EXEMPTED BUSINESS

EXEMPTED BUSINESS:

(Motion): 6.15 pm

With the consent of Mr Deputy Speaker and the general assent of Members present,

Question put, and agreed to.

Resolved,

That the proceedings on this day's sitting on the Estimates for FY08/09 be proceeded with beyond 7.00 pm and be exempted from the provisions of Standing Order No. 91(3). - [ Mr Lim Swee Say ].

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COMMITTEE OF SUPPLY: Head S (cont.) -

The Chairman: Head S, Ministry of Manpower. Dr Ng Eng Hen.

Dr Ng Eng Hen: Sir, let me thank Members who have commented on CPF LIFE - Ms Sylvia Lim, Mr Siew Kum Hong, Prof. Mehta and Mr Seng Han

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Thong. I think some other Members also commented on it during the Budget debate - Mr Ang Mong Seng, Dr Amy Khor, Mdm Halimah Yacob, Dr Lim Wee Kiak, Mr Yeo Guat Kwang and Mr Zainudin Nordin. I will try to take some of their queries here.

The Government has accepted the recommendations of the National Longevity Insurance Committee chaired by Prof. Lim Pin. It was a Committee appointed by the Ministry, and my own reply to them is that they have done a great service for Singaporeans. I had called it a landmark report and it is so, because the Committee’s proposals for annuity plans, now simply called CPF LIFE, significantly strengthens our CPF system, and it provides a much needed tool to address the increasing lifespans of Singaporeans and our ageing population. As everyone should know by now, CPF LIFE will provide members an income for as long as they live, instead of an abrupt cut-off with no income when they are older and most dependent, as in the current Minimum Sum scheme. I am gratified by the positive response to CPF LIFE from members of the public, the media and MPs. The Straits Times said that it "recommends it thoroughly", and "that this is a plan that … sells itself." These positive responses from the media, grassroots organisations, unions and members of the public reassure the Government that its efforts to improve the retirement adequacy of Singaporeans - and I know that this requires substantial changes - are correct policies, and indeed appreciated by the public at large.

I also want to thank Members of this House for supporting CPF LIFE. At the same time, we recognise that there will always be gaps. This is a new plan and we will take in the good suggestions to improve the scheme further. But I want to caution that we should not impose demands on CPF LIFE to deliver on goals for which it is not meant to address.

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Neither should we expect CPF LIFE to carry burdens for which it was not designed. If we did so, it would doom the scheme to fail eventually. We have to remember that this is a scheme that will have to provide for retirement needs for successive generations of Singaporeans. So we must ensure, first and foremost, that CPF LIFE itself is financially sustainable for the very long term. If we start in 2013 for those aged 50, some of them may live to 100 or more. So, at least, for one generation, it has to last 50 years or more. For successive generations, we will have to be very careful that CPF LIFE must be started and operated based on the correct principles.

And this is exactly how we should start. The cardinal principle and critical pillar underpinning the viability of CPF LIFE must be that a member can only spend what he saves. This has been the guiding star of our CPF system since it was started 50 years ago in 1955. We have never wavered from this guide-post, despite any challenge. We have kept the CPF self-funded. All of us contribute to our CPF with that clear expectation that we can only spend what we saved. We should be very careful to reiterate that CPF LIFE does not dilute this principle. Yes, there is some risk pooling, but the amount you put can be determined by you, and you can even get out sometimes more than what you put in. It does not dilute the principle that you can only spend what you saved. This principle ensures that the assets within the CPF LIFE match its liabilities. This is why Prof. Lim Pin's Committee was also careful to point out that the payouts from CPF LIFE, as Ms Sylvia Lim mentioned, must take into account future mortality experience and actual investment returns, to ensure that CPF LIFE remains fully funded.

Mr Siew Kum Hong and Ms Sylvia Lim talked about universal coverage and what about those who are not included. This does not mean that we do not assist

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those who do not work and do not have CPF funds, but we should mix the two. The CPF LIFE in the CPF system is not a financial assistance scheme. It is an individualised pension system. Neither does it imply that we should be satisfied that some groups are left out of CPF LIFE. Indeed, as Mr Seng Han Thong said, bring in as many as possible into this safety net. But they must be brought in on the correct terms and, indeed, we must step up efforts to increase the reach of CPF LIFE to include as many as possible, including those that Mr Siew Kum Hong talked about, ie, the low-wage workers, contract workers and the self-employed. Minister of State Gan Kim Yong will touch more on these aspects.

I would also want to say that Singapore is not alone in applying this principle of self-provision to provident funds; that you receive amounts proportionate to what you have saved or put in is an established principle of most pension systems, even those which provide defined benefits. For example, if you log on to the US Social Security benefits webpage, let me quote from the website: “Higher lifetime earnings result in higher benefits. If there were some years when you did not work or had low earnings, your benefit amount may be lower than if you had worked steadily.” It is almost intuitive and sensible. Indeed, that is how pension systems apply this rule. That is why those who do not have enough in their CPF to provide an income for life, will not be automatically included. This is the reason.

So when the compulsory LIFE scheme starts in 2013, as Mr Seng Han Thong says, about 75% to 80% of the first cohort of active members will have sufficient cash in their Minimum Sum of about $40,000, and they will be automatically included in CPF LIFE. But because of the extra 1% interest earned on the first $60,000, subsequent cohorts to that will have more, and we expect

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that, over time, almost all active members will be included into CPF LIFE. But even for those with less than $40,000, we want to encourage them to opt in, as well as for those who are older than 50 this year, and I will talk about that.

The Life Bonus (L-Bonus) has indeed been structured to be generous to encourage opt-ins. Those who opt in must be willing to receive monthly incomes lower than those who are automatically included, but they will have the assurance that this will last for as long as they live. We have lowered significantly the threshold amount. From $40,000, we have lowered it to $20,000, ie, by half, for eligible members to receive the full L-Bonus, up to $4,000. Those lower than $20,000, we are allowing them to come in. We want them to come in, but they will get a pro-rated L-bonus. I think it is fair. But at $20,000 and beyond, they can get up to the full L-Bonus of $4,000. The message underlying the L-Bonus, the way it is structured, is very clear - CPF LIFE is a good scheme that provides for your old age, and the Government is providing incentives to get as many as possible to opt in, even if they are not automatically included.

