CENTRAL PROVIDENT FUND (AMENDMENT) BILL

Order for Second Reading read.

5.52 p.m.

The Minister for Labour (Mr Ong Pang Boon): Mr Speaker, Sir, I have the Yang di-Pertuan Negara's recommendation that this Bill be proceeded with. Sir, I beg to move, "That the Bill be now read a Second time."

The main purpose of the Bill is to amend the Central Provident Fund Ordinance so that the Central Provident Fund Board may not be restricted in declaring a higher rate of interest than 2« per cent per annum to contributions of the Fund. At present, the Board is precluded from declaring a higher interest than 2½ per cent per annum unless the assets of the Board at current market value exceed its liabilities by ten per cent. This amendment of the Central Provident Fund Ordinance is in line with what has been introduced in the Employees Provident Fund (Amendment No. 2) Act, 1960 of the Federation of Malaya which came into force on 31st December, 1960. The Board is in a financial position to declare a higher rate of interest than 2½ per cent per annum, as the redemption value of the Board's investments is very much more than its liabilities.

The other amendments to the Central Provident Fund Ordinance have been introduced on the recommendation of the Central Provident Fund Board from the experience gained in administering the Ordinance since it came into force on 1st July, 1955.

As I will be moving that this Bill be committed to a Select Committee after its Second Reading, I shall only touch briefly on the other important amendments which this Bill seeks to make to the Central Provident Fund Ordinance.

Clause 2 introduces a definition of the word "employed" and modifies the existing definitions of the words "employee" and "employer" in section 2 of the Ordinance.

The objects of the amendments read in conjunction with clause 9 are:

(i) to extend the benefits of the Ordinance to certain classes of workers who at present because of their conditions of employment do not benefit from the provisions of the Ordinance.

(ii) to make the principal employer who may not be the immediate employer of an employee liable to pay contributions under the Ordinance, and

(iii) to limit the application of the Ordinance in the case of seamen to Singapore citizens only, and to anticipate the possibility that it may be desirous to exempt owners of vessels who do not have a place of business in Singapore from the provisions of the Ordinance.

Clause 2 also introduces a new definition of "wages" as the existing definition is extremely cumbersome and has led to difficulties in interpretation. The proposed amendment defines "wages" simply as remuneration in money due `to a person in respect of his employment as an employee. The effect of the amendment is, however, modified by paragraph (g) of clause 5 which provides that, for the purpose of calculating contributions payable in accordance with the Schedule of the Ordinance, any casual overtime earned by a time-rated employee in regular employment over and above his usual earnings may be disregarded.

In the case of employees who are not paid by time or who are not in regular employment, contributions to the Fund will be based on the total remuneration in money.

Clause 3 of the Bill amends section 4 of the Ordinance to empower an inspector to examine or summon for examination an employer in the same manner as an employee in regard to matters connected with the Ordinance. The existing Ordinance limits the power of an inspector to examine only an employee and not an employer.

Clause 3 of the Bill also provides that the members of the Board and its employees shall be deemed to be public servants within the meaning of the Penal Code. This amendment follows what has been introduced in regard to members and employees of other Boards such as the Public Utilities Board and the Housing and Development Board.

Clause 4 of the Bill amends section 6 of the Ordinance whereby a higher rate of interest than 2½ per cent per annum on contributions to the Fund could be declared by the Board on approval of the Minister for Finance.

The present provision prevents the Board from declaring a higher rate of interest than 2½ per cent per annum because the Board's assets valued at current market value exceed its liabilities by ten per cent. This provision is considered to be unduly restrictive. The Board is in a financial position at present to justify the payment of a higher rate of interest of more than 2½ per cent per annum. This clause also amends subsection (4) of section 6 of the Ordinance to clarify Government's liabilities in respect of the Fund as the meaning of the existing subsection (4) is considered obscure.

Clause 5 (a) of the Bill amends section 7 of the Ordinance by removing the provision requiring employees to work for an employer continuously for one month before contributions become payable for them. This amendment, read in conjunction with the amendment to the Schedule of the Ordinance, will make it necessary for contributions to be made for all employees who earn more than $20 from the date of employment and not after one month of employment as at present.

