CENTRAL PROVIDENT FUND (AMENDMENT) BILL

Order for Second Reading read. 6.25 pm

The Minister for Labour and Second Minister for Law and Home Affairs (Prof. S. Jayakumar): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the Bill is essentially a technical enabling legislation to provide the legal framework for:

(a) the Medisave Scheme;

(b) extension of the Home Protection Insurance Scheme to HUDC Phase Ill home-owners;

(c) the imposition of a ceiling on the employers' contributions by statutory bodies; and

(d) any Cash Grant Schemes.

Sir, the details of the amendments are in the Explanatory Statement and I shall not repeat them here. I shall merely touch on the more important aspects of the Bill.

As regards the Medisave Scheme, the main features of the Scheme were debated in this House and it was approved in principle by this House in August last year and came into effect on 1st April, 1984.

Clauses 2, 4, 5 and 8 are to provide the legal framework for the implementation of the Medisave Scheme. They will, inter alia:

(i) create Medisave accounts and provide for the transfer of balances in members' special accounts as at 1st April 1984 to their Medisave accounts.

(ii) provide that a member will not be entitled to withdraw any moneys in his Medisave account when he reaches the normal age for withdrawals of his other amounts in his CPF.

Provision is also made for self-employed persons who will be covered by the Medisave Scheme and all contributions paid by them will be credited into their Medisave accounts.

As regards the Cash Grant Scheme, Sir, the details o,f the Scheme, which is under the charge of the Ministry of Home Affairs, have been widely publicised and it was implemented on 1st June 1984. The new section 11 B in clause 4 will empower the CPF Board to accept any cash grant made by the Government for the purpose of such Cash Grant Scheme.

Mr Jeyaretnam: Sir, on a point of order. I do not think we have a quorum in the House.

Mr Deputy Speaker: Will the Clerk please check whether we have a quorum?

The Clerk: We are short of one Member.

Some hon. Members entered the Chamber.

Mr Deputy Speaker: Some Members have just come in and we now have a quorum. Thank you, Mr Jeyaretnam. You may continue, Prof. Jayakumar.

Prof. Jayakumar: Thank you, Mr Deputy Speaker, Sir. Under the Scheme, the cash grant will be credited into the Ordinary account of the member and can only be used for the purchase of an HDB flat. The section will also provide for the recovery of the cash grant from any moneys standing to the credit of the member in the Fund, if the cash grant was obtained by any false or misleading statement or document or if the member has committed a breach of any of the terms and conditions of the cash grant.

As regards the limits on contributions, Sir, there is no limit on the employer's CPF contribution for the public sector, ie the civil service and statutory boards. Non-pensionable officers enjoy the employer's CPF contribution at the full rate, currently 25%, and pensionable officers at the par- tial rate, currently 15%. The pensionable officers are also eligible for benefits under the Pension Scheme. Government's intention to set appropriate ceilings was indicated one year ago. In May this year, Government announced the limit on the employer's CPF contribution for the public sector so that the superannuation benefits of the pensionable officers will not be less favourable than those of non-pensionable officers.

However, as the current contracts of employment of some statutory boards stipulate that the employer's CPF contribution is without any limit, amendments are necessary to implement this decision and to remove any doubts.

Hence, the effect of clause 3 of the Bill is to provide that no statutory board shall be liable to pay CPF contributions in excess of the prescribed amount.

However, where, for any individual, the quantum of the employer's CPF contribution already exceeds this prescribed ceiling, the contributions payable by the employer will be frozen at this quantum. The employer will continue to pay this higher quantum for such employee.

Finally, Sir, the Home Protection Insurance Scheme covers members who have purchased a house or flat from the HDB, JTC, HUDC or the Minister for Finance (Mindef Housing Scheme) with CPF moneys and who have mortgaged the property to such bodies. The amendment in clause 7 is to extend the Scheme to members who have purchased an HUDC Phase III property from the HDB with CPF moneys but have obtained a mortgage loan from an approved mortgage instead of the HDB.

Sir, I beg to move.

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 - [Prof S. Jayakumar].

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