The introduction of CPF LIFE will help CPF members to better provide for their own retirement. This is good, as members of the public have said. But during the Committee's deliberations - some of you can ask Mr Seng Han Thong who is on the Committee, including other unionists - the Committee and other members of the public said they were concerned about this aspect, that we should not oversell CPF LIFE because they were fearful that it will undermine family support for the elderly. It must not give rise to the wrong impression that the responsibility of children or family members to help each other is diminished.

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Family members must continue to play a key role in looking after the elderly and each other. This is a value that we must reinforce, not diminish. This is why, in tandem with the introduction of CPF LIFE, we further liberalise the Minimum Sum Topping-Up Scheme. This year’s measures come close to the enhancements that I announced last year. Last year, we raised the prevailing limit. It was previously very low and I said that we can raise it up to the current Minimum Sum (MS), and it will keep going up as the MS goes up. The results of last year's measures have been encouraging. If we compare 2006 to 2007, the number of top-up applications increased by two and a half times, while the total amount of top-ups increased by almost three times, to $44 million, up from $15 million. This year, we will make further enhancements to the schemes.

All in all, the new rules make topping up simple and with added incentives, more will be able to receive top-ups, and those who top up for others can receive incentives. Let me make it simple.

Firstly, you can top up more each year. Cash top-ups to the Minimum Sum will no longer be subject to annual caps. Previously, it was about $26,000. Note that it is to the full MS, which means that you can top up up to $99,000 this year.

Secondly, for cash top-ups, we will remove restrictions on age and specific family relationships. Now, more people, including extended family members, will be able to make cash top-ups to members above or below age 55. Cash top-ups will also enjoy enhanced tax relief. Cash top-ups by a member or his employer can enjoy up to $7,000 tax relief per year. In addition, if the member makes cash top-ups to his family members, he can receive up to an additional $7,000 tax relief a year. To facilitate, I have asked the CPF Board to step up its communication efforts to encourage members to top up

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their relatives' CPF. These changes will take effect from 1st November 2008.

From 1st November 2008, employers will also be allowed to make cash top-ups to their employees' Minimum Sum and they can enjoy a full tax deduction. The message from the L-Bonus, the liberalisation of the top-up rules is again simple and clear - family members who can afford to, should support one another. We strongly encourage husbands to top up the accounts of their spouses. This is a year of Budget and COS that all the Ministers encourage their husbands to top up the accounts of their spouses, so I am adding my voice to it as well. Mr Khaw Boon Wan said it for Medisave.

Today, I am encouraging husbands to top up the other accounts of their spouses. But there are incentives in my encouragement, and the incentives are great. Let me give you an example. If a husband at age 55 tops up his 50-year-old spouse's account by $20,000. Here, we see Mrs Tan who is not working now but has $8,000 in the CPF in 2008. Mr Tan, the husband, tops up $20,000 in her account. If he uses cash, the first thing is that he will have up to $1,400 in tax savings. But if he tops up $20,000 so that Mrs Tan has $28,000 at age 50, the effects are dramatic. Five years later, Mrs Tan will not have $28,000. His wife will have $40,000. It is a jump of $12,000 in five years - $8,000 in additional interest earned, and $4,000 from the L-Bonus. If Mr Tan had kept that $20,000 in his account, because the extra 1% is capped at $60,000, he loses that 1%. If he transfers $20,000 from his CPF to his wife, there is an additional $200 a year in additional interest. So, $28,000 at 50, at age 55, you can join the CPF LIFE scheme, and at age 65, Mrs Tan can look forward to $360 a month, for life. And she will have a total gain of CPF interest, plus L-Bonus of nearly $10,000. So, if the husband tops up $20,000, the Government is, in effect, matching the top up by

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$10,000. We are adding a plea for spouses to top up your spouses' CPF and get more.

Let me now address the specific concerns about CPF LIFE which have been raised. Many people have asked, and I know some Members have expressed that it is a bit confusing, the 12 options, and many people have asked "What do I do now? I do not fully understand the scheme but, from what I hear and read, it seems to be good, so what do I do?" My general assurance to all Singaporeans is this - do not worry. You actually do not need to do anything, if you are younger than 55, except work and contribute to your CPF, of course. I think that is a good piece of advice. But when the time comes for you to join CPF LIFE, the CPF Board will contact you and help you. But let me sketch out how the scheme will affect different broad groups, and provide some details.

6.30 pm

As we said, in 2013, the scheme starts. For those who are 50 and below this year will automatically be included, if they have $40,000 and above. Those aged 51 to 54 now, they can opt in when they reach 55. The CPF Board will contact them then and facilitate.

For members aged 55 and above this year, we will give them ample time to opt in, a year or more. For those who can benefit from CPF LIFE, again, the CPF Board will contact them and provide them the necessary information and opportunities to opt in. All those who meet the eligibility criteria and opt in will receive L-Bonuses. This will increase their CPF funds and monthly payouts.

Some have fed back that CPF LIFE is complicated. So to make it easy to understand, let me have another go. You only need to remember three things, not 12. First, CPF LIFE guarantees you an

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income for life. It will start from 65 and after age 65, the drawdown age will be for life, for as long as you live. Second, the Minimum Sum will always be returned to you, and the unused sum will go to your beneficiaries. Third, if you want a higher income from CPF LIFE, you can do so by putting more into CPF LIFE which means at least less for beneficiaries. I think that is simple enough. Three key points.

