CPF LOAN FOR HDB FLATS

Column No : 1783

CPF LOAN FOR HDB FLATS: 4.

Ms Irene Ng Phek Hoong asked the Minister for Manpower if low-income or jobless Singaporeans who sold their HDB flats to get out of their debts and to downgrade, can be allowed to either (i) keep a percentage of the sales proceeds of their flat that now have to be returned to their CPF accounts; or (ii) loan from their own CPF accounts the sum of the sales proceeds that now have to be returned, and to arrange an instalment plan for the loan to be paid back into their CPF accounts.

The Minister of State for Manpower (Mr Gan Kim Yong) (for the Minister for Manpower): Mr Speaker, Sir, allowing low income or unemployed Singaporeans to keep part of the proceeds when they sell their HDB flats instead of returning to their CPF will deplete their CPF savings ahead of their retirement. This is not the best way to help them as it will undermine their post retirement needs in the long term. This might help them meet their daily needs for a while but we would be storing up bigger problems in the future. To allow them to loan from theirCPF is also not practical. They are