CENTRAL PROVIDENT FUND (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Manpower (Dr Lee Boon Yang): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

At this year's National Day Rally, the Prime Minister announced that the Ministry of Health will introduce Eldershield, an affordable severe disability insurance scheme to provide insurance coverage to elderly Singaporeans who require long-term care. The details of the Eldershield insurance scheme was released by the Ministry of Health on 24th August this year. The Ministry of Health had decided to allow CPF members to use their Medisave savings for the Eldershield premiums. It had also designed the Eldershield insurance scheme to operate as an opt-out scheme to attain as wide a coverage as possible. To provide for the use of Medisave for Eldershield premium, the CPF Act has to be amended.

Sir, currently, the CPF Act allows the withdrawal of Medisave savings to pay for the premiums of medical insurance schemes such as Medishield, NTUC Income's Incomeshield and AIA's Healthshield. Such schemes are defined as insurance to reimburse the CPF members' hospitalisation expenses. The Eldershield is a severe disability insurance scheme which provides coverage for long-term care, including home care and does not cover hospitalisation expenses. Hence, the CPF (Amendment) Bill before the House today introduces a new provision to allow CPF members to use their Medisave savings to pay for premiums of any healthcare insurance scheme approved by the Minister for Health. For those who do not have enough Medisave savings, they can use the Medisave savings of their spouse, children, parents or grandchildren. This will give CPF members greater flexibility in using their Medisave savings to pay for approved healthcare insurance, including the Eldershield. Sir, this is in line with the Ministry of Health's objective of expanding the role of healthcare insurance to meet the healthcare cost of Singaporeans.

Sir, the Eldershield will operate as an opt-out scheme. The Ministry of Health (MOH) has announced that the opt-out age will be set at age 40 and the maximum entry age will be set at 70. A special one-off exercise will be conducted for Singaporeans aged between 40 and 69 to decide whether to opt-out of Eldershield. MOH has also announced that to encourage greater private sector participation in the severe disability insurance market, they will tender out Eldershield to private insurers. To enable private insurers to operate opt-out insurance schemes, the CPF Board will need to provide these insurers with certain information. Hence, the Bill also seeks to amend the CPF Act to allow the CPF Board to release relevant information to an insurer administering or operating an approved insurance scheme, without the need for authorisation by the Medisave account holder. In the case of Eldershield, for example, MOH would require the CPF Board to pass information such as the names, addresses and gender of CPF members aged between 40 and 69, to the approved insurers to facilitate the running of the scheme. For those who did not opt out of Eldershield but have insufficient Medisave balance to pay for the premiums, the insurance companies have to know the premium shortfall so that they could request these CPF members to top up the outstanding balance by cash.

Sir, CPF members may ask what are the safeguards and prevention of possible abuses of such information disclosure. I would like to reassure hon. Members that CPF account details would be safeguarded. For Eldershield, only the CPF member's name, address, gender and premium shortfall, if any, will be released to the insurer. Insurers will not have free access to CPF members' account details. For the vast majority of members who have enough Medisave to pay for their Eldershield premium, information on their Medisave account balance will not be released to the insurer. The insurer will know only when a CPF member does not have sufficient Medisave for the Eldershield premium to be deducted. This makes it convenient for CPF members, as they do not need to separately check whether they have sufficient Medisave for Eldershield premium. As Medisave savings can be used to pay for hospitalisation expenses and other approved insurance premium payments, releasing information on the member's Eldershield premium shortfall is not indicative of the savings that he has accumulated over the years in his Medisave account.

Sir, the proposed amendments also stipulate that the insurer may not use the information for any other purpose other than for those connected with the administration of the scheme. The insurance companies will not be allowed to divulge such confidential information to their insurance agents or other parties for any other purposes. An insurer who misuses or wrongfully communicates confidential information will be guilty of an offence. Under the Statutory Bodies and Government Companies (Protection of Secrecy) Act, the insurer shall be liable on conviction to a fine not exceeding $2,000 or to imprisonment for a term not exceeding 12 months, or to both, and under the Official Secrets Act, the insurer shall be liable on conviction to a fine not exceeding $2,000 and to imprisonment for a term not exceeding two years. I would like to reiterate that only information that is essential for the administration of the approved healthcare insurance will be passed to approved private insurance companies, and that the approved insurance companies will be required to use the information strictly for the purpose of enrolling Singaporeans in the approved healthcare insurance schemes.

