CENTRAL PROVIDENT FUND (AMENDMENT) BILL

CENTRAL PROVIDENT FUND (AMENDMENT) BILL: Order for Second Reading read.

5.03 pm

The Minister for Manpower (Mr Gan Kim Yong): Mdm Deputy Speaker, I beg to move, "That the Bill be now read a Second time."

Madam, this Bill will amend the Central Provident Fund (CPF) Act to provide for the full implementation of the CPF LIFE scheme in 2013, and to facilitate the disbursement of CPF assets to beneficiaries, as well as to streamline the administration of the CPF.

CPF LIFE

CPF LIFE was made available in September last year to allow older members, in this case those who turn 55 before 2013, to opt in to the scheme. Younger members turning 55 from 2013 onwards with at least $40,000 in their Retirement Accounts will automatically be included into CPF LIFE. While members with lower balances will not be automatically included, they can still opt-in.

Between age 55 and their CPF Draw-Down Age (DDA), members’ CPF balances typically continue to grow due to property refunds, top-ups, interest income as well as employment contribution if the member continues to work. Members who are not auto-included at age 55 due to low balances may be able to increase their CPF savings significantly by the time they reach their DDA. I had announced at the Committee of Supply (COS) debate earlier this year that we will also auto-include those with $60,000 in their Retirement Accounts when they reach DDA. Section 27K of the CPF Act will be amended to provide for this.

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For members who are already on CPF LIFE before DDA, we should similarly include any additional monies received in their Retirement Accounts between age 55 and their DDA for the members’ CPF LIFE, so that they can have a higher monthly LIFE income. We are, therefore, amending section 27L to do so.

Disbursement of CPF assets to beneficiaries

Madam, we are also refining the disbursement of CPF assets of deceased members. Currently, CPF savings have to be disbursed directly to the nominees upon the death of a member. Some members have requested for their CPF savings to be transferred directly to their nominees’ CPF accounts instead so as to help provide for their healthcare and retirement needs. I think this is a sensible request. Therefore, sections 15, 20 and 25 will be amended to offer members this option. This option will become available from 1st January 2011 onwards.

Madam, the next area of change concerns unclaimed CPF monies. This includes monies of deceased members which have not been claimed by the beneficiaries, which the CPF Board is currently required to hold indefinitely. This is not desirable as the assets should be disbursed to beneficiaries as far as possible.

We are, therefore, amending sections 15 and 20 to allow the CPF Board to automatically disburse a member’s CPF monies to his nominees, once it is notified of his demise. CPF Board will no longer need to wait for nominees to apply for the bequeathed monies before they can be disbursed. Nevertheless, some CPF monies may continue to remain unclaimed for various reasons, for example, nominees with incomplete or inaccurate details on record may not be contactable. We will streamline how such CPF monies are managed.

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The amendment to section 13 will allow CPF to transfer all unclaimed monies in the subsidiary accounts into the Ordinary Account (OA) of the member six months after his death and they will earn the OA interest rate. Since the member has passed on, we should cease paying the higher interest rates of the Special, Medisave and Retirement Accounts and the extra 1% interest, which are meant to improve the member's retirement and healthcare savings. The deceased member’s CPF monies will be kept in their respective accounts to facilitate claims up to six months after his demise, as some claims, such as hospital bills, are usually made only after his demise.

If monies are still left unclaimed seven years after the member’s death, these monies will be transferred into the general monies of the Fund, as unclaimed monies of deceased members should not accrue interest indefinitely. Section 6 will be amended to provide for the cessation of interest on the unclaimed monies once they are transferred to the general monies of the Fund.

A similar arrangement will also be applied to dormant CPF accounts. A CPF account is deemed dormant if a combination of factors is satisfied, including: firstly, if the CPF records show that the member has attained a prescribed age; currently, that is set to 100 years. Of course, I know, some do live beyond 100 years and, therefore, there are additional conditions that have to be satisfied. Secondly, if the member does not respond to notices from the CPF Board or advertisements placed in the newspapers to satisfy the CPF Board that he is still alive. Thirdly, if there has been no account activity for the last 10 years. Even then, in the event that the CPF Board subsequently learns that a dormant member is still alive, the CPF Board will restore the monies to the member’s original accounts with interest. The

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amendments to section 13 enable the CPF Board to do so.

