CPF Dependants' Protection Scheme

Mr Zainal Sapari asked the Acting Minister for Manpower (a) what is the current number of Singaporeans earning below $1,700 per month who opted out of the CPF Dependants' Protection Scheme; (b) what are the reasons for their opting out of the scheme; and (c) whether the Government can consider a scheme to waive or reduce the premiums for workers earning below $1,700 per month.

Mr Patrick Tay Teck Guan asked the Acting Minister for Manpower (a) what is the current number of CPF account holders, with a breakdown in terms of age, gender and salary range, who are (i) on the Dependants' Protection Scheme (DPS); and (ii) not on DPS because of their opt-out; and (b) what has been the claims experience in the last five years.

Mr Seng Han Thong asked the Acting Minister for Manpower (a) how many CPF members have opted out of the Dependants' Protection Scheme (DPS) since its inception and what is the income profile of those who opted out; (b) whether there are plans to review the scheme so that lower-income Singaporeans are adequately protected in view of its opt-out nature; and (c) how will CPF Board incentivise the lower income group to remain in the scheme.

Mr Tan Chuan-Jin: The Dependants' Protection Scheme (DPS) is a term insurance scheme that mitigates the impact of a loss of income to a family, in the event that the insured member can no longer work due to permanent incapacity or death. The scheme is automatically extended to CPF members who are Singapore citizens or Permanent Residents, between age 16 and 60, when they make their first CPF contribution.

Being an insurance scheme that protects dependants against loss of income, the priority is, therefore, to ensure that gainfully employed members with dependants are covered by DPS. Currently, about 83% of active CPF members between the age of 16 and 60 are covered under DPS. The share of males and females covered is roughly equal. The rest comprises primarily CPF members who have opted out of the scheme, whose coverage has lapsed, or who are unable to get coverage due to health conditions. Among employees aged between 16 and 60 and earning $1,700 and below, 79% are insured under DPS. This compares to 84% for those earning above $1,700.

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In terms of claims experience, there was an average of 2,800 claims per year (about 0.15% of the insured population) between 2007 and 2011. These claims amounted to an average of $143.5 million per year.

Based on data over the past five years, on an annual basis, an average of 1.5% of the DPS members cease their DPS coverage, either because they have opted out of the scheme or lapsed in their premium payments. For those who opted out during this period, more than half had no income, earned $1,700 and below, or were self-employed. A significant proportion, about a third, were young members aged 16 to 20, and likely to have opted out because they did not have dependants to support.

For those whose DPS coverage lapsed due to non-payment of premiums, the vast majority of them had no income or were self-employed, that is, members with no Ordinary Account contributions that can be used to pay for DPS premiums. About half of them were young members aged 16 to 20 who may not have dependants, or older members aged 56 to 60 who may no longer be working and supporting their families. The proportion of males and females who opted out or have lapsed coverage was roughly equal.

To help members remain covered on the scheme, DPS premiums are kept low and affordable. The yearly premium ranges from $36 for members aged 34 and below, to $260 for members aged 55 to 59. If a member's Ordinary Account balance is insufficient, DPS premiums can be paid from the member's Special Account. Most members should have little difficulty affording the premium so long as they are working. However, as with all insurance policies, the premiums cannot be waived and the coverage will lapse when there is non-payment.

Measures are also in place to minimise the DPS opt-out and lapse rates. When members request to opt out of the DPS, the insurers will ensure that they are fully aware of the consequences of opting out before accepting their request to do so. In particular, members are informed that if they decide to rejoin the DPS in future, their application will be subject to them being in good health, as required at the point of auto-inclusion.

To minimise lapse rates due to insufficient CPF balances, members receive notifications via mail to remind them to pay their DPS premiums in cash. All members will be given a final notice before the DPS coverage is terminated. Those who wish to re-join the scheme subsequently can apply to do so.

We will continue to review the DPS to ensure that it meets members' needs. For example, we have noted public feedback that the current auto-inclusion age of 16 may be too low for most members, as they are unlikely to have dependants at that age. We will also continue to look into other ways to reduce the lapse rates, to help more members stay covered.

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