PENSIONS (AMENDMENT NO. 2) BILL

Order for Second Reading read.

4.34 p.m.

The Parliamentary Secretary to the Minister for Finance (Mr Tang See Chim): Mr Speaker, Sir, I beg to move, "That the Bill he now read a Second time."

A national serviceman who joins Government service after having served a period of full-time national service, is now granted salary increments, on appointment, commensurate with the time he has spent in such full-time national service. The various statutory boards have also followed Government's example. This is to ensure that someone who is called up for full-time national service and later joins the service of Government or one of the statutory boards does not lose out to his contemporary who is not called up for full-time national service.

This Bill, however, proposes to take this one stage further. A youth who undergoes full-time national service will also be rewarded by having such service included as pensionable service under the Pensions Ordinance, 1956, if he is appointed to and subsequently retires from Government service in pensionable circumstances.

At present, the Pensions Ordinance only allows for service in a civil capacity to be included for pension purposes. The Bill, in seeking to amend the Ordinance, provides for the President to make regulations for this purpose. The period of full-time national service could be put in at any time, whether before or after the officer's appointment to Government service.

This, Mr Speaker, Sir, is only fair recognition of the service in the cause of our country which our national servicemen put in. No one in his right senses would grudge this to our national servicemen.

Clause 3 of the Bill provides that where an officer is retired in the public interest under paragraph (e) or in special circumstances after having completed 15 years' service under paragraph (j) of subsection (2) to section 7 of the Ordinance, he will not draw a pension till he has attained the age of 50. This is to ensure that an officer who retires prematurely does not in the long run benefit more than the officer who serves his full career in the public service.

For instance, an officer who is retired at the age of 35 years in the public interest would, if he joined the service at 24 years of age and is drawing a salary of $1,000 a month at the time of retirement, normally be eligible for a monthly pension of about $200 plus a gratuity of $10,000. If this is paid to him from the time of his retirement at 35 up to the age of 70, which is a reasonable life expectancy, he would draw a total of $102,000 over the 35 years he is in receipt of a pension. Moreover, he would be in a position to find other employment after retirement and would benefit from the Central Provident Fund or other superannuation scheme in addition to the salary he would receive from such employment. This surely is an anomalous situation where an officer who is retired or retires prematurely benefits more than one who gives his whole working life to the public service with loyalty and dedication and retires at the normal retirement age.

Provision is, however, being made for payment of gratuity to the dependants of an officer who retires prematurely and who does not survive to 50 years. An officer who retires prematurely and who is mentally or physically incapacitated to such an extent that he is unable to continue in any employment before he has attained the age of 50 sears may also be paid his pension from the date of such incapacitation.

The Bill also seeks to provide that a police officer below the rank of Assistant Superintendent in any Auxiliary Police Force, as may be specified by the President by notification in the Gazette, may be retired and paid a pension on reaching the age of 45. This is to bring the retirement age in the present and any future Auxiliary Police Force in line with that in the regular Police Force.

Mr Speaker, Sir, I beg to move.

Question proposed.

4.40 p.m.

Mr Yeo Toon Chia (Kampong Kapor): (In Mandarin): Mr Speaker, Sir, with the changes in our circumstances and situation, the loop-holes in our laws which are not in keeping with our society should be plugged. It is wise for the Government to introduce this amendment Bill. This Bill treats the period of national service as pensionable service for national servicemen who join Government service. In other words, our youths who have completed national service and who join the public service will have their period of national service taken into consideration when their pensions are computed on retirement. Their full-time national service is regarded as effective public service. Furthermore, national servicemen who join the public service are granted salary increments commensurate with the period they have spent in full-time national service. But I do not know whether the statutory boards and private enterprise have also implemented this scheme. What is the outcome of the negotiations between the National Trades Union Congress and private enterprise to ensure that our youths who have completed their national service will benefit from this scheme?