Some of you will say, what does that mean? It means that at age 55, all members automatically included will be put into the Standard Plan. Let me explain to you how it works. I have taken Mr Seng Han Thong's example and made a slide now called "The Standard Plan". There is no more refund or non-refundable, which is confusing. The Standard Plan provides a balance between what the member receives each month for life and how much he wants to leave for his beneficiaries. It is as simple as that. It is a balance. For those who want to choose higher income plans, they want more from their CPF LIFE, they want a higher income than what they can get in the Standard Plan, they can do so but they may leave less for their beneficiaries. Or they can choose lower payouts, or less income, and may leave more for their beneficiaries. For a selected few, there are finally the non-refundable plans which provide even higher payouts but it may leave the least for your beneficiaries. It is quite easy to understand.

What will happen when a member in the first cohort reaches 55 in 2013? I have given you a general example. Let me give you a specific example. Someone who has $67,000 in his Minimum Sum. At age 55, he is automatically put on the Standard Plan. He will get $610 a month for life. But that person may say, "Well, $610 is not enough. I want more." You can go up to $650, more for life but at

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least less for your beneficiaries because you are putting more into it - some of it is a non-refund plan - but you just basically put more into CPF LIFE. The others will say, "I don't really need so much income. I want to leave more for my children." You just choose one of the lower income which leaves more for your beneficiaries. It is quite easy to understand. The CPF Board will provide essential and personalised information to each member when he reaches 55. They will be told how much he or she has in their Minimum Sum and placed under the Standard Plan and how much they will receive for life. Any unused amount remaining in their Minimum Sum will be returned to the beneficiaries when the members pass away. If the member wants, he/she can choose the other options - which include no refund, so they get a higher payout.

We will continue to educate members on LIFE plans. I am sure this will not be the last time, and we will continue to reiterate so that people can understand. The CPF Board will step up its communications effort.

Questions have been asked about how the self-employed (SE) and low wage workers (LWW) can save enough to be included into CPF LIFE. Ms Sylvia Lim and Mr Siew Kum Hong asked: what about those who do not qualify? What is the Government planning to do? Do we help cope with their needs in their old age? Other Members have also asked this - Mr Zainudin Nordin, Dr Amy Khor, Mr Ang Mong Seng, Prof. Mehta, Dr Lim Wee Kiak. The Minister of State Gan Kim Yong will elaborate on specific efforts in helping low wage workers and self-employed persons for CPF contributions.

I want to make one or two points here. Let me point out that we have in place measures to help these low wage workers, self-employed and contract workers to build up their CPF balances.

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Firstly, Workfare will contribute up to 20% of a worker's wages into his CPF. This is a significant help.

Let me explain to you how big an impact it is. I will not choose somebody in the 50th percentile. I will choose somebody with the 10th percentile wage earner who earns $900 a month. You agree that that is a reasonable starting point to help those who are low wage workers. Mr Harun, say, at age 40 today, he earns $900 a month. Let us say he has combined in his Ordinary and Savings Accounts of about $15,000 and he continues to work till 65 and contributes regularly. How much do you think he will have at age 55, 15 years later? $20,000 or $30,000? Not at all. He will have $71,000 in his Retirement Account. This is in effect steady contributions to CPF. And with the Workfare Income Supplement, he will have $82,000 in his Retirement Account.

My point is, at age 65, if we help him to continue to work, he will have $107,000 in his Retirement Account and $122,000 in his Retirement Account with Workfare. It is a substantial help that we are giving to low wage workers. But we are saying that he must continue to try to work. Is that a wrong message? Do you prefer a message which says, "I will take care of your needs. Unconditional assistance." Can you deliver? Can you have a system that provides that? So it is much safer. I think the better message to articulate is that, yes, you do your part, but Government will help and help substantially. So even if he uses a sum of money to buy a home, this takes into account that he does not use any of it to buy a home. But even if he uses half of it and with the additional housing grant, he can still own a home and half of that $40,000 in his Retirement Account to have an income under CPF LIFE for as long as he lives.

I also want to add that since 2001, we have helped this group and others

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substantially. Since 2001, including the GST Offset package, special transfers, the Government has contributed a total of nearly $12 billion to members and to citizen residents.

Some have talked about housewives. As I said, I encourage spouses to top up for their housewives, and this is why we have structured the L-Bonus as such. For the disabled, I take that there are other employment assistance schemes, such as the Open Door Fund and the Enabling Employers under MCYS. But my main point is, let us not mix the two. CPF LIFE is for those who have put enough into their own CPF and we need the other schemes to help the others.

Ms Sylvia Lim asked about inflation in CPF LIFE. She is quite right. It is not inflation indexed. In fact, Prof. Lim's Committee struggled at length because it makes sense if you can have a payout that rises, so that your purchasing power is not diluted. I find it hard to make the distinction between the Ministry and the Committee making this wide consultation because we appointed the Committee to make wide consultation. But the point is they had wide consultation. The feedback was this. If you have inflation index, it means smaller amounts from the beginning and larger amounts when you are older. Many members of the public said they were concerned that they would not live long enough to receive the later amounts. So the Committee was practical and they say, "Let's just have it flat because the Minimum Sum scheme is flat." I think it is a sensible proposal. There are of course other ways to increase your income later in life. One good example is the HDB Lease Buy-Back Scheme which tops up the stream of income that you get from CPF LIFE.

Ms Sylvia Lim also asked about sustainability. She is right. Prof. Lim Pin's Committee was very careful to say that

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payouts must be based on how long people are actually living and the interest rates. Because to be financially viable, payouts and premiums must correspond to actual interest rates and mortality experience. This is a universal rule that is applied for all insurance and annuity providers. It is nothing new. If you read the report, Prof. Lim Pin's Committee specifically noted the example of Equitable Life in the UK - I have circulated that - for a company that made promises, that they could not deliver and did no one any good. It is easy to make promises, in other words. It is easy to say, "I will give you this." But if I ask you, "how are you going to pay for it? Will you be around to make sure that you stick to your commitment? And what if you cannot? What service have you done?" So if you say

CPF LIFE, everybody jumps on board. It is a wonderful safety net. You do not have to bring in your rope. When the net breaks, what happens? I think we want to be very careful. It will be subsumed under the CPF interest framework which guarantees 3.5% for less than $60,000. Beyond this, the payouts will be paid based on actual interest rates and mortality experience. This is in line with standard practice of annuity providers to ensure that CPF LIFE remains adequately funded and sustainable over the long term.

