HOME AFFAIRS UNIFORMED SERVICES SUPERANNUATION BILL

Order for Second Reading read. 4.05 pm

The Minister for Home Affairs (Mr Wong Kan Seng): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Home Affairs Uniformed Services (HUS) plays a key role in meeting public safety and security needs. The presence of capable Home Affairs Uniformed Services officers will help to maintain a stable environment needed to attract investments.

To ensure that the HUS is able to execute its roles in meeting public security and safety needs, we need to attract and retain good officers to join the Home Affairs Uniformed Services. It is with this objective in mind that the Ministry of Home Affairs (MHA) commissioned a study by an international consultancy firm to review the Home Affairs Uniformed Services career structures and systems in April 2000.

The Home Affairs Uniformed Services Career Review aimed to restructure the Home Affairs Uniformed Services career to ensure that it is well positioned to meet future public security and safety needs. It studied the career structure, pay and benefits package, career management and performance management of the HUS officers.

The Government has accepted the recommendation to introduce a super- annuation scheme for HUS officers. The scheme is known as the INVEST Plan. The Plan will replace the Contract scheme that is currently open to Home Affairs Uniformed Services officers in the Civil Defence, Prisons, Narcotics Service, as well as the Police (Junior) Officers Service. Officers on the Full CPF Scheme in the above services will also participate in the INVEST Plan. They will continue to receive Full CPF contributions and will also receive additional contributions credited into the INVEST Plan to build up a superannuation fund to help them transit out of service at the age of 50 or 55. The Plan will also replace the Pension scheme of the Police (Senior) Officers Service. The Plan will apply to all new Home Affairs Uniformed Services officers from 1st October 2001. Existing Home Affairs Uniformed Services officers are given an option to convert to the INVEST Plan and have the accumulated benefits under their existing schemes transferred to the new Plan. Let me explain the rationale of the INVEST Plan.

The retirement age for new Home Affairs Uniformed Services officers will be lowered by 5 years, in recognition of the rigorous requirements of the Home Affairs Uniformed Services. Being in a uniformed organisation, HUS officers are required to be physically fit, agile and alert when discharging their day-to-day duties. For instance, Police officers need to be agile and fit to perform patrolling duties, which include physically strenuous tasks like pursuing criminals. Civil Defence officers perform operational duties such as fire-fighting and rescue, emergency ambulance and hazardous materials mitigation, which require considerable physical effort. Similar exacting physical fitness and mental alertness requirements apply to officers in the Prisons and Narcotics schemes of service.

In addition, the increasing civilianisation and outsourcing of non-core functions will reduce the number of desk-bound administrative jobs. This in turn reduces the traditional channel used to hold older officers who are no longer suited for rigorous, frontline work, till they retire. For example, the number of desk-bound administrative jobs in the Police force will decrease to about 10 percent in the future.

Thus from 1st October 2001, all new officers joining the Home Affairs Uniformed Services will retire at age 50 if they retire as Junior Officers, and at age 55 if they retire as Senior Officers. Serving officers can choose to opt into the new scheme. The INVEST Plan is to help these officers transit out of service into their second career. Similar to the SAVER and Premium Plans that have been introduced in the Singapore Armed Forces (SAF), the INVEST Plan offers reasonable superannuation terms to uniformed officers who have to retire earlier than other civil servants.

The Ministry of Home Affairs has also taken the opportunity to replace the Pension scheme for Police Senior Officers with the INVEST Plan. This is because our review found that a plan which builds up officers' retirement benefits through making monthly contributions into the officers' accounts during the course of their careers, such as the INVEST Plan, is better able to meet the needs of Police Senior Officers, as compared to one where officers receive a fixed quantum on retirement, such as the Pension scheme. This is also to make it consistent with our Senior Officers in the other Home Affairs Uniformed Services Schemes. We will then have uniformity in treatment, instead of differential treatment for the Home Affairs Senior Officers.

The mechanism of the INVEST Plan is similar to the SAF's SAVER and Premium Plans. Under the INVEST Plan, the Home Affairs Ministry will contribute an amount based on a percentage of the officer's monthly salary into an INVEST Retirement Account kept for the officer. It is 7 3/4% for Junior Officers and 6% for Senior Officers, starting from the 7th year of service. Because of the additional component to replace pension, Police Senior Officers will get a higher contribution rate, that is 11 3/4% from the first year of service.

In addition, Junior Officers will receive retention payments in a separate INVEST Retention Account. The retention payments will be credited into the officer's Retention Account on satisfactory completion of each year of service, during the officer's first 10 years of service. The payments equal one month of salary for each year of service during the first 6 years. In the 7th to 10th year, the payments rise to 1 1/2 months of salary for each year of service.

The funds in the officers' Retirement and Retention accounts will be pooled to form an investment fund known as the INVEST Fund. The INVEST Fund will be managed by professional fund managers. Based on returns from investments, dividends will be credited into the individual accounts of each officer. An INVEST Board of Trustees, chaired by the Permanent Secretary, and comprising senior Home Affairs Ministry officials and people with relevant experience from the public and private sectors, will oversee the fund managers.

The accumulated amounts in the INVEST accounts can be withdrawn by the officers progressively. If the officer resigns prematurely, the Ministry will retain part of the amount in the officer's accounts. The officer can only withdraw the full amount in his accounts if he serves a full career with the Home Affairs Uniformed Services, when he retires at age 50 or 55 for Junior and Senior Officers respectively. The Ministry expects the progressive withdrawal feature of the INVEST Plan to enhance retention, thus helping the Ministry to attract good quality officers to join and remain with the Home Affairs Uniformed Services for a full career.

The Home Affairs Uniformed Services officers are, generally, pleased with the review and the enhancements in the career management. Junior Officers who have served more than 10 years and who will be given a one-off retention payment are happy. Briefings on the details on the new scheme of service and the INVEST Retention and Retirement Plan started in mid-July, with individual consultation for officers who need to discuss further their options. In addition to information booklets, officers were also given a projection software for them to compute and compare projected benefits under the current and the new terms.

As for the INVEST retirement plan where serving officers opt for earlier retirement age, officers decide based on what suits them best, taking into account their age, family commitments and plans after retirement. While some have expressed concern about the limited second career choices at age 55, others look forward to being able to start a second career after earlier retirement. Officers are also pleased with the possible additional source of savings available at retirement from the retirement fund. In general, the INVEST Retirement Plan has fared better among younger officers as officers with 10 or less years to retirement feel that their investment is not likely to gain much in the short span of time. Ultimately, each serving officer chooses what suits him best. No serving officer is worse off than before.

Sir, this Bill will provide the legislative framework to implement the INVEST Plan. It will also make consequential amendments to the Pension Fund Act to allow for officers' benefits accumulated under the Pension Fund to be transferred from the Pension Fund to the INVEST Fund.

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. - [Mr Wong Kan Seng].

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