CENTRAL PROVIDENT FUND (AMENDMENT NO. 2) BILL

Order for Second Reading read. 3.56 p.m.

The Minister for Labour (Mr Ong Pang Boon): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the Central Provident Fund savings is the principal source of savings for workers in Singapore for their old age. It is also a source of protection for the dependent family when a member dies. Members can make use of their CPF savings to purchase flats under the various approved housing schemes. They can also use their CPF savings to buy shares issued by the Singapore Bus Service (1978) Ltd. This use of CPF savings ensures that Singapore workers have a stake in the country and participate in its future development. At the end of June 1978 there were 1,292,925 members registered with the Fund. These members have a total of $5,406 million standing to their credit.

The administration of the Central Provident Fund Act over the years has shown that the Act requires to be further improved. The amendment Bill is before the House for this purpose. The proposed amendments will streamline the administration of the Fund and provide better protection to the immediate family of a CPF member.

The proposed changes to the Act are described in the Explanatory Statement to the Bill. I should like, however, to elaborate on some of the more important amendments.

Investigations into whether employers have paid contributions correctly for their employees have often been hampered by inadequate and inaccurate wage records. Since the authority conferred by the present legislation is confined only to the examination of documents relating to the employment of employees, employers could often evade or underpay contributions by understating or omitting altogether wages paid to their employees. This is especially true for employees who have already left employment. As a result, such employees are often deprived of their due benefit.

The proposed amendment to section 4A contained in clause 3 of the Bill seeks to empower the CPF Board to examine the audited statement of accounts of an undertaking regardless of whether the accounts relate to employees of the establishment involved. This is important as enforcement officers would be able to view the accounts as a whole and any under-statement or omission of wages by employers, whether intentional or otherwise, would be discovered and suitable enforcement action taken to recover any contribution due to the employees.

Mr Speaker, Sir, under section 13 of the CPF Act, a member of the Fund may nominate any beneficiary to receive his CPF savings in the event of his death before withdrawing from the Fund. We have found that this system of disposal does not adequately meet the interest of the immediate family of the deceased CPF member. Hon. Members will recall an incident in January of this year when the aged widow of a deceased member was deprived of means of support because her deceased husband nominated another person, his employer in fact, to be the beneficiary of his CPF savings. Despite her efforts, which included taking the case to court, she was not successful. The case has now been referred to the Legal Aid Bureau which has filed an appeal to the High Court. This is not an isolated case. Many hon. Members in the course of their constituency work have been confronted with family tragedies compounded by loss of CPF benefits. The immediate family needs the CPF savings for the daily necessities of life. In cases where the deceased member owns a flat which is still mortgaged to the Housing and Development Board and the Jurong Town Corporation, the family will also need the savings to make further payments for the flat. From these cases, it is clear that there is a need to improve the present system of nomination so that despite the failure of members to make provisions for their immediate family, they would not suffer as a result. Indeed the Government has a responsibility to ensure that at least 50% of deceased members' CPF savings will be passed on to their families and dependants in their hour of need.

The number of payments to nominees of deceased members is not large. In 1977, out of a total of 15,736 withdrawal payments, 2,147 were made on the ground of death. Of these 2,147, there were 98 payments which were not made to the members of the immediate family of the deceased members. However, the consequent hardship to these dependants cannot be measured in terms of statistics.

Clause 10 of the Bill, therefore, seeks to improve the provision for members of the immediate family by introducing two changes. The first is that a CPF member will be entitled to dispose of by nomination only 50% of his CPF savings. The other 50% of the deceased member's CPF savings will be transferred to the Public Trustee for distribution. The distribution of this 50% of the savings for Muslims will be under Muslim law. In the case of non-Muslims, the distribution will be as provided in clause 14 of the Bill. Hitherto, a CPF member was allowed to dispose of all his savings to his nominees. This restriction on his right to distribute all his CPF savings according to his wishes is not a radical change. Under the Inheritance (Family Provision) Act, the court has the power to order payment out of the estate of a deceased for the benefit of a surviving spouse or child if the Court is of the opinion that the disposition of the deceased's estate effected by his will, or by the law relating to intestacy, or the combination of both of his will and that law, is not such as to make reasonable provision for the maintenance of the spouse or child.

It must be pointed out that the rules of distribution provided in clause 14 of the Bill follow closely that of the Intestate Succession Act. The rules give priority to members of the immediate family. The wife or husband and children of the deceased member will have first priority to receive all the 50% CPF savings. When there are no children but there are a spouse and parents, then the spouse will receive half and the parents the other half. If there is no spouse or children, the parents will get all the 50% CPF savings. If there are no parents, grandparents come next, followed by brothers and sisters and children of deceased brothers and sisters, and uncles and aunts. When none of these are present, the amount will be distributed to the beneficiaries nominated by the deceased member. If there is no nomination, the amount will be paid to the Government.

The second change to the system of nomination is the provision for revocation of the nomination upon the marriage of the member. Regular notices reminding members to update their nominations are printed on the members' statements of accounts sent out each year. The CPF Board has gone as far as making nomination forms freely available at the Registry of Marriages, although I might add that this was not always welcome on so auspicious an occasion. In addition, the Board provides assistance at its offices to help members complete nomination forms. Despite these measures, the problem of ensuring that members of the Fund update their nomination remains. Furthermore, many workers in Singapore start work before they are married. The beneficiaries they nominate at the start of their working careers were often left unchanged. If they subsequently marry and die before reaching 55 years, members of their immediate family will be deprived of the CPF savings of the deceased CPF member. In the interest of caring for the young, aged and needy in Singapore, the Government cannot avoid the responsibility of ensuring that the workers' hard earned savings in the Fund are used to benefit those who are most likely to be adversely affected by their untimely death. It is, therefore, necessary to introduce the invalidation of nomination as a result of marriage. It is not a new concept as a similar provision exists in the Wills Act.