It is hard to predict how the 10-year Singapore Government Securities (SGS) will perform. We talked about this during the CPF debate. There was a substantial debate and most of us were here, it was a few days of debate, and many of the Members debated. We said at that time that 10-year SGS performed over 4% historically. We cannot predict it in the future. According to historical expectations, I think it will be above 4%, which means that the guaranteed 1% will be above 5%.

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Prof. Mehta suggested that CPF contribution rates of workers aged 50-55 be reviewed. Let me just say that I have no intention of being anti-family, against social gerontology on ages. We introduce this to help older workers remain employable because of our seniority-based wage system. She asked for empirical evidence that it helps. I do not know whether it is empirical. But the employment rate for workers aged 50 to 54 has risen, from 68% in 2002 to 75% in 2007. So it is a significant jump. But Prof. Mehta did not mention one point that we did not take away. The Workfare Income Supplement

pays up to $2,400 a year and 25% of wages, and the Workfare Income Supplement increases as you grow older. So am I an ageist if I do that? It is just being practical. We recognise that you are fixed with a formula that we inherited from whoever that when you grow older and your wages go up, the employers find it harder and less motivated to hire older workers. So let me just categorically say that it was not discrimination against older workers. It was to help them increase their employability and the figure tells me it has, whether it has been due to the economy or due to the reduction in the CPF rates, maybe both. But whatever it is, our Workfare Income Supplement tops up, and in a majority of cases more than makes up for their reduction in CPF. I also want to add that our CPF top-ups usually are more for older people as well.

Ms Lee Bee Wah asked if we could allow CPF members to use CPF funds to fund their own part-time tertiary education. I understand the merits. I believe that education elevates and delivers. But as the Minister who is also looking after your old age needs for CPF, I have to ensure that there are enough CPF savings for old age. So there are trade-offs. When I look at how much longer Singaporeans are living, how much more rapidly ageing our population is, I think we keep to the current position. Do not liberalise it further.

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Part-time students are likely to be working adults so that they would be able to pay their tuition fees. I think MOE and the Finance Minister has announced liberalisation for use in certain courses.

So, I think we keep it as it is and not expand the current CPF Education Scheme to fund part-time studies.

6.45 pm

Mr Seng Han Thong asked about CPF investments. If I heard rightly, he said there are some people who will forgo the extra 1% on the $20,000. We have not factored that in. We can consider it, but our basic proposal was that if we pay 3.5%, it is to be treated as a long-term fund, because 3.5% is even more than the 20-year SGS currently. So, we should treat it as long-term money and not short-term funds to be used for investments.

Sir, recent changes in our CPF system, especially the CPF LIFE, have put us in a much stronger position to address the challenges of our population. We now have a more robust system, and the challenge is to get as many people on board as possible to enhance retirement sums. With the extra 1% interest on the first $60,000 and the introduction of CPF LIFE, there is even greater benefit for Singaporeans to contribute to and grow their CPF savings. Members and employers can play a part by top-ups. Husbands can top up their spouses' CPF. So, I urge all working Singaporeans to regularly contribute to their CPF, and for family members who can afford it, to top up the CPF of their loved ones.

Re-employment of Older Workers

Mr Seng Han Thong: ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Sir, in the past, whenever I went to the Changi Airport, I used to go to look for a relative in the toilet because he told me that he is an attendant at the

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airport toilet. He is so happy because he said that the environment is good, his wages are good and his supervisor is very kind. In the last one or two years, I find that more and more old people are working. They are happy, compared to two or three years ago when we were debating whether old people should work. I think there is a large difference.

What is the secret of our success?

First, I think it is because of our environment. Second, as the Minister said, we emphasise the importance of encouraging and helping the senior people, even though it is only a few hundred dollars. So in order to encourage more older workers to work, besides redesign of the jobs and retaining a certain amount in the CPF, it is important to improve the working environment. Using the example of the toilet at Changi Airport where my relative told me: "I do not like to go to the coffeeshop toilet in the HDB estates because it is not clean." So besides job redesign, we must also redesign and improve the work environment.

*Cols. 2047-2048.

The Minister of State for Health (Mr Heng Chee How): Sir, the re-employment of older workers is an imperative for the economy and society because of the manpower shortage and rising longevity. The coming of the re-employment law in 2012 adds further urgency to companies and organisations to make the necessary arrangements. Within the union movement, we have already reached out to some 35% of unionised companies last year, and we are on our way to reaching out to 60% this year. Within those companies that have committed themselves, work also is being done to restructure the hiring and deployment plans so that the employability of these older workers would not be a one-year phenomenon at age 62 or be overly dependent on an ultra-tight labour market.

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I am not sure what progress there has been in the non-unionised sector.

In view of the less certain economic outlook and the possible lack of urgency on the part of some employers as they focus on immediate-term firefighting, ie, they do not see doing this work to ensure re-employment practices are well managed as a 2008 priority but, perhaps, as something that they can tackle in the year 2011, if they think, then there is a risk that the momentum in this subject will flag. If that is so, then there will be big difficulties later on.

I would like MOM to give an update of the status of the progress so far and urge the Government to continue to devote attention and resources to highlight the importance of getting it going and to nudge all employers to work with their unions and employees to put in place sustainable arrangements for different industries and job types as soon as possible.