Mr Speaker. Sir, this scheme also applies to the statutory boards. But I do not know whether national servicemen who join the public service and the statutory boards are exempted from having to serve a three-year probationary period. If they have to, then it is in conflict with the principle that national service is deemed to be public service. This will put them at a disadvantage when they compete with other people who have not undergone national service in promotion exercises.

Singapore is not a weak country. It is a country which implements measures when these are necessary. It is a country which places emphasis on the responsibility of its people and it is a country located in a strategic position. In order to survive and prosper, it is necessary to follow a non-aligned foreign policy and, at the same time, build up its defences. This shows that the measures which have been taken are wise and are receiving the support of the people. However, Mr Speaker, Sir, to a young man who has undergone national service, it is proper for the Government to legislate to safeguard his interest and to regard his two-year full-time national service as part of his public service.

I fully support this Bill. I hope the Minister will also pay attention to our youths' prospects for further studies in order to ensure that national service can be a perfect system.

4.45 p.m.

Mr Sia Khoon Seong (Moulmein): Mr Speaker, Sir, I wish to speak on the second part of the Bill dealing with public officers having to retire prematurely and their entitlement to pension benefits. I do agree with the rationale behind this Bill that an officer who retires prematurely should only be entitled to the drawing of pension on reaching the age of 50 years. However, I feel that this particular feature of the Bill has not taken into consideration the fact that a public officer can opt for a full pension, a three-quarters pension and a quarter pension with gratuity. What I want to know is, if an officer retires prematurely and he is not able to receive the monthly pension until he reaches the age of 50 years, will he be entitled to receive his gratuity immediately? I hope that the Parliamentary Secretary to the Minister for Finance will give a "yes" answer to my query, simply because I think that there will be no rationale behind the move to prevent an officer from receiving his gratuity payment immediately. The reason is this: I will just give an illustration. If an officer retires prematurely on good grounds, at the age of 40 years, and he is given immediate pension benefits, meaning that every month he gets his pension allowance, then he definitely has an added advantage over another serving officer who has got to serve till the normal retirement age. It gives him an extra ten years to draw that extra money. Therefore, if this Bill seeks to stop that loop-hole, I think the rationale is sound. This will not make those dedicated and loyal officers who serve up to the normal retirement age feel that they have been unfairly treated, and that those who leave the service prematurely get an added monetary benefit. But the amount of gratuity will not change once it is computed -whether he receives it at the age of 40 years or 50 years. He is entitled to it. Therefore, I would imagine that while, or, the one hand, there is a rationale for stopping an officer from getting his pension allowance immediately on his premature retirement, I see no rationale at all for stopping him from getting his gratuity. However, I hope that my fears are unfounded and that the Parliamentary Secretary will give a "yes" answer to my query.

4.47 p.m.

Mr Tang See Chim: Mr Speaker, Sir, let me reply to the Member for Moulmein first. I am afraid I will have to disappoint him. My answer is "No". If the Member can accept the rationale that an officer who retires prematurely should not get his pension until he reaches the age of 50 years, the same rationale surely should apply to the exercising of the option to have a gratuity and a reduced pension. Surely, he is not saying that $10,000 today is the same as $10,000 in 20 years' time.

Mr Sia Khoon Seong: Mr Speaker, Sir, I would just like to inform the Parliamentary Secretary that the moment a person joins the public service, before he even thinks of retiring prematurely or in normal circumstances, he will have to opt at the outset whether he wants a full pension or a three-quarters pension and the rest to be computed in the form of a gratuity. The choice is made, and if that statement is disputed, then either I have been in the wrong Government service in the past, or the Parliamentary Secretary is not aware of the service conditions.

Mr Tang See Chim: Mr Speaker, Sir, I stand to be corrected, but I do not think the Member is right when he says that an officer has to exercise his option at the very beginning of his career in the civil service. He exercises it at the end of his career. Six months before he retires, he has to give notice, and in exceptional circumstances, the President can waive that six months' notice.