Clause 5 (d) amends section 7 of the Ordinance to enable employers and employees to contribute excess contributions to the Fund at any time and not only at regular monthly payments as at present.

Clause 5 (g) introduces a subsection (6) to replace the existing subsection (7) . The new subsection specifies more clearly the way the amount of wages for a calendar month is to be determined in the case of employees whose wages are paid at intervals of longer than a month. The proviso to the new subsection modifies the amendment to the definition of "wages" which has already been explained in clause 2 above.

Clause 6 amends section 10 of the Ordinance to remove the provision under which employees over the age of 55 may become members of the Fund by giving notice to the Board within one month of the coming into force of the Ordinance that they desire to be members of the Fund. As the Ordinance has now been in force for over seven years, there is no longer any need for this provision.

Clause 7 of the Bill deletes section 23 which being transitional is no longer required. It introduces a new section which will enable money to be transferred to the Fund from private provident funds. This is considered necessary because many private provident funds make provisions in their rules for such transfers to be made, but there is at present no provision in the Ordinance enabling the transfers to be accepted by the Fund.

Clause 8 of the Bill repeals section 24 of the Ordinance in regard to return of excess contributions and inserts in its place the provisions of Rule 15 of the Central Provident Fund Rules. This new section will give power to the Board to retain certain monies paid in error.

Clause 9 of the Bill amends section 25 of the Ordinance to enable the Minister to make regulations to extend the benefits of the Ordinance to workers whose terms of employment do not constitute a contract of service or apprenticeship and to provide that when an employee is employed in a specified employment under the control or management of a principal employer or is engaged and paid by a supplier of labour, such principal employer or supplier of labour shall be treated as employer of the employee and liable to pay contributions for him under the Ordinance, even though the employee may have an immediate employer directly in control of him. This clause has been introduced in order that certain classes of casual employees who at present do not have contributions made for them are benefited by the Ordinance.

Clause 10 of the Bill amends the Schedule to the Ordinance by increasing the maximum amount of wages in respect of which contributions are not payable from $10 to $200. The amendment is considered necessary as a result of the amendment whereby contributions for an employee become liable as soon as he commences employment.

Sir, I beg to move.

Question proposed.

Mrs Seow Peck Leng: Mr Speaker, Sir, may I raise a point which I feel that the Select Committee should pay attention to?

I brought up this point at the last sitting and the Minister for Finance did not quite catch it. I thought then that the women were trying to get the best of both worlds, but later on, in the C.P.A. Room, when I explained it to him, he actually thought that there was gross injustice there and he promised that something would be done about it to remedy the situation. I did bring out the fact that it is very dubious whether a married woman in Government service after 15 years is pensionable or not, as this may not apply to future generations and future employees. But there are a great number of married women who were in the service before parity or equal pay was given to women, and who are still in the service, and this affects them, and their position is dubious. After they have served for 15 years and they retire, they will get three-quarters of their pension and they will therefore not be eligible for provident fund. But they will have to wait till they are 55 years old to withdraw whatever money they have put in. On retirement, not only will they have to wait for their money, but whatever gratuity or money they get from Government has to be used to pay back what Government has put into their provident fund. Therefore, such a married woman is penalised, once, for having to subscribe to the provident fund when she is not entitled to draw out her money later on, and, secondly, to pay Government's share, and then wait till several years more - she retires at 45 and she has to wait till she is 55 - to draw out not only her money, but also the money she has to pay on behalf of the Government. As the Minister for Finance felt that it was grossly unfair, would the Select Committee look into it?

Mr Speaker: Mr Ong Pang Boon, in reply.

Mr Ong Pang Boon: Mr Speaker, Sir, the point raised by the Member for Mountbatten could be looked into by the Select Committee.

Question put, and agreed to.

Bill accordingly read a Second time.

Committed to a Select Committee consisting of Mr Speaker as Chairman and seven Members to be nominated by the Committee of Selection. -[Mr Ong Pang Boon].