Besides CPF monies, the CPF Board is also currently obliged to hold unclaimed Special Discounted Shares (SDS) of members who died without nomination. The SDS programme was introduced under the National Share Ownership Scheme in 1993 to give Singaporeans a greater stake in the economy. CPF members purchased these shares with their OA monies. We will also streamline the administration of unclaimed SDS by amending section 26.

To reduce the number of unclaimed SDS cases, a new section 26A will empower CPF Board to sell the SDS of members who died without nomination under the instruction of the legal representatives of the deceased’s estate, and to pay them the proceeds of the sale, along with any dividends and proceeds from capital reduction exercises accumulated following the members' demise. These legal representatives refer to the representatives appointed to administer the estate through the Grant of Probate or the Letter of Administration.

In the absence of such legal representatives, the CPF Board may receive instruction from the next-of-kin to sell the shares and pay him the proceeds. This will be less costly and more convenient for the beneficiaries as they no longer need to obtain the Grant of Probate or Letter of Administration in order to claim the SDS.

Upon a member’s death, dividends and proceeds from his unclaimed SDS will be held in a non-interest bearing account. Since these dividends and proceeds are received on assets held on behalf of beneficiaries as part of the member’s estate, they should not attract CPF interest. The same treatment will be applied to the SDS of members whose accounts have been deemed dormant.

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Unclaimed SDS of members who have been deceased or dormant for seven years will be sold with all proceeds and dividends transferred to the general monies of the Fund to ease management and treated as unclaimed CPF monies, as I explained earlier. I want to assure the House that valid claimants can approach the CPF Board at any time to claim the monies that are due to them. The changes relating to unclaimed CPF monies and SDS will come into effect on 1st January 2011.

Streamlining the administration of the CPF Act

Finally, this Bill clarifies and streamlines the administration of the CPF Act in a few areas. First, it is a long-standing practice of the Public Trustee, which disburses CPF monies of deceased members without nomination, to reimburse reasonable funeral expenses from the CPF monies to persons who would have been entitled to receive the CPF monies. Section 25 will be amended to formalise this administrative practice that the Public Trustee has been carrying out as a service.

Second, some Licensing Agencies (LAs) currently assist the CPF Board in enforcing Medisave contributions by self-employed persons (SEPs). The LAs will not approve the applications for renewal of their licences, should they default on their contributions. As some LAs may move to an auto-renewal licensing regime and self-employed persons may no longer need to apply for the renewal of their licences, section 13A(1) will be amended to empower such LAs to continue enforcing Medisave contributions, even when no application to renew a licence is required.

Third, the Board allows the withdrawal of CPF monies of a member who is "mentally disordered and incapable of

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managing himself". Sections 2 and 15 will be amended to allow the CPF Board to adopt the standard of "lack of capacity" within the meaning of section 4 of the Mental Capacity Act (MCA) to bring the CPF Act into alignment with MCA.

Lastly, section 16A(1) will be amended to permit Medisave withdrawals with respect to psychiatric and other treatment or services approved by the Minister for Health. This will update the CPF Act and bring it in line with the current policy.

Madam, the amendments in this Bill will refine the CPF system to better serve our members.

On this note, Mdm Deputy Speaker, I beg to move.

Question proposed.

5.14 pm

Mdm Halimah Yacob: Mdm Deputy Speaker, our CPF scheme is an important social safety net that has served Singaporeans well by enabling us to take care of our three critical needs, ie, retirement, medical and housing. The introduction of the CPF LIFE further strengthens our capacity to plan and provide for our retirement better. While there continues to be criticisms from some quarters that the CPF LIFE is yet another device for the Government to retain the members’ CPF monies, by now Singaporeans know that the CPF LIFE is in their own best interest and the Government’s actions, demonstrated yet again during the last recession with its Jobs Credit, SPUR and other schemes to help Singaporeans, clearly show that it has consistently put people’s welfare before anything else. With a rapidly ageing population, it is imperative that the Government puts in place a sound retirement saving scheme, which will not only provide a reasonable retirement income but is also sustainable from the perspectives of both the individual and the economy.