Sir, I beg to move.

Question proposed.

Mr Hawazi Daipi: Sir, this is a straightforward Bill and the provisions are very good. I would like to support it. But I have a few questions for the Minister.

How would the CPF Board counsel those CPF members who want to opt out of the Eldershield scheme, considering that this is a good scheme for them? On the supply and use of information on any member that the insurer requires, I welcome the Minister's assurance that the Government will take very seriously any misuse of information. But it is very important to every account holder that the information about him is not divulged to third parties. So I would like to ask the Minister how would the Government ensure that such information on the account holders is not divulged to third parties.

Are there plans by the Government to widen further the use of CPF savings by account holders to buy insurance policies and any other schemes that would help workers and benefit their elderly parents to make full use of their CPF savings? Would the Minister inform the House of the number of active CPF account holders who use their CPF savings for monthly premiums for insurance schemes other than the schemes approved or administered by the Ministry of Health and related agencies? Would the CPF Board advise both the account holders as well as the insurers, if the Board has reasons to believe that, in some other insurance scheme, the CPF member may not have the means to pay, using his CPF balance?

Sir, it is very important to ensure that CPF members do not overuse their CPF balances which could result in their not having the full benefits of the insurance schemes that they have signed up for, if they have to terminate the service only on account of their inability to pay the premium.

Mr Chiam See Tong: Sir, when I read the Bill, my concern was the loss of confidentiality of the CPF member in regard to his CPF account. I have just heard the Minister say that there are good preventive measures against insurance companies abusing their ability to have access to CPF accounts. But from what I read here, the insurance companies do not only have access to the main account of the CPF member but also including information relating to the amount standing to his credit in his Medisave account. In other words, they not only have access to the Medisave account, but also to the other accounts. So maybe the Minister could clarify on that point.

I wonder whether the Minister has thought of any other schemes whereby CPF members could approach the insurance company and it could tell them whether or not they qualify, rather than for the insurance company to be given a blanket right to look into CPF accounts. Sir, I know the CPF Board is very strict on this point. Even we, as lawyers, have no access to our clients' CPF accounts. If we want to know what is in our CPF accounts, sometimes when we need to know that, we have to get the member's written consent or authority before we can have a look at his account. So perhaps the Minister could assure the House that this access to CPF accounts is definitely not likely to be abused.

I have also heard the Minister saying that insurance companies wanting to participate in this scheme are subject to tenders. I hope that the Government shall be fair in approving insurance companies which wish to run this scheme, and not only to give a few select preferred insurance companies to have the monopoly of the business.

Dr Lee Boon Yang: Mr Speaker, Sir, I thank the Members who support the Bill. I will now answer the questions raised by both Mr Hawazi and Mr Chiam.

Mr Hawazi asked whether the CPF Board will help to counsel members so that they do not opt out of the scheme. Certainly, when the Ministry of Health launches this one-off exercise to ask those aged above 40 and up to age 69 whether they are going to opt out or not, we will participate in the process of educating and informing our CPF members. We will urge them not to opt out recklessly. This is a good insurance scheme. Eldershield will help to provide for their old age. About 8% of the elderly population will be in need of such assistance. So it will be good for these people. It will be good for us. We do not know when we may be struck down by a disease or an ailment that requires long-term care. So it is a very affordable insurance scheme and members should not just opt out without making a careful consideration.

Mr Hawazi also asked whether the CPF Board would ensure that the information would not be used for other purposes, just like Mr Chiam also raised the same point on confidentiality. In my Second Reading speech, I have addressed this point. The Board is very concerned and well aware of its responsibility as trustees to the CPF members for their CPF savings. We do not unnecessarily reveal any information concerning members' accounts.