The proposed amendments to the system of nomination is of public interest. I therefore propose to refer the Bill to a Select Committee so that it can be examined in great detail.

Sir, I beg to move.

Question proposed. 4.11 p.m.

Mr Cheong Yuen Chee (Toa Payoh): Mr Speaker, Sir, during the past year considerable publicity has been focused on the Central Provident Fund Act, particularly on the provisions relating to the payment of CPF contributions on the death of a contributor. It is not uncommon, as was shown in one court case, for a contributor to nominate a person who is not a member of the family or one of his dependants to receive his contributions under the Act. In that context, the provisions of this Bill seeking to correct a situation, which can be manifestly unfair and cruel to the dependants of the deceased by irresponsible contributors, are most timely and welcome. Some may question the basis of the relevant provisions of this Bill which take away from a contributor any discretion to do what he likes with the money credited to him under the Central Provident Fund Act. To my mind, the justification is that it is the responsibility of a contributor to look after his dependants. If he fails to do so for one reason or another, then his dependants who survive him will become a burden to the State and the responsibility of his fellow Singaporeans. Moreover, whatever sum is credited to a contributor, at least half of that sum represents contributions by his employer who is required to do so under the CPF Act. Such contributions by the employer though credited to the contributor would not have formed part of his contributions under the Act if it were not for the existence of the CPF Act. In that context, I should think that the Government is eminently justified in amending the provisions of the CPF Act to ensure that at least one-half of a deceased's contributions goes to his wife and dependants.

Sir, while I give my support to the Bill, I am not satisfied with the scope and purpose of the proposed amendments to the CPF Act. Undoubtedly, the relevant provisions of this Bill seek to correct an evil. But a pertinent question is whether, in seeking to rectify the evil, the Bill will create another evil of equal or even greater magnitude. To make myself clear, under the proposed amendments to the CPF Act, one-half of the contribution is to be reserved for the spouse in the first instance. But there may be valid reasons for the deceased contributor in the first place not wanting to leave any portion of his or her CPF contribution to the spouse. One example is that a contributor may be estranged from his or her spouse and may be judicially separated but not divorced from the spouse. In an extreme case, the deceased contributor may have commenced divorce proceedings against his or her spouse but the final decree of divorce is not announced before the death of the contributor. It is conceivable that, in such a case, it may be most unfair for the CPF Act to require one-half of the deceased contributor's CPF money to be given to the spouse, particularly if the intention of the deceased contributor is to set aside the whole of the CPF money for the benefit of the children rather than the spouse. It is also conceivable that, even if a deceased contributor is not estranged from the spouse or has not contemplated divorce proceedings against the spouse, there may be valid reasons for the deceased contributor not wanting to let the spouse have any control over any portion of his or her CPF money. The spouse, for instance, may be a spendthrift or a compulsive gambler who cannot be entrusted with the proper management of the CPF money. For this reason the deceased contributor may have appointed a person who is not a member of the family to hold the CPF money in trust for the benefit of the spouse and the children.

Under the proposed provisions of the Bill, no consideration is given to such a possibility, i.e. the suitability of the spouse to be entrusted with one-half of the deceased contributor's CPF money. If the spouse is an irresponsible person, the objective of the proposed amendment, that is, to prevent the spouse and children of the deceased contributor from becoming a burden to the State, is therefore defeated. In that context, I am particularly unhappy that in proposing the amendments to the CPF Act, the Government does not appear to have considered the amendment of the provisions of section 13(2) of the Central Provident Fund Act, excluding CPF money from forming part of the deceased contributor's estate. That particular provision is reproduced in the amended section 13(2) as contained in clause 9 of the Bill. As long as such a provision exists, it is not possible for a contributor to safeguard the spouse's own self and the children from a failure of the improvident spouse, that is, by appointing a trustee to whom the whole of the CPF money can be entrusted for the ultimate benefit of the spouse and children. In that context, I think it is much to be regretted that advantage has not been taken to plug, what I would consider to be a considerable loophole in the Act.

Under section 13(1) of the existing Act, there is a provision to protect CPF money from being seized in payment of debt owing by the contributor. But the contributor can nominate his creditor to receive his CPF money under the Act. Under the Bill, the creditor may receive not more than one-half of his CPF money, but I think the ability of a creditor to receive any portion of any CPF money lawfully under the Central Provident Fund Act serves to defeat in any way the social objective of the Act which is to ensure that the spouse and children of a contributor are not left destitute on his death.

Mr Seah Mui Kok (Bukit Ho Swee): Sir, I have a request to make to the Hon. Minister for Labour. I would ask him to give serious consideration to compel those who are going to get married to sign the CPF nominee form, failing which the marriage certificate would not be issued.

Mr Ong Pang Boon: Sir, as I have said earlier, I am proposing to refer the Bill to a Select Committee so that the provisions of the Bill can be considered in detail. So I do not propose to answer the points raised by the Member for Toa Payoh at this stage because it would require quite some time to answer all the points that he has raised. In fact, the point he mentioned about the estranged wife is really a very complicated problem, because who is in a position to assess whether the spouse is a responsible person to receive the CPF savings? I do not think the Central Provident Fund Board has the means to make the proper assessment. In any case, the law is to legislate for the vast majority of the people and we cannot legislate for the exceptional cases. Nevertheless, the points raised by the Member for Toa Payoh will be discussed in the. Select Committee when it is formed.

Question put, and agreed to.

Bill accordingly read a Second time.

Resolved,

"That the Central Provident Fund (Amendment No. 21 Bill be 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].