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One of the biggest challenges facing many countries today, whether developed or developing, is providing for the retirement needs of their people. In the developed world, the sustainability of the pension scheme is a big concern due to budget cuts and weaker growth. In the developing countries, the weakness and inadequacy of the retirement scheme is the problem which causes untold miseries to many. So, in my view, the measures and refinements suggested in this Bill will further strengthen our social safety net and retirement income to meet our future needs.

However, as some of the changes seem to be quite significant, especially those concerning the CPF LIFE, I think Singaporeans do need a clear understanding of these changes which are important to their own well-being. Therefore, I have a few clarifications to seek from the Minister on this Bill.

The changes to the CPF LIFE scheme seeks to do two things. First, it provides for a second auto-inclusion of members who were excluded because they did not qualify as they do not have $40,000 at the age of 55 years in 2013. With the amendment, such members will now be automatically included if they have $60,000 when they are 65 years old. Although this appears to be a logical development viewed from the perspective of the CPF LIFE as it aims to be a comprehensive retirement scheme, and its objective of protecting as many retirees as possible is laudable, it does nevertheless give the impression that CPF LIFE is rather arbitrary. After first rejecting those members without sufficient funds, it then seeks to subsequently auto-include them the second time after they have come into some monies. While some members may welcome this move as they are now given a second chance, others may prefer to be given a choice instead of being compulsorily included when they thought that they were already excluded.

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So, could the Minister clarify the rationale for this second auto-inclusion and whether such members should be given a choice of whether or not to join the CPF LIFE, instead of being compulsorily covered? Could the Minister also give an idea as to how many people will be affected by this change?

The second change to the CPF LIFE scheme allows the Board to make use of additional funds that a member accumulates in his Retirement Account after joining the CPF LIFE but before the Draw-Down Age, to top up his LIFE plan so as to provide for a higher monthly LIFE payout. I think that this is also quite an important change. While the objective may be good, that is, to provide a higher retirement income for members, some members may not welcome the move as they would already have made their choices on which of the four LIFE plans to choose from, based on the amount that is available when they turn 55. There is certainty when members know exactly the amount that would go into their LIFE plans at the time they turn 55. So the new amendment will add some element of uncertainty as it allows additional monies accumulated in the Retirement Account after they join CPF LIFE to be used as premiums for their LIFE plan. In other words, members who are covered by the plan will not have a definite idea as to how much will actually be used for their LIFE plan as the amount can increase after they have joined the plan so long as they have monies in their Retirement Account.

Could the Minister clarify what is the basis and why this change is being effected and why was it not included in the original law when the scheme was first discussed, so that members have a clear idea on their financial commitments under the LIFE plan? Could the Minister also provide information on how many of those currently on the LIFE plan did not meet the Minimum Sum requirement?

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Madam, I welcome the idea of allowing CPF members to bequeath the CPF monies directly to their nominees’ CPF accounts, as this would better provide for the healthcare and retirement needs of their nominees. This is certainly a good move. As this is a purely voluntary decision on the part of the member, members can decide based on their own needs and in their own interest and it is not a controversial change. In fact, it would help to enhance the CPF savings of surviving members of a deceased member.

On the amendment with regard to the unclaimed CPF assets of deceased and dormant members, could the Minister provide information on how many people will be affected and what is the total amount involved? On a further point, could the Minister also enlighten this House as to who will be considered as dormant members and what steps will be taken to locate the beneficiaries before the funds are transferred to the CPF general fund? Could the Minister also provide some information about what will happen to the monies of the deceased and dormant members that are transferred to the general fund, how will it be used and who will benefit from it?