Mr Sia Khoon Seong: Mr Speaker, Sir, I do not want to carry on this diatribe with the Parliamentary Secretary. I think he has to check that fact first because I know it from my own experience. As a former teacher, I was required to opt for full or reduced pension at the outset, unless, of course, the Ministry of Education made the mistake of asking me to make the option - that probably is possible -but I doubt that; in spite of their inefficiency, they are not likely to make a mistake like this because this is under the direction of the Treasury. As one who happened to be a civil servant in the past I am quite certain that this is the practice. An officer is not allowed to carry on for 10 or 20 years of his career, and finally make that option six months before his retirement. In fact, at the very outset, when he makes the option, it is very clearly stated that it is irrevocable.

Mr Tang See Chim: Mr Speaker, Sir, may I quote from clause 15 (1) of the Pensions Regulations which reads as follows:

`An officer to whom a pension is granted under the Ordinance may, at his option exercisable as hereinafter provided, be paid, in lieu of such pension, a pension at the rate of three-fourths or any greater fraction of such pension together with a gratuity equal to such number of times the amount of the reduction so made in the pension as is specified in paragraph (6) of this regulation.'

Clause 15 (2) reads:

`The option shall be exercisable, and if it has already been exercised, may be revoked, not later than the day immediately preceding the date of such officer's retirement:

Provided that if the officer does not exercise the option prior to the day preceding the date of his retirement, the President may, if it appears to him in all the circumstances equitable so to do, allow the officer to exercise the option at any time between the date and the actual date of award of a pension to him.' Does the Member understand that?

Mr Sia Khoon Seong: Mr Speaker, Sir, I will continue this controversy with the Parliamentary Secretary after this session, but the point I made earlier was not whether the option is exercisable at the beginning or at the end of the officer's career. The point I wanted to make was this. In the illustration I gave earlier, the officer retires at the age of 40 years. Then from 40 up to 50, which should be his normal retirement age, he gets ten years extra of pension allowance. Therefore, this gives an added advantage to an officer who leaves the service much earlier than one who serves faithfully until the normal retirement age. Therefore you stop it, and I say there is a rationale for this. But how does this compare with gratuity? Because whether you give him gratuity at the age of 40, 45, or 50, it is the same amount.

The Parliamentary Secretary to the Minister for Finance just now mentioned one point, that is, that the value of money today and its value in ten years' time is not the same. My point is, do you think that it is fair that an officer, after having served a number of years and you allow him to retire with all the retirement benefits, should not be given the amount of money that is due to him in the form of a gratuity when the money value is much more than what it will be ten years hence? You are not giving him the added advantage hut that which is rightly his. I do not think it is right for the Government to prevent him from immediately getting what is due to him as a gratuity. But if the Government does not allow him to get a pension immediately on his premature retirement, it is merely saying that his normal pension benefits only start when he has attained the age of 50 years. Therefore, the Government is not giving him ten years extra of pension benefits. But whether the Government gives him the gratuity before that or after that, the amount is still the same. That is my point, Mr Speaker, Sir.

Mr Tang See Chim: Mr Speaker, Sir, I really cannot see the logic of the argument of the Member for Moulmein. On the one hand, he is not quarrelling about the rationale of not paying a pension until the officer reaches 50 years of age. On the other hand, he says we must pay him a gratuity now because the amount paid today is the same as the amount paid 20 years hence. Is that the Member's argument? If so, I will borrow $100,000 from him now and pay him back $100,000 in ten years' time without any interest. If that is his argument, he should have no objection at all to lending me the money. In fact, the whole point is that $100,000 today is not the same as $100,000 in ten years' time, it grows. This is because if you put $100,000 into a bank drawing eight per cent interest per annum, then every year you will be receiving $8,000 in interest. And in ten years' time, the amount will double itself.