ADVANTAGE! Scheme

As part of the Government's efforts to promote employment, retention and re-employment of mature workers, MOM and WDA have initiated the ADVANTAGE! Scheme. Under the scheme, and subject to fulfilling conditions, a company can receive grants of up to $400,000, and I commend MOM and WDA for initiating the ADVANTAGE! Scheme to give incentive for progress. Clearly, the more attractive the terms and user-friendly the scheme becomes to companies of different sizes and in different industry settings, the faster the take-up. That means that more mature workers across more sectors will benefit earlier in terms of prospects for employment, retention and re-employment. On the ground, there has been some feedback on how the

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scheme could be further refined to accelerate progress.

First, is to introduce more flexibility. Some companies may need pilots in order to gain the confidence to do more. Such companies would hope that the grants can be structured in such a way as to support the conducting of pilots.

Second, smaller companies find it harder to fulfill the conditions on headcount employment, compared to bigger companies. Yet, as a group, SMEs employ the majority of workers and would have to re-employ them in time to come. Is there a scope to focus on terms that would suit SMEs better? Is it possible for the ADVANTAGE! Scheme's terms to be adapted for SMEs? If not, could there be a small ADVANTAGE! Scheme, for example?

Third, some companies are running ahead of others in terms of ideas, and so they put in their grant applications. But the application does not amount to $400,000 in the first instance. But there is a current limitation in the sense that a company is allowed to apply once. So, they hope that the company grant cap can be maintained while allowance be made for them to apply more than once.

I hope that MOM can take these suggestions into account as we enhance and refine our efforts to support the employment and re-employment of older workers.

Retirement Age

Dr Ong Seh Hong: Sir, I am glad to hear the Minister proclaim his pro-elderly stand and that the Government is aware of the need for active ageing.

I have argued in this House before, and still stand in firm belief that the chronological age is no indication of a person's psychological, physiological and mental well-being. A person at 62 could

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still be very healthy in all aspects, and he can expect to live longer if he is actually working. Back then, admittedly, my arguments were not supported by facts and statistics, as they are now with the Prime Minister's National Day Rally Speech. I have challenged the Ministry that the prescription of retirement age at 62 acts as a ceiling to a working person's continual active ageing. Now, I would like to revisit this topic and urge the Ministry to once again consider removing totally, the concept of a prescribed retirement age and allow a person to work as long as he is fit and capable to perform the job duties, regardless of his age. As a psychiatrist, I have often noticed the rapid physical, psychological and mental deterioration the moment a person retires from his work and remains inactive in both physical and social life.

Sir, if a person continues working past the prescribed retirement age, at the very least, his savings would last longer. He would be happier, as he still keeps in touch with his colleagues everyday he goes to work. He would also be healthier because of the physical activities he does and the challenges he faces day to day. Minister Mentor has said that, if having reached the age of 62, we decide to stop working and enjoy life, we would be making the biggest mistake of our life. Why then should MOM force our citizens to make the biggest mistake of their life by setting an artificial retirement age?

Workfare Income Supplement

Dr Ahmad Mohd Magad: Sir, the Workfare Income Supplement (WIS) has been of great help in boosting the incomes of older workers and lower-wage earners. However, I am concerned with the 100,000 or so low-wage workers who have not signed up for the WIS scheme. I understand that some of these workers may be illiterate and do not understand the mechanics of the scheme. Others may be casual workers or self-employed ones

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who do not make Medisave contributions because they have difficulty making ends meet and are struggling to finance their day-to-day needs. This includes the group of physically disabled people who work informally in workshops and earn low salaries.

Sir, I would like to propose some minor changes to the WIS scheme. I feel that the WIS scheme should be tweaked for lowly-paid casual workers or the self-employed. Currently, these people would have to make a Medisave contribution to have the entire WIS payouts channelled to their CPF Medisave accounts. I would like to suggest that this group of workers have their WIS allocation divided into two portions.

First, a smaller portion to be disbursed in the form of cash and the remaining bigger portion to be in the form of CPF Medisave contribution. A salary cap could be set for these workers, eg, those earning below $500 or $800 a month. Other factors, like disability, should also be included for qualifying workers. I believe it is important to tweak the system for these workers to incentivise them to continue working and, at the same time, have contributions made to their Medisave accounts. As these people may be too hard pressed for cash, making them contribute to Medisave in order to receive more money in the Medisave accounts hardly seems like an attractive option. This small cash incentive may persuade more to join WIS.

Another possibility is to enable grassroots agencies or self-help groups to help with the Medisave contributions of truly needy low-income workers so that they can benefit from the Medisave top-ups.

Mdm Halimah Yacob: Sir, the WIS is a good scheme, as it is aimed at motivating and incentivising our low-wage workers to strive hard and be self-reliant. However,

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for it to be a fair scheme, overtime should be excluded from the computation of the $1,500 income ceiling. Including overtime penalises low-wage workers who work hard, as the harder they work, the faster they will reach the income ceiling. This is unfair to them. It also runs counter to the stated objective of the scheme.

Fixed overtime is commonplace in some sectors, such as the security sector, and other sectors starve for workers in a tight labour market. And overtime can constitute a significant portion of the wages, in some cases, even as high as 40% of the total wages. Indeed, if there are two workers working side by side in a company, and one has a good attitude and willingly agrees to do overtime every day, whereas the other is lazy and refuses to do so, then it is unfair that the one who refuses to do overtime will get the WIS, but not the hardworking worker. Therefore, I urge the Minister to consider excluding overtime in computing a $1,500 income ceiling.

Ms Cham Hui Fong (Nominated Member): Sir, the much-discussed savings for old age CPF LIFE lies in the fundamental of having a CPF account. 287,000 persons received the first payment in January. Probably we have another 150,000 more to go to ensure that they can come on board the CPF scheme.

May I ask the Ministry how and what more will the Ministry be doing to reach out to this group of people? In fact, many workers today, although they are on the WIS scheme, do not quite understand the mechanics of it, eg, how do we actually calibrate and compute the figures to them? Even the formal low-wage workers that we spoke to do not quite understand the scheme. In most cases, when we talk to the workers, they would not want to come forward to claim for their CPF for

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fear of losing their jobs. So, in most cases, we engage the manpower agencies, through the help of the end-user companies who are essentially our unionised companies. That proved to be quite effective. Can the Ministry therefore identify all the manpower agencies that we have, check on their compliance on CPF and conduct investigations into these companies and not just act when there are complaints?