On the amendment to allow conditions to be imposed upon the grant, renewal or reinstatement of any registration, licence, certificate or permit, without any application being made for that registration, licence, certificate or permit, I assume that this refers to the Medisave contributions for self-employed persons. The purpose of this amendment is likely to catch those situations where the licence once issued need not be renewed any further. With this amendment, the relevant Government agencies will now have the power to have a licence terminated, suspended or revoked if a self-employed person has not been paying

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his Medisave contributions. Whilst the intention of this amendment is good, as we also want to make sure that those who are self-employed have enough Medisave savings to take care of their medical needs, I would like to urge the CPF Board to put in place a system where the self-employed will be informed in advance before his licence is suspended, revoked or terminated as this affects his livelihood, and we all know that the self-employed faces greater income volatility compared to normal employees. They normally default when they are faced with other pressing immediate needs which they had to settle, such as the children's school fees or housing arrears, which may then affect their ability to pay their Medisave contributions.

Mdm Deputy Speaker, other than these comments and clarifications, I support the Bill.

5.21 pm

Ms Sylvia Lim: Madam, I would like to seek two clarifications on the Bill.

First, as regards the definition of "dormant account", the new section 2(1B) defines dormant account as one where a member has reached a prescribed age, prescribed circumstances exist and he has not responded to the Board to confirm that he is alive. According to the new section 13(7B), this dormant status would trigger a count-down towards a transfer to general monies, where the member’s monies will not attract interest payments.

Madam, there will be some concern about ensuring that elderly and frail CPF members, including those with stroke, dementia or who are illiterate, are not unfairly deprived of interest because they did not respond to the Board's request. What sort of due diligence will the Board exercise before making the transfer to the general monies of the Fund? Would there

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be a link-up to nursing homes, welfare homes, etc, to account for those in care? Would there be personal visits by CPF Board officials to the member's last known address?

Secondly, Madam, under clause 16(a), the new section 27L (1A) provides that CPF members who have already paid premiums for CPF LIFE annuities when they reach 55 will be required to pay additional premiums just before they reach Draw-Down Age (which eventually will be 65 years). These additional premiums will only be told to them two months before they reach the Draw-Down Age. Madam, at age 55, the member would have made his selection of the CPF LIFE annuity plan based on the premiums and projections told to him then. To require him to pay additional premiums just before Draw-Down Age seems to be a retroactive requirement, since he cannot change his annuity plan unless he gets special permission then. Should the member not be given a choice whether or not to pay the additional premium?

5.23 pm

Mdm Ho Geok Choo: Mdm Deputy Speaker, first, I would like to commend the Ministry for improving the clarity of the provisions in the CPF Act. I would also be focusing on a few of the proposed amendments.

Currently, CPF LIFE will apply automatically to those who turn 55 from 2013 and have at least $40,000 balance in their CPF Retirement Account. Those without that amount are left out. With this second auto-inclusion point, this group will now be included automatically, should their CPF savings increase to $60,000 by the time they turn 65. I would like to commend the Ministry as this amendment addresses the problem for which CPF LIFE was intended to be in the first place – which is to provide for those who may

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not have enough funds after their retirement.

Many CPF members have been invited to join this scheme. However, I would like to suggest that more specific guidelines be given on how to select one of the four CPF LIFE options available. This is because members cannot change it once they join the scheme, nor are they able to withdraw except under certain conditions. It is also important to emphasise and educate members that they should not depend entirely on CPF LIFE to meet all their retirement needs as the payouts may be insufficient. An all-encompassing approach should be adopted to help Singaporeans plan for retirement and this includes education on other options other than relying purely on this scheme.

Clause 2(g) amends section 2 by inserting a new subsection (5) to clarify that where a reference is made to the Board being satisfied that a person lacks capacity within the meaning of section 4 of the Mental Capacity Act, the Board must be satisfied that the person’s lack of capacity is likely to be permanent.

Madam, I would like to seek clarification on how this permanence is to be tested and defined. According to section 4 of the Mental Capacity Act, it does not matter whether the impairment or disturbance is permanent or temporary. Would it be too strict for the CPF Act to exclude, for example, severe impairment in the functioning of the brain, which lasts for a period of time but with a chance of recovery? How will it ensure that the monies paid out will reach the intended member, who has been deemed to lack mental capacity?

