MINISTERS ON PENSION SCHEME

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MINISTERS ON PENSION SCHEME: 8.

Mr Steve Chia Kiah Hong asked the Deputy Prime Minister and Minister for Finance what is the justification for keeping Ministers on the pension scheme when all other public and civil servants have been converted to the Central Provident Fund scheme.

The Deputy Prime Minister and Minister for Finance (Mr Lee Hsien Loong): Mr Speaker, Sir, when the civil service phased out pensions for most of the public sector in 1986, it consciously decided to retain the pension scheme for officers in a small number of key services, one of which is the Administrative Service. Administrative Officers need deep knowledge and long experience of policy issues. The service takes in some recruits mid-career, but it continues to rely heavily on officers who have joined at the entry level. For these reasons, the pension scheme remains relevant to them. As part of their overall package, pensionable officers receive lower CPF contributions than non-pensionable officers. Political appointees are also on pensions because their terms of service follow those of Administrative Officers.

Mr Steve Chia Kiah Hong: Sir, how does the Deputy Prime Minister expect citizens to take the uncertainty of retirement planning under the CPF, which is a defined contribution scheme, at their

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own cost, whereas Ministers and public officers themselves are under a guaranteed and defined benefit pension scheme, using taxpayers' money? In other words, their CPF may run out before the citizens die whereas qualified Ministers are taken care of by the taxpayers' money until they die. Am I right to say that?

Mr Lee Hsien Loong: Mr Speaker, Sir, it is an entire package. When we calculate the salary, we look into how much a person receives now, how much he receives in the CPF, and how much he can expect to save in pensions. And when a person retires, he has a choice of having a pension stream for the rest of his life or taking a commuted lump sum at the point of retirement. In fact, as a matter of fact, nearly everybody who retires prefers the commuted lump sum. Because you take a lump sum, you invest it, you do what you want. If it runs out, it runs out. There is no free lunch. If you do not have your CPF, you have the pension. If you have the pension, you have less CPF. So it all adds up to a finite amount. The Member's implicit question is: are the Ministers enriching themselves again? And the answer is, we are going on market terms and, if anything, we are paying below what the market is.

Mr Steve Chia Kiah Hong: Clarification from the Minister. Does any serving Minister who turns 55 actually receive both salary and pension at the same time? If yes, should he be serving?

Mr Lee Hsien Loong: I believe the answer is yes. That is the rule for the civil service, and the Ministers follow the civil service rules.