Mr Sia Khoon Seong: Mr Speaker, Sir, I would like to clarify my point. I do not want to enter into a controversy over the value of money increasing or diminishing in years to come. My point is this. The Government has no moral right to use somebody else's money to make money. Similarly, it cannot say, "Today, we will not pay in full the M.P.s' allowances, or the Ministers' salaries or the Government servants' salaries. Instead we will pay them the balance of the money at the end of so many years." The Government's point of view is quite different, because it thinks it will earn interest on it. Making money is a good thing, but the point is, has the Government the moral right to take somebody's money that is due to him and earn interest on it? I think not only is the Government keen but the officer is also keen to get interest earned from the money put into the bank. But the point is, who has the moral right to the money? If the Government is thinking in terms of paying him the interest, I think that is quite fair, because it is saving the money for him. If he is entitled to $10,000 gratuity, then the figure of $10,000 is the same due to him no matter when he is given the gratuity. That is what I meant when I said it is the same amount. But whether the purchasing power of money has diminished or not is a separate matter. This is the money that is automatically due to him. You pay him gratuity after he has earned it. How can you keep his money and deny him not only the opportunity to earn interest on it, but you also deny him the chance probably to buy a house, or the opportunity to make use of the money profitably. I think the Government has no moral right to take that opportunity away from the officer concerned.

Mr Tang See Chim: Mr Speaker, Sir, I just cannot understand the logic of the argument of the Member. He seems to be tying himself up in knots. If he quarrels about the granting of pension as from the age of 50, all right, that is possibly a question of difference of opinion. But he does not quarrel about that at all. He quarrels about the fact that we are not giving officers a gratuity on retirement day, irrespective of whether the officer reaches 50 years of age or not. The Member sees it from only one point of view. But there is also the other point of view. He is like a horse wearing blinkers, Sir! [Interruption]

Mr Speaker: Order.

Mr Tang See Chim: The whole point is that it is an anomaly if an officer who prematurely retires should get pension from the day of his retirement, while his colleague in the civil service, having given full, loyal and dedicated service to the nation, should receive less than this officer who has not done that well and prematurely retires. Surely if that argument applies to pensions, it also applies to gratuities. Any businessman, banker, or economist can tell you this: $100,000 today definitely has a higher value than $100,000 in 10 or 20 years' time.

If for example, an officer retires before 50 and gets a quarter of his pension, computed as gratuity, then us colleagues, who remain in the service and continue to give faithful service to the nation, are at a disadvantage. Then, at what time are we going to give gratuities to those dedicated civil servants who remain in the service? At the very time they join the service? Surely this is not right. That is why I say that the Member for Moulmein is tying himself up in knots. He just cannot understand the logic of my argument. He agrees with one line of it. It is a parallel argument, Sir. He agrees with one line of the argument, and yet he says that the parallel argument is not true. He goes off at a tangent.

The Parliamentary Secretary to the Minister for Culture (Inche Sha'ari Bin Tadin): He is making a mistake.

Mr Tang See Chim: The same argument, therefore, applies to pensions or gratuities. Those who retire prematurely will be given the option to exercise whether or not to have a reduced pension and gratuity. But both the reduced pension and gratuity will not be payable until the officer reaches the age of 50 years, or sooner if he is incapacitated.

Mr Speaker, Sir, I think I have sufficiently answered the Member for Moulmein. Actually I need hardly answer the Member for Kampong Kapor, as the only point he raised was the increment in salaries. This is already in force in Government departments as well as in statutory boards. The Government, however, cannot force this upon the private sector. But the Government is doing its part, and we hope the private sector will follow its example and treat our national servicemen fairly and squarely.

The Member for Kampong Kapor also talked about the probationary period. Surely, Mr Speaker, Sir, this has nothing to do with pensions. I think it is only fair that if everybody who joins the civil service is required to undergo a probationary period, then the same condition should also apply to national servicemen, even after completion of their national service, because in any case they do not lose out at all. This means that everybody goes on probation for a certain period. If we make it an exception for national servicemen, they would have an advantage. Whether or not that is desirable is not for me to say. The point is that it is better that everybody should be given the same opportunity.

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 Tang See Chim].

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