I welcome the new sections, 26A to 26D, where the distribution and disposal of shares of members who died before 1st January 1996 is addressed. Automatically disbursing monies to the nominees is welcome but the issue of dormant CPF accounts raises concerns. If a member is

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found to be still alive, the monies due will be paid by the CPF Board. In a modernised and automated environment, how does this misinformation come about? How does such a situation arise and how many such "orphaned" cases does the Board handle per year? What has been the payout and what are the causes for such lapses or rather situations?

Madam, the number of unclaimed monies is a cause for concern. I would like to know if the public outreach programmes by CPF are sufficient and that if they are, how could we further fine-tune the outreach to ensure that the message reaches the CPF members and the public at large that nominations are necessary to ensure that monies due to members will reach their loved ones. And as a matter of concern, is it possible for the CPF Board to provide the figures for the amount of unclaimed CPF monies over the past 10 years, the causes and how has the Board gone about in settling the unclaimed monies due?

With that, I support the Bill.

5.27 pm

Assoc. Prof. Paulin Tay Straughan: Thank you, Madam, for this opportunity to share my thoughts on this important Bill.

Over the years, the Central Provident Fund (CPF) has evolved into a comprehensive social security scheme that provides for, among others, retirement, healthcare and home-ownership needs of Singaporeans. This Amendment Bill, as with previous amendments, serves to further refine the provisions in the CPF to better meet the needs of Singaporeans. On behalf of all Singaporeans, I would like to thank the Minister and his staff for their hard work in sustaining this important scheme that we have come to

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depend on for economic and social security.

There are two aspects of this Bill which I would like to highlight. The first relates to clause 7 which amends section 16A(1) to allow withdrawal from a deceased member's Medisave account to pay for "psychiatric or other treatment or services" rendered to the deceased before his demise. This serves to expand the eligibility of Medisave beyond just "medical treatment".

On this note, I would like to ask the Minister what "other treatment or services" covers. Does the expansion include all health and care-related services rendered to the deceased before his death or only to what was originally authorised to be deducted through Medisave? Given the fast greying Singapore population where healthcare costs for elder care are of primary concern, will the Minister consider extending Medisave coverage for palliative care, step-down home care services for example, as well as institutional care services for the elderly? If so, this will certainly ease the financial constraints on caregivers, and render Medisave a more robust and comprehensive healthcare savings scheme.

I understand that the conditions under which Medisave can be invoked are kept stringent to minimise risk of premature depletion of the account. However, in the case of the deceased, I think we can afford to be more generous in our definition of eligibility so that faithful caregivers will be fairly compensated for their services.

The second aspect of this Bill I would like to draw attention to is the amendments to the CFP LIFE scheme. Once again, I am reminded that only those with active CPF accounts stand to benefit from this important scheme. The group that stands out as being at risk for omission is the ageing homemakers.

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In my very first debate in this House last July, the Minister had assured us that there are processes in place to facilitate regular contributions to CPF accounts of loved ones. I would like to ask the Minister to share with us the data on the proportion of Singaporeans who are still without active CPF accounts as well as the number of Singaporeans who are nearing 55 years old but do not have the minimum sum required in their CPF Retirement Account. What is the profile of this group and what efforts have been made to help them meet the eligibility requirements for inclusion in the CPF LIFE scheme?

Mr Gan Kim Yong: Mdm Deputy Speaker, I want to thank Mdm Ho Geok Choo, Ms Sylvia Lim, Mdm Halimah Yacob and Assoc. Prof. Paulin Straughan for their support of the Bill. Let me respond to their comments and questions.

Assoc. Prof. Straughan asked about those who might not have $40,000 in the CPF Retirement Account. Currently, two-thirds of all working age resident CPF members are active members. The CPF Board projects that for the first auto-inclusion cohort in 2013, around 70% of active members will have at least $40,000 in their retirement savings account. Therefore, all these will be auto-included in CPF LIFE. This ratio will improve and become higher for younger cohorts, because they would have a longer time to accumulate savings and benefit from interest income.

