CENTRAL PROVIDENT FUND ACT (Amendment to incorporate minimum protection to spouses)

Mr Chng Hee Kok asked the Minister for Labour, in view of recent court rulings on the division of Central Provident Fund (CPF) savings upon divorce, if he will consider introducing legislation to amend the CPF Act so as to incorporate minimum protection to spouses of CPF contributors irrespective of the contributors' nominations.

The Minister for Labour (Dr Lee Boon Yang): Mr Speaker, Sir, at present, a CPF member may nominate any person to be the beneficiary of his CPF savings upon death. If there is no nomination, upon death, his CPF savings will be distributed by the Public Trustee to the spouse, children and other family members according to existing law.

The current nomination rule also provides that a nomination is automatically revoked by marriage. The intention of this is to force CPF members to re-consider their nominations in favour of their spouses or other members of their families. If the member fails to re-nominate, his CPF savings will be distributed as though there is no nomination.

If we amend the Act to incorporate a minimum protection to the spouse of a CPF member by providing in law that the spouse is entitled to a portion of his CPF savings, it would erode the right of CPF members to nominate person or persons of their choice to receive their CPF savings.

Sir, in 1978, an amendment similar to the Member's proposal was, in fact, incorporated in a CPF (Amendment) Bill which was subsequently referred to a Select Committee. The Select Committee received various representations from organisations and persons arguing that it was undesirable to overrule a CPF member's nomination for beneficiaries of his CPF savings. The proposal was subsequently not taken up.

In view of the above, my Ministry will not amend the CPF Act as suggested by the Member.

Mr Chng Hee Kok: Mr Speaker, Sir, as the promotion of family values is the cornerstone of our society's philosophy, will the Minister say that, hypothetically, it is against the country's interest should a CPF member nominate a person other than his family members, for example, he nominates his pet dog as his beneficiary under the CPF scheme that we have currently?

Dr Lee Boon Yang: Mr Speaker, Sir, currently, about 50% of the CPF members do not or fail to make nominations after their marriage. In other words, should anyone from this 50% pass away before the age of 55, the CPF savings will be transferred to the Public Trustee who will then distribute it according to the intestate law. In which case, the interest of the spouse, the children or immediate family members will be looked after because the intestate law spells out clearly how it should be distributed. Out of the remaining 50% who have nominated, about 95% of them nominate their immediate family members as beneficiary. Sir, therefore there is no widespread abuse of privilege to nominate beneficiaries to their CPF savings. I think, by and large, CPF members are very concerned and sensible about how their CPF savings should be distributed upon their death. And I do not see any reason why we should now remove this power to nominate beneficiary to a member's CPF savings.

Mr Chng Hee Kok: Sir, I recognise that there is still the 5% which the Minister has mentioned. How is he going to protect the interest of the spouses? Usually, these are cases whereby the surviving members of the family have no legal recourse or they may come from the lower-income group and unable to seek legal recourse.

Dr Lee Boon Yang: Mr Speaker, Sir, among the small percentage of CPF members who have nominated beneficiaries who are not members of their immediate family, they have, in fact, nominated their relatives, ie, their uncle, aunty or nephew, to be their beneficiaries. They may have special reasons for doing so, and I do not think we should override their personal preference in such matter.

Dr Kanwaljit Soin (Nominated Member): Sir, would the Minister please tell the House whether the statutory right of nomination takes precedence over the High Court's ruling because CPF monies are now considered part of matrimonial assets, and if the nomination is not in line with the division as suggested by the High Court, would the statutory right of nomination take precedence?

Dr Lee Boon Yang: Mr Speaker, Sir, I believe the Member's supplementary question has overlapped into the question that she herself has asked. With your permission, Sir, could I proceed to answer that question first?

Mr Speaker: All right.