Similarly, the end-user companies have a role to play to ensure that all the workers - whether they are formal or informal workers, as long as they are working in their work premises - are treated fairly, because the fact is that they can outsource the work but they should not outsource their responsibilities.

Next, on the payment of WIS. We have workers who earn less than $1,200 a month, which qualifies them for WIS. We understand that they were paid in January, two months ago. They contribute lesser per month to CPF, but WIS should be enough to offset the reduction. In fact, that has been something that we have been telling them. The good news is not just on overtime payment, which Mdm Halimah mentioned earlier, they got good bonus last year. This particular company paid them three months' bonus. We worked out the annual sum. Including the overtime - leave the overtime that these workers have clocked in - they are unlikely to qualify for the second round of payment in April because their annual salary will exceed $18,000 by a little bit.

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However, to our horror, we were told by CPF Board that if their annual salary were to exceed $18,000, CPF Board will recover the first payment that was already made to them, ie, recover from their bank account and their CPF account. So, that is something that we have a lot of

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difficulties explaining to them - that if their annual salary were to exceed $18,000, as the company was doing well, they would be penalised because they got to pay back. We would certainly like the Ministry to look at this limit and also explain to us why there is this recovery of the first payment. At the same time, can the Ministry consider the fact that these people indeed had a lower CPF contribution rate for the particular months, even though towards the end of the year, they could have higher overtime or higher bonuses to actually compensate for the difference?

Employment Assistance for Vulnerable Workers

Mr Ong Ah Heng (Nee Soon Central): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Singapore's unemployment rate is the envy of many countries around the world. This is something that we can be happy and thankful for. Last year, more than 130,000 jobs were created. According to reports, many sectors, including NTUC, are reporting higher wages in the labour force.

However, during the meet-the-people sessions, we still get residents coming to see us requesting for employment assistance. They are mostly the elderly, the less educated and the less skilled. While the Singapore economy is booming, this group of people is left out. So when Singaporeans enjoy higher take-home pay, this group can only watch with envy. And many of them suffer in silence about the difficulty of getting a permanent job or job insecurity and they are the most vulnerable group. They often hold partime jobs, or temporary jobs. They are unlikely to have a steady income due to the insecure nature of their job. So they do not have much CPF and we see them regularly during the meet-the-people sessions.

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Although the Government has many social assistance schemes their most immediate needs would be to help these people get employed and to meet their current financial needs. In this regard, I would like to ask MOM whether we have any special schemes to assist this group of people. Besides the current measures that we have, they still need a lot of assistance from the Government and they are in urgent need of help especially when the rest of Singaporeans are benefiting from a growing economy.

*Cols. 2049-2050.

Contract and Part-time Labour

Ms Jessica Tan Soon Neo (East Coast): Sir, in 2007, contract workers stood at 12% of the total resident employment. This amounts to about 180,000 workers. Part-time workers also stood at about 100,000. I believe these figures will continue to rise given the increasing trend we are seeing of organisations hiring on contract terms for flexibility as well as the encouragement and the drive for the re-entry of women and older workers into the workforce.

Over the past 10 years, women in the workforce have steadily increased from 580,000 in 1997 to 780,000 in 2007, representing a 33% increase. The number of older workers aged 50 and above has also increased steadily from 220,000 in 1997 to 470,000 in 2007, representing a 100% increase. We will continue to see an increase in the number of older workers as lifespan is projected to increase for Singaporeans and they are expected to live longer.

With these changing demographics and potential increase and demand for contract and part-time employment, what is being done to ensure fair and conducive employment terms for both contract and part-time workers? Are our labour policies for contract and part-time employment updated to ensure that these workers'

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interests are protected and they stay motivated, their skills upgraded, to ensure increased productivity? I believe that more can be done for both contract and part-time workers. Let me give you a real example of why I said this.

I took an existing part-time employment contract from a local organisation which hires quite a large workforce in Singapore. And I was surprised to see that an individual had been working for this organisation for more than 10 years, had been paid the same salary for the last 10 years, no increment, did not benefit from the company's productivity or performance bonuses, although the company had performed very well over the last few years. She also had no reimbursement for medical or hospitalisation cost, although she was paid wages for MC and given hospitalisation leave. She does receive, I think, about $10 per month for medical charges.

If this is representative of the significant proportion of employment terms for part-time workers, we will have challenges ensuring that workers stay motivated and continue to upgrade their skills or to maintain their productivity. So I would like to understand what is being done to encourage and provide the framework for fair employment for part-time employees.

With the increasing trend of organisations hiring on contract terms both for lower wages as well as PMETs, how can we ensure that there are fair employment terms, especially for lower wage workers? What can be done to ensure that they have equitable and continuous Medisave and CPF contributions and what measures are put in place to get them to contribute to CPF as well as encourage their employers to contribute? As Minister Ng had said and reiterated just now, what we should do is to ensure that we get as

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many as possible into the CPF system so that they can benefit from CPF LIFE and WIS, etc.

Sir, with contract and part-time workers forming a growing proportion of local employees, will MOM be investing more resources to understand the trends of employment and challenges that these segments face? Can the Minister share with the House if there are plans to do this, so that it is possible to understand the right level of support that is needed for this group of workers?

While contract and part-time workers provide flexibility to both organisations and employees, it can lead to anxieties and frustration for both workers and employers. In order to ensure that we continue to see our workers motivated, we need to ensure that we take care of them. So, Sir, I would like to make a suggestion. I would like to propose that the Ministry provide appropriate focal support for this group of employees and look at how to provide better employment terms for them.

Facilitating Part-time Work in Singapore

Dr Lim Wee Kiak: Sir, during a clinical session at a restructured hospital last week, my clinical assistant, Mdm Vasagi, was in tears and looked very troubled. I asked her what happened. She told me that her 60th birthday was approaching and that she had just received a letter from the hospital HR. I asked her whether it was a birthday greeting or some form of gift from the HR. She said, no, it was the contrary. She will be turning 60 years old soon and has been notified by the hospital that her salary will be revised downwards from $1,666 to $1,502 - which means that she is excluded from WIS - while the remaining terms and conditions of employment remain unchanged.

I have asked around my friends in the private sector whether it is a common

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practice to reduce the pay of a worker when he or she reaches 60 years old without any change in workload or working hours. Perhaps, they wish to be politically correct, many replied that they do not subscribe to such a practice and will pay the worker as long as productivity remains. Should the public sector, including restructured hospitals and the statutory boards, not take the lead and practise good and fair employment. Reducing the pay without reduction in workload or working hours of older workers would be deemed as taking advantage of these older workers. It will do more to discourage rather than to encourage them to stay in the workforce.

With the changing demographics and escalating demand for workers to sustain our economic growth, we have to do more to entice and not to discourage older workers to remain in the workforce for as long as possible. Many would like to continue but may prefer some form of a part-time arrangement so that they can have other pursuits. If there is going to be a 10% cut in pay, there might as well be a 10% cut in working hours as well. Part-time work will also encourage more non-working spouse to return to workforce as part-time arrangement will allow them to take care of their families as well.

Therefore, I would like to ask: what are the barriers to part-time work for the employers and the employees? Will MOM do more to promote and encourage part-time work? And what is the current legal framework to protect the interest of these part-time workers?

Flexi-Works! Scheme

Dr Ahmad Mohd Magad: Sir, I would like to urge MOM to give more recognition and support to companies that come up with flexi work arrangement plans that involve full-time work which does not affect salary, benefits or time frame for career advancement of women. Some

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examples are: Flexi-time, where employees have to work during the core period but otherwise may choose to start and end time of work; Flexi-week, where employees work week may involve different permutations or what makes up a week; and Flexi-place where employees may work via telecommunicating.

I believe these arrangements are critical in retaining female workers who are already in the workforce but have problems balancing work and home commitments, as well as also housewives who would like to return to the workforce without keeping a typical office hour day.

Part-time work arrangements may be suitable for some women, but it is in a way simpler for employers to accommodate as compared to flexi-work arrangements. Currently, a lot of part-time or work-from-home jobs involve processes like data entry, and this may not be challenging enough for some mothers, especially those who are more educated.

Will the Ministry offer further incentives to employers who re-design jobs which are currently not considered as traditional part-time jobs? What measures could be taken to change the mindset of employers that part-time or flexi-work arrangements do not necessarily mean a lower quality of work?

Fair Employment Practices

My second cut, Sir. The Tripartite Guidelines on Fair Employment Practices was released in May 2007 to give employers a guide in recruiting staff and to make the workplace a discrimination-free place. These guidelines include a section on job advertisements and list some do's and don'ts for employers. Although there have been vast improvements in promoting fair job advertisements, the problem with biasness in advertisements has not been totally eradicated.

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A look at Saturday, 23rd February's Recruit section in The Straits Times proved this. There were advertisers asking for people "between the ages of 20 to 24 years old", "fresh school leavers" and "fresh grads". These are discriminatory advertisements and immediately disqualify capable applicants who are older. Some other advertisements are vague and state 'bilingual', without explaining which languages are needed for the job, or why.

I would like to ask the Minister what the Tripartite Alliance for Fair Employment Practices intends to do with such advertisers? Would legislation be effective in making sure that employers are not blatantly discriminating in their advertisements? While I recognise that legislation will not stop discriminatory practices, it will provide more bite to the process of having fair employment practices in Singapore, just like the Equal Employment Opportunity law in the United States provides. In the event that the Ministry feels that legislation is not appropriate at this juncture, I would like to propose the setting up of a monitoring system where the TAFEP is obliged to send out letters of reproach to such employers. It must also engage errant employers in a meaningful educational process on fair employment practices.

Workplace Sexual Harassment

Ms Ellen Lee (Sembawang): Sir, I would like to share one real life example reported to have happened in Singapore in The Straits Times about two years ago: A 34-year old female IT professional of an American multinational company complained of sexual harassment by a male co-worker. He persistently sent her lewd SMS messages. She complained to her boss who referred him to the HR. HR warned the male worker and then transferred him to another department. He quit shortly afterwards.

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Sir, I wonder how many of such cases have not been reported. How many victims are willing to step forward and complain of their plight? Worse, if the supervisor himself is the harasser, what can the victim do? I think the victims are likely to keep quiet, ask for a transfer or leave their jobs.

In 1993, AWARE conducted a survey to determine how serious sexual harassment at the workplace was. About 50% of the 389 respondents had experienced verbal, visual or physical harassment in the office. Half were their superiors. Last year, AWARE launched another survey to collect more data. I believe, with the progress of time, more victims are stepping forward to share their stories.

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Would the Minister consider introducing sexual harassment laws in Singapore?

We know that when a woman is harassed sexually at her workplace – be it only once or, over time, on a regular basis – there is no legal recourse. We should not let the difficulty in defining what constitutes sexual harassment in the workplace deter us, as I believe that we can work out a boundary to protect the more vulnerable victims.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] The majority of the victims of sexual harassment remains quiet but, in the end, because they do not get protection from the law, they give up seeking recourse and just walk away. In fact, these victims continue to suffer this harassment and unfair accusation and being blamed for inviting unwanted attention, and so they have been told that they deserve it. But the truth is that the person who perpetrated the offence continues his wrongful act and escapes the law. Although a few people have come forward, what choice do they have?

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At the present moment, workplace sexual harassment is not an offence here. The police say that they will only step in if a sexual act has taken place, such as the use of criminal force to outrage a victim’s modesty, which is seizable and punishable under the Penal Code. The Penal Code also has provisions such as insulting the modesty of a woman, making obscene or lewd acts at women but they do not address the sexual harassment problem at its root cause. There is also other “not so noticeable” behaviour such as passing lewd or suggestive remarks or using other forms of new media, such as Friendster, Facebook, MSN, SMS and email to sexually harass a woman. What are the practices among the companies and how prompt will companies address and resolve such issues? I feel that it is time for us to do more by having specific laws against sexual harassment.

*Cols. 2051-2052.

Workplace Safety

Mr Ong Ah Heng: ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Sir, our construction industry is booming and the growing number of construction projects requires more workers. A lot of construction workers are needed and the number is likely to grow further. The majority of the workers in our construction industry are foreign workers. Many of these workers have come to our shore, leaving their loved ones and family behind, to look for employment opportunities. Many of them are also indebted just to come here. They have families to support from the wages they earn here.

Therefore, we should ensure that the workplace is safe by enforcing safety procedures at the construction site. Although we have tough laws to ensure workplace safety, such as the Workplace Health and Safety Act, and stiff penalties against errant companies that do not observe good safety procedures at the

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worksite, we still have a lot of worksite accidents resulting in death. For instance, worksite accidents caused by lifting equipment at workplace have risen to a five-year high in 2007, causing 342 injured and 12 dead. In 2002, the figure was 86 injured and eight killed.

I know that our Manpower Ministry has been working very hard with the industry to train their personnel in the area of workplace safety and to provide co-funding training. Just like what Mr Hawazi said, "Accidents at the worksite often can be prevented if adequate preparations are made." I have noted that worksite accidents are very high in the construction and marine industries.

As we continue to see large numbers of deaths from worksite accidents, I would like to know whether the number of worksite death has been reduced, after the introduction of the Worksite Health and Safety Act to lower industrial accidents. I also note that, with effect from 1st March 2008, MOM has included six more industry sectors, which is good, and I hope that with the inclusion of the six new sectors, worksite safety can be further enhanced.

*Cols. 2053-2054.

Mr Heng Chee How: Every worker deserves to go to a place of work that is safe and to be able to go back safely to their family every day. The Government has put emphasis on workplace safety and health. With the enhanced occupational safety and health framework and the Workplace Safety and Health Act as well as the participation from tripartite partners and industry, the goal is to further improve safety outcomes and reduce fatalities, injuries and accidents in all workplaces. I believe that there has been improvement between 2005 and 2006, and the data for 2007 has yet to be released. But since the beginning of this year, there have already been three worksite incidents with fatalities. There

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have also been road accidents involving the conveying of workers in open vans and trucks from time to time. It is important to assess whether the overall intention and efforts are on track or whether there has been a slackening on the part of the industry. The Lianhe Zaobao editorial of Saturday, 1st March 2008, expresses the same sentiment.

I would like the MOM to give an update on whether the overall incidence of workplace accidents of all degrees of severity has shown declines; whether safety should now be further tightened for the conveying of workers to and from workplaces; and whether cost competition and time pressure in tender bids have a negative effect on the willingness of companies to fully look after the safety of their workers.

Foreign Worker Issues

Ms Denise Phua Lay Peng: Sir, I congratulate the Minister and his team for their stellar performance in the creation of new jobs. I also support the Ministry's policy of liberalising foreign worker quotas to address labour shortages, especially in the construction and manufacturing industries. More and more foreign workers are landing on our shores. I wish to urge the Ministry to avoid the ostrich syndrome and ignore the problems related to the influx of the many thousands of foreign workers in Singapore. Sir, not everyone who has grievances in this area is an ugly Singaporean, intolerant of foreign workers. Neither are Singaporeans unappreciative of the Ministry's good work or contributions made by foreign labour to our economy. Many know that foreign workers are also human beings and they need leisure time and place.

In my weekly house visit last week at an HDB estate, which is nicknamed "Little Thailand", one lady resident pleaded with

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me to ask Government for an explanation on why citizens like her are penalised for throwing a piece of paper and yet the scores of foreign workers in her void deck can get away with blatantly drinking, partying noisily, littering, and sometimes urinating, exposing themselves openly. I assure Minister that this is not anecdotal and similar problems are also surfacing in other parts of Singapore.

Sir, I urge the Ministry to take proactive leadership in addressing these issues before the social costs escalate further. Half-hearted multi-agency efforts have failed in the past and more teeth and resolve are required to assure more results. MOM should make a serious effort in assembling and leading relevant agencies such as HDB, commercial sector, town councils, NEA, Police, URA, LTA and SLA, where relevant. We cannot simply rely on volunteer patrol teams or grassroots leaders to solve these problems. The problems are not insurmountable and the appreciation for MOM will be further elevated if we can lead in removing the valid angst caused by the liberal foreign worker policy the Ministry has embarked on.

Foreign Domestic Workers

Mr Ong Ah Heng: ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] In the 1950s, when Singapore was still a colony, we had a lot of women who were employed as domestic maids for the British and civil servants working here. But after 40 years, we have been transformed into the biggest employer for foreign maids. Now, we have a lot of foreign maids and, according to press reports, it would appear that they are always being mistreated by their employers, and they risk their lives while doing their domestic work and some of them even have to work in the shop or in their relatives' household.

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Singapore is still far away from becoming a gracious society. For example, on 27th February, the newspaper reported that, after working here for six months, a local maid could not get her pay. Not only is it unfair, it also tarnishes the good image of Singapore. The employer should know from the beginning whether he can afford to have a domestic maid. How could the employer owe her salary for so long?

Singapore is not the only country that employs foreign domestic maids and maid abuse cases are not uncommon to Singapore. However, we must also ensure that our foreign maids are fairly treated, and since there are a large number of domestic maids, and this number is likely to grow further, I would like to ask whether MOM is monitoring the situation of maid abuse.

*Cols. 2055-2056.