However, Assoc. Prof. Straughan may be under the impression that there is a minimum savings level in the Retirement Account to qualify for CPF LIFE. I assure her that this is not so. Let me reiterate that there is no minimum balance needed to qualify to participate in CPF LIFE. Members with lower CPF balances can still opt-in to the scheme, as I mentioned in my Second Reading speech.

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On top of that, we have several schemes to help members with low balances. First, we help them work and save more. The Workfare Income Supplement scheme encourages older low-wage workers to continue to work and to save for their retirement. We are also introducing re-employment legislation which was highlighted by my colleague, Minister Lim Boon Heng earlier today. This will also encourage them and provide more opportunities for older workers to continue working to build up their retirement savings. Secondly, the Government provides the L-Bonus, or CPF LIFE bonus of up to $4,000 for those born before 1963, to help them to have more savings for CPF LIFE. Thirdly, we have gradually liberalised the minimum sum topping-up scheme over the years, so that by now, besides family members, even employers and friends can also top up the Retirement Accounts of members with low balances.

During the Second Reading of the CPF Act last July, Assoc. Prof. Straughan had suggested introducing a GIRO system to facilitate top-up for CPF members. She will be happy to know that we have taken her suggestion on board and CPF Board has started offering this service since April this year.

All these measures will help CPF members increase their retirement savings in order to participate in CPF LIFE. The rationale behind having the second auto-inclusion at the Draw-Down Age that Mdm Halimah asked about is to help include those who have missed auto-inclusion at age 55, but who have accumulated more savings by their Draw-Down Age. For the first auto-included CPF LIFE cohort, the participation rate among active members is projected to increase from 70% to over 80% with auto-inclusion at the Draw-Down Age.

Mdm Halimah and Ms Sylvia Lim asked about the additional premium at

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Draw-Down Age (DDA) for those who are already participating in CPF LIFE. Let me clarify, this is no different from the current practice under the Minimum Sum Scheme, where all the balances in the Retirement Account, up to the minimum sum, will have to be set aside until DDA, including contributions and interests received between age 55 and DDA. The member will then receive a payout for 20 years from DDA, under the Minimum Sum Scheme. Hence, it is necessary and appropriate for CPF LIFE to similarly take in such additional monies in the Retirement Account between age 55 and DDA.

This intention is not new. This intention was also stated clearly in the report of the National Lifelong Income Committee in 2008. We had not amended the Act for this purpose last year, because the earlier amendments last year were meant to facilitate older members to opt-in. It was meant as an opt-in scheme. As it is an opt-in scheme, the second premium was incorporated as part of the scheme design. So it was already in the CPF LIFE scheme for the opt-in cohort. Now we are making this amendment in the Act to build it in as a feature for the auto-included cohort.

I agree with Mdm Ho Geok Choo that public education is important to help members understand how to select the plans. Since last September, the CPF Board has sent direct mailers to every eligible opt-in member with information on CPF LIFE. The Board has also reached out through various media channels, the CPF website as well as regular talks and roadshows on CPF LIFE. Members can also approach the CPF Board directly for help and advice. When choosing a plan, members should consider whether they prefer to have a higher payout and provide less for their beneficiaries when they pass on, or they prefer to leave more for their beneficiaries and accept a lower payout.

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These are trade-offs for them to decide. Once they have decided, they should then select the CPF LIFE plan that would best suit their needs and criteria. We have simplified CPF LIFE into four plans. Many members have found the materials provided to them helpful in understanding and selecting the plans. I also agree with Mdm Ho on the importance of helping Singaporeans plan for retirement. The CPF Board has a member education programme which promotes retirement planning. The Board produces education materials and runs events such as talks for CPF members reaching 55 years of age to promote these messages. The Board also has a dedicated financial planning website, IM$avvy. The Board is also an active member of MoneySENSE, the National Financial Education Programme, led by MAS. The Board will continue to help its members plan for their retirement.

