CENTRAL PROVIDENT FUND BOARD (Madam Jenny Koh's claim)

Mr Steve Chia Kiah Hong asked the Minister for Manpower (a) whether the CPF Board had made a mistake in rejecting Madam Jenny Koh's claim initially; (b) if so, has the Board apologised to her for causing so much distress at a time when she had to deal with the loss of her husband; and (c) what steps is the Ministry taking to prevent similar incidents from arising in future.

The Minister for Manpower (Dr Lee Boon Yang): Mr Speaker, Sir, before I answer Question No. 11, may I have your indulgence to inform the Nominated Member that earlier on, when he raised Question No. 3, my colleague was not in the Chamber to answer his question and also Question No. 4. And with your indulgence, if time permits, before the end of Question Time, my colleague would seek your permission to answer Question Nos. 3 and 4. I will now turn to Question No. 11.

Mr Speaker, Sir, the Home Protection Scheme (HPS) is a mortgage reducing insurance scheme that protects CPF members who have obtained housing loans from approved authorities against losing their flats purchased under the Public Housing Scheme should they become disabled or pass away before their loans are repaid. A CPF member would qualify to claim under the Home Protection Scheme if there was an outstanding loan to discharge.

Sir, in Mdm Jenny Koh's case, based on the intended loan commencement date, 1st August 2001, as provided by the Housing and Development Board, the CPF Board had deducted the premium and sent Mdm Koh and her husband, the late Mr Yee, a certificate informing them that the cover commencement date was 1st August 2001. The cover under the Home Protection Scheme was premised on the condition that the purchase transaction would be subsequently completed.

Sir, unfortunately, Mr Yee passed away before he completed the purchase transaction. In the light of this, the CPF Board took the position that a housing loan had not been taken, as Mr Yee was not the legal owner of the flat at the time of his sudden demise. Therefore, while we sympathised with Mdm Koh and her family, the Ministry was not able to accede to her appeals and had the CPF Board discharge his loan liability to HDB when there was no outstanding housing loan to discharge.

Her subsequent appeals were rejected as the Board explained that the Home Protection Scheme (HPS) did not apply to Mr Yee since he had not withdrawn any monies from his CPF account to repay the HDB housing loan. This was premised on the interpretation of section 29(2) of the CPF Act which provides that the HPS applies to a member of the CPF Fund who had withdrawn monies standing to his credit in the CPF Fund to repay any instalment of housing loan. Prior to this case, the CPF Board's interpretation and procedures had worked well for practically all the Home Protection Scheme cases. In a way, Mdm Koh's case is exceptional as it involved the question of whether there is insurance coverage before a person becomes a legal owner of his flat.

As hon. Members are aware, my Ministry conducted another review of the case and, in particular, the legislative framework which governed the scope and application of the Home Protection Scheme was re-examined. I thought this was necessary as I was concerned that there may be pre-existing ambiguity in the interpretation of the provisions governing the scope of the HPS. In this regard, guidance was sought from the Attorney-General's Chambers.

Mr Speaker, Sir, the Attorney-General's Chambers has advised that the legislative scope of the Home Protection Scheme is provided under section 29(1) of the CPF Act and that this section did not require Mr Yee to complete the purchase transaction or to withdraw monies from his CPF account to repay the loan in order for the Scheme to apply to him. It was sufficient if there was a valid housing loan discharge and the Home Protection Scheme premiums had been deducted. Therefore, since there was in place an agreement for HDB to extend a housing loan to Mdm Koh and her late husband jointly, and the Home Protection Scheme premiums had been deducted from the CPF accounts of Mdm Koh and her husband, the CPF Board could discharge Mr Yee's liability to repay the housing loan to HDB. This review has brought about a favourable outcome for Mdm Koh.

Sir, in the course of the review, the Board has also looked at past claims, rejection cases, in order to see if there were similar cases that require a re-look. The Board told me that there is only one case that might require re-consideration. This case is being reviewed now. Similar incidents are unlikely to occur in the future as we have now clarified the legal interpretation as to when the Home Protection Scheme coverage would take effect for cases of this nature. The CPF Board has also introduced new procedures to ensure that such cases will not be repeated.

Sir, in fact, in order to avoid any ambiguity in the interpretation of the relevant provisions of the Act, my Ministry will consider amending the legislation. We intend to rephrase the legislation such that the Home Protection Scheme coverage for a member would begin once there is a valid housing loan agreement with the HDB or any other approved mortgagee and the HPS premiums are deducted by the CPF Board.

Mr Steve Chia Kiah Hong: I thank the Minister for his long and very extensive explanation and clarification. The Minister has not answered my question. Has the Ministry and the CPF made a mistake in the interpretation of the law and, in this case, has an apology been made to Mdm Jenny Koh?

Dr Lee Boon Yang: Mr Speaker, Sir, I thought I have explained to him the decision to reject the appeal was made on the best interpretation of the provisions in the CPF Act at that time. There is no question of a mistake. It was a question of how the interpretation, and subsequent review of the legislative intent, was made.