CENTRAL PROVIDENT FUND (AMENDMENT) BILL

Order for Second Reading read, 5.00 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, over the last 11 years, the Central Provident Fund has grown in significance as a social security institution. The rate of contribution has steadily increased from 10% of an employee's wage to the current rate of 37%. The number of CPF members and their total savings in the Fund have also increased significantly from 505,000 members and $504 million at the end of 1968 to 1,436,000 members and $7.5 billion respectively last year.

For most CPF members, and indeed the majority of our work-force, CPF savings con- stitute the main source of savings for old age or to provide financial protection for their families in the event of their death before the age of 55. The Fund has also enabled 268,000 of its members to use their savings for the purchase of flats and houses under various approved housing schemes. In 1978, members were also allowed to use CPF savings to buy shares issued by the Singapore Bus Service. Such uses of CPF savings enable workers in Singapore to have a stake in the country and participate in its future development.

The Amendment Bill before the House has been introduced to improve protection to CPF members and their families. A major aim in the Bill is to encourage CPF members to give due consideration to members of their immediate family when they nominate persons to receive their CPF savings upon their death. With the present rate of contribution, CPF savings will form a significant portion of a member's assets. Unless otherwise expressly intended by a CPF member, such savings should be for the benefit of his immediate family when he dies.

In the administration of the Fund over the years, it has been found that there are members who, having made their nominations before marriage, have neglected to update them after marriage. In the majority of such cases, the nominees are their parents, brothers and sisters; some have nominated distant relatives, friends, and even employers to be their beneficiaries. Whatever the case may be, the wives and children of such members will unfortunately and unwittingly be made to suffer hardship if they should die without changing their nominations, and thus leave their families unprovided. The Bill therefore seeks to protect CPF members' immediate families by revoking their nominations upon their marriage. This will force CPF members to reconsider their nominations, hopefully in favour of members of their immediate families. If such a member fails to re-nominate, his CPF savings will be paid to the Public Trustee upon his death and distributed in accordance with the rules of intestacy,

As for CPF members who have made their nominations after marriage, I take this opportunity to assure them that the Bill, when passed by Parliament, will not affect their nominations, unless of course they subsequently remarry. For these members who have made their nominations, I hope they have made provision for members of their immediate families.

Mr Speaker, Sir, under section 13 (3) of the Central Provident Fund Act, CPF savings of a member who is an undischarged bankrupt are deemed to be impressed with a trust in favour of his nominees. The intention of this provision is to protect his savings from seizure by his creditors, thereby protecting the interest of his beneficiaries when he dies. However, it imposes unnecessary hardship on such a member, as well as his immediate family. Firstly, under this provision, he is unable to use his CPF savings for the purchase of HDB and JTC flats to house his family, even though such flats are protected by law from seizure by his creditors. Furthermore, a CPF member who has attained the age of 55, or is physically or mentally incapacitated, or is of unsound mind, is unable to withdraw his savings from the Fund to sustain himself and his family even if his savings substantially exceed the amount required to discharge his debt. Clause 11 of the Bill, therefore, seeks to remove such unnecessary hardship on undischarged bankrupts so as to enable them to withdraw their CPF savings for the purchase of HDB and JTC flats. The Bill also seeks to enable undischarged bankrupts to withdraw from their CPF savings a monthly sum to be determined by the CPF Board for their maintenance if they have attained the age of 55, are physically or mentally incapacitated, or are of unsound mind. In addition, the Bill seeks to empower the Minister to approve total withdrawal of the CPF savings of an undischarged bankrupt if he qualifies under the same grounds.

Mr Speaker, Sir, CPF inspectors are often hindered in their investigations into incorrect payments of contributions by employers because of inadequate and inaccurate wage records. The authority conferred by the present legislation is confined only to the examination of documents relating to the employment of employees. Employers can therefore evade or underpay contributions by understating or omitting altogether wages paid to their employees. This is particularly true for those who have already left employment and, as a result, are often deprived of their due benefit. The proposed amendment in Clause 5 of the Bill, therefore, seeks to empower an inspector of the CPF Board to examine the audited statement of accounts of an employer's undertaking, regardless whether or not such accounts relate to employees of the establishment. This will enable enforcement officers to view the accounts as a whole and to detect under-statement or omission of wages by employers for suitable enforcement action to be taken to recover contributions due to the employees.

The rates of CPF contribution for all categories of employees in the private sector are as set out in the schedule to the Act. With rapid social and economic changes, I foresee the need to provide for different rates of contribution for different types of employees. The proposed amendment in clause 13, therefore, seeks to empower the Minister to make regulations to provide for rates of contribution other than those specified in the schedule in respect of such categories, classes or descriptions of employees as he may specify.

Finally, Mr Speaker, Sir, clause 4 of the Bill contains amendments to allow greater flexibility in the administration of the Board, while clause 6 seeks to empower the Board to use moneys in the Fund to purchase properties and to construct buildings for the purposes of its occupation and investment.

Sir, I beg to move.

Question proposed. 5.11 p.m.

Dr Augustine Tan: Mr Speaker, Sir, I would like to seek clarification from the Hon. Minister for Labour in respect of clause 6 of the Bill before this House. Under the proposed amendment to section 5 (2) (c) in clause 6 of the Bill, the Board is empowered to use moneys "for the purchase of any property and for the construction of buildings." Then I notice that subsection (2A) mentions that:

"The land situate at 79 Robinson Road, Singapore, acquired by the Board, and the building constructed thereon prior to the commencement of the Central Provident Fund (Amendment) Act, 1980, shall be deemed to have been purchased and constructed by the Board in pursuance of the powers conferred upon the Board by paragraph (c) of subsection (2) of this section.".

Sir, this again seems to be a case of something having been done outside this Parliament without proper authorisation and then subsequently seeking permission in this House. What if this House were to say no? Would the CPF Board be prepared to give up that building?

Earlier, in the Budget debate, we had to censure the Minister for Finance for converting a loan into a grant. As stated in the Annual Report of the Sentosa Development Corporation, this was already implemented and then permission sought in this House for that particular purpose. Would the Hon. Minister please explain, and would he give an assurance to this House that in future the CPF Board will not do things without the permission of this House?

Mr Ong Pang Boon: Mr Speaker, Sir, the decision to construct the CPF building was taken long before I assumed the post of Minister for Labour. But I can assure him that it was not a deliberate attempt to bypass Parliament. I think it was a genuine oversight. I can assure him that this will not be repeated.

Dr Augustine Tan: Mr Speaker, Sir, is it intended under the proposed amendment that the CPF Board will engage in investment in property on an extensive scale?

Mr Ong Pang Boon: Mr Speaker, Sir, at this moment, I do not anticipate that kind of activity.

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 Ong Pang Boon].

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