I will now address Mdm Halimah's queries on disbursement of CPF assets to beneficiaries. In the last five years, the CPF Board has been able to locate and make payment to nominees in 98% of all such cases. Two percent of the cases remain outstanding, despite the Board's efforts to locate the nominees and disburse the monies. These include cases when nominees either did not respond to the CPF Board letters or could not be located because of insufficient or inaccurate information provided by the member on the nomination form, or some nominees might have relocated overseas.

Over the last few years, we have on average about 280 cases of beneficiaries not coming forward to claim the monies of deceased members, involving about $2.4 million each year. As for Mdm Halimah's question on when a member will be considered dormant, I have explained that in my earlier speech. Firstly, this is if the record shows that the member has attained a prescribed age, which is now set at 100 years. For some

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who live beyond 100 years, there is a second condition, and that is if the member has not responded to any notices that the Board has sent to them or advertisements that we placed in newspapers to ask them to come forward. If they do not respond to these advertisements, the third condition is that there has been no account-activity for 10 years.

Mdm Halimah and Ms Sylvia Lim wanted to know what steps the Board will take to locate beneficiaries before funds are transferred to the CPF general fund. The Board does its best to locate the beneficiaries. For example, the Board will send letters of enquiry to the person who had notified the Board of the member's death. The Board will also go through its own records as well as residential listings to track down these beneficiaries. If necessary, the Board will publish the case on the Ministry of Finance (MOF) unclaimed monies website for one year, and also place advertisements in the local newspapers calling for beneficiaries to come forward and claim the monies.

Mdm Halimah asked about the status of monies which will be transferred to the general monies of the fund. Let me clarify that the objective of the transfer is to consolidate the monies for ease of management. The general monies will remain as part of the overall Central Provident Fund. What is more important is that valid claimants can still approach CPF Board at any time, even after the seven years to claim the monies including interest. That means the monies will be returned to the member's account with interest.

On Mdm Halimah's comments on Medisave contributions for self-employed persons, let me first clarify that this amendment extends the powers of non-renewal to cases where licences can be automatically renewed without application. Today, the way the Act is drafted, it

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requires an application to be made, so that the licensing authority (LA) can reject the application. But going forward, as many of these LAs may move towards an auto-renewal process which does not require an application to be made, this amendment will allow the LAs to continue to enforce the requirement, despite the absence of an application process.

I assure Mdm Halimah that CPF Board will provide sufficient notice. It is our practice to send out reminders to self-employed persons six to eight weeks before his licence is due for renewal, so that he can settle any outstanding Medisave liabilities. In addition, the CPF Board reminds self-employed persons annually to make Medisave payments. We will also allow self-employed persons to pay via instalment plans if they require a longer time to settle the arrears.

Assoc. Prof. Straughan has asked what other treatment and services are covered by the amendment of section 16A(1). The amendment is not an expansion of the use of Medisave. It is just to align the CPF Act with our current policies on the use of Medisave that are already defined in the CPF regulations. This includes inpatient hospitalisation at acute hospitals, community hospitals and chronic-sick hospitals. It also covers outpatient treatment for cancer, chronic diseases and others. CPF members can already use Medisave for inpatient palliative care in hospices. I understand that the Ministry of Health is working with providers to offer home palliative care services. To better cater for institutional and step-down care, the Medisave withdrawal limits for community hospitals and day rehabilitation centres have been increased since 1st June this year. While MOH continues to study and review how Medisave can be used for intermediate and long-term care, the original purpose of Medisave which is to help Singaporeans with their hospitalisation expenses after retirement must be preserved.

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On the question of mental capacity posed by Mdm Ho Geok Choo, let me explain that we currently allow early withdrawal of CPF monies by members who are permanently incapacitated. Therefore, a member who is mentally disordered and incapable of managing himself has to be shown to be permanently so, to guard against pre-mature withdrawal of his CPF savings. The amendment does not change current policy but preserves the requirement for permanent incapacity.

Mdm Ho has also asked how the Board determines permanent lack of capacity. The CPF Board relies on the professional assessment of doctors to ascertain if a member's lack of capacity is likely to be permanent.

I believe I have answered most of the questions. Once again, I would like to

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thank Members in the House for their support of the 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 Gan Kim Yong].

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