With regard to access to members' particulars provided for in this Amendment Bill, we are only limiting it to the Medisave account, because it is related to the use of Medisave to pay for the premiums for Eldershield. So we will not allow the insurance companies to have direct access to a member's CPF account in toto. For instance, the insurance companies will not have access to the balance in his Ordinary account. Also, to further safeguard confidentiality, we will not be conveying to the insurance company the member's balance position in his Medisave. As I have explained in my Second Reading Bill, our intention is to expedite the operation of this Eldershield insurance scheme to make it easy. If we have too many requirements, the cost of managing the insurance will go up, and premiums will, therefore, have to go up. We want to make it affordable by designing it as a simple, workable and pragmatic insurance scheme.

What we are going to do is only to inform the insurance company when the member's account balance falls below what is required for him to pay the premium. So, knowing the anniversary date of his Eldershield policy, that we will have to deduct a certain amount of money for the Eldershield premium, and knowing from our records that he does not have a sufficient balance in his account, we will then inform the insurance company that so-and-so does not have enough to pay the full premium and that it will have to collect from him, say, "X" dollars in cash, to make up for the premium so that the policy does not lapse. In that sense, we are not revealing all the information concerning the Medisave account to the insurance company.

As I said in my Second Reading speech, the fact that he may not have a sufficient balance in his Medisave account does not reflect on his financial position at all, because he may well have somebody in the family who fell ill recently and was hospitalised and his Medisave account was used to pay those hospitalisation expenses. If he continues to have a job, he continues to be able to service his mortgage, he has no financial difficulty at all. That is, in fact, a very poor reflection of the state of his financial affairs. So members should not worry that this Eldershield insurance will result in the confidentiality of their CPF account details being breached.

Mr Hawazi also asked whether we intend to widen the use of CPF savings for the purchase of insurance policies. Today, under the CPF Investment Scheme, we do allow members to use their CPF savings, both in their Ordinary and in their Special accounts, to purchase investment-linked products. These are insurance policies with an investment component. I do not think we have allowed the use of CPF savings to purchase an ordinary life insurance policy without an investment component.

Are there plans to widen the use of CPF savings for insurance policies? Under this Amendment Bill, I would like to point out to Members that this is only pertaining to health insurance. Hon. Members will notice that clause 3 of the Bill amends section 77(1)(ja) of the CPF Act, and that the section refers to "the withdrawal of money from the Medisave account of a member for payment of premiums payable by the member or his dependant who is assured under a medical insurance scheme approved by the Minister charged with the responsibility for health." So it is strictly a health-related insurance scheme. And the answer then would be, yes, I believe the Ministry of Health is looking at other health insurance schemes which will meet their requirements, and we would be encouraging CPF members to consider alternative forms of health insurance.

Mr Hawazi asked for the number of CPF members who have used their CPF savings to purchase insurance schemes. I am afraid I do not have the numbers with me, but if the hon. Member has an interest in that, he can either file a Question or I can convey the answer to him.

Mr Hawazi also asked whether the CPF Board would advise CPF members and insurers if the Board has reason to believe that a member is buying a policy that may well exceed his means to service. This is, of course, an area of some concern to us, especially in investment-linked products. That is why last year we stopped the use of CPF savings for the purchase of annual premium investment-linked products, because there is a chance that the member may not be able to service a future premium and the policy will lapse, and he stands to lose quite a large sum of his CPF savings. We will continue to advise and to educate CPF members on making prudent decisions with regard to the use of their CPF savings.

Finally, Mr Chiam urged that the Government should be fair in approving companies to be named as the insurers for the Eldershield insurance scheme. Let me assure Mr Chiam that the Government is always fair and always above-board in its choice of service providers, whether it is just for ordinary service or for a special scheme such as an Eldershield insurance premium. I understand that the Ministry of Health will invite insurance companies to submit their tenders to participate in the scheme, and the merits of each tender will be studied carefully, and only those that meet the requirements imposed by the Ministry of Health will be selected. We are looking at, potentially, up to four insurance companies to be selected to run the national scheme. I hope this will reassure Mr Chiam that we will continue, as always, to be fair and above-board.

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. - [Dr Lee Boon Yang].

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