of corruption, I find that section 3 of that clause allows the President to exercise the discretion to direct all or any part of that pension to the accused person upon serving his sentence.

I believe that the Government and this House have zero tolerance for corruption and despite more high-profile cases surfacing this year, Singapore is generally a corruption-free society and certainly one of the most corruption-free countries in the world.

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We should continue to uphold that and while attractive incentives can reduce the need to turn towards corruption, we should at the same time also ensure that there are enough deterrents. I would like to suggest that the clause reflects that a Member, who is found guilty and convicted of corruption or a related charge, has his rights to any pension payment from thereon be taken away from him. That is a permanent suspension and no possibility of a transfer or reinstatement thereafter. I believe this is a strong deterrent and as Members of Parliament, we should send a clear message of intolerance towards corruption. Sir, on the whole, I support the Bill.

Mr Speaker, Sir, first of all I would like to thank Mr Christopher de Souza and Mr R Dhinakaran for speaking in support of this Bill.

Now, on the specific matters that Mr Dhinakaran spoke on, perhaps I could respond. Mr Dhinakaran suggested that the minimum periods of reckonable service be made uniform for both office holders and Members of Parliament and set at either eight or nine years. Sir, his proposal, while there are some merits from an equity point of view, actually will have no practical effect now, or in the future, because only Members of Parliament who were elected before 1 January 1995 are eligible for a pension, that is, those who started service 17 years ago, and that far exceeds the minimum period required for eligibility for pension. So, all of such Members of Parliament who are still serving today would already have exceeded the current minimum reckonable service required for a pension and hence Mr Dhinakaran's proposal to shorten the minimum required service period to be eligible for pension would have no practical effect on any Member of Parliament now or in the future.

I also mentioned in my speech earlier that there is no minimum period of service for the payment of the death gratuity. So, Mr Dhinakaran need have no concerns about that.

Mr Dhinakaran also suggested that the provision that allows for death gratuity to be transferred to satisfy a court order for the payment of maintenance of a minor child, whether legitimate or not, be changed to exclude illegitimate children. This clause is part of the existing death gratuity provision in the PPA. This is because section 68 of the Women's Charter imposes an obligation on a parent to maintain or contribute to the maintenance of his/her child whether legitimate or not, and section 69 of the Women's Charter further provides for a court order to be obtained to enforce this obligation. Hence, the PPA allows for such a provision to be put into force, should a court so order.

Finally, Mr Dhinakaran also called for the removal of the discretion by the President to transfer the pension of a Member of Parliament or office holder who has been imprisoned for corruption, to his family where the pension has been withheld or reinstate the withheld pension to the person after his imprisonment. Sir, I wholeheartedly agree with Mr Dhinakaran that there is no tolerance for corruption in this country. This is why in 1975 the PPA was amended to provide the President with the discretion to decide whether the whole or part of any pension should be withheld for any office holder or Member of Parliament convicted under the Prevention of Corruption Act or of any crime involving corruption under any other written law, even if he has only been fined and not imprisoned. Prior to that, under the Pensions Act, the pension gratuity could only be withdrawn in the event of imprisonment or the death penalty.

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As for the part of this provision which allows for possible transfer or reinstatement, it is entirely a matter of discretion whether any such transfer or reinstatement should be made, and it is not automatic. This is the same approach as a similar provision for civil servants in the Pensions Act and is meant to provide discretion during circumstances when transfer or reinstatement may be warranted. Thus far, there have been no cases that have warranted the exercise of this discretion under the PPA.

Once again, Sir, I thank Mr de Souza and Mr Dhinakaran for their support for the Bill and for upholding the very important principles that underline this Bill.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Teo Chee Hean].

Bill considered in Committee; reported without amendment; read a Third time and passed.

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