CPF EDUCATION SCHEME

CPF EDUCATION SCHEME:

(Extension): 7.

Mr Zaqy Mohamad asked the Minister for Manpower whether the Ministry will consider extending the CPF Education Scheme to full-time undergraduate and diploma courses at private and foreign institutions in Singapore and

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recognised or accredited foreign institutions abroad.

The Minister for Manpower (Dr Ng Eng Hen): Mr Speaker, Sir, the primary objective of CPF is to help members save enough for their retirement needs. As all of us know, Singapore has a rapidly ageing population. I will give some numbers to underscore that. The proportion of Singaporeans aged 65 and above is expected to grow from 8% in 2005 to 19% in 2030; roughly, 1 in 5 by 2030 will be above 65. Retirement and healthcare needs will therefore correspondingly increase. However, only about 40% of current active CPF members turning 55 are able to meet their CPF Minimum Sum. So I think our priority should be to help members set aside more CPF savings in the future, instead of allowing withdrawals for expanded purposes.

Mr Zaqy asked whether the CPF Education Scheme could be further liberalised. This particular scheme was introduced in 1989 and was a concession for the use of CPF monies and intentionally limited to only full-time local tertiary education courses at approved publicly funded tertiary institutions, because these are heavily subsidised by the Government. We have allowed it and we will continue to allow it. But even then, 13% of students who had borrowed from their parents' CPF accounts for tertiary education have not been able to pay the monies back despite CPF Board's enforcement efforts. So, to better prepare for the needs of an ageing population, we should not extend the use of CPF for more educational purposes. There are other existing avenues through which students can obtain financial assistance if they are needed.

Mr Zaqy Mohamad: Sir, one of the arguments often made by students who

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are not in our local universities or not receiving subsidised education is that loans are hard to come by, and the number of options out there are not many, in terms of financial options that are available to them. Given that only 13% probably default on their repayments to CPF, would the Minister consider at least limiting the quantum or putting certain credit criteria on the loans that they can get from the CPF?

Dr Ng Eng Hen: Sir, I do not know enough about financial access for private institutions to state categorically whether access is adequate or not. I think there are sufficient avenues for taking personal loans. This is not something that I can intelligently comment on.

The real issue is whether we should expand and allow more students to draw from their parents' accounts. I am sure there are very good reasons for that. Education is an investment and when the students get their university degrees, they will repay their parents. As I said, I do not argue with the positive aspects of having a high education. Our current challenge is an ageing population and smaller family sizes. In fact, the CPF Board and the Ministry of Manpower are actually the last gate. I am sure if the scheme is liberalised, most parents would, because they are good parents. I would rather act as that very firm gate-keeper, so that the parents' CPF funds are not depleted.

Mr Cedric Foo Chee Keng: Sir, if the parents have an amount above the Minimum Sum, will the Ministry consider allowing a parent to draw down, so as to invest in the child's education, provided the amount remaining in the CPF is above the Minimum Sum?

Dr Ng Eng Hen: Sir, the Member is quite right. It is a theoretical possibility, although most families who have enough in their CPF and above the Minimum Sum are not the ones who need the money to

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fund their children's education. The problem is really someone in between who does not have enough but feels that he really wants his child to have higher education. As I said, there are enough financial schemes that they have access to. The CPF was really constructed primarily for retirement needs. When I say "retirement", it also means housing, medical as well as to ensure that there is enough to last them for their retirement. I do not think it will be wise for us to liberalise and allow it for educational purposes. I think that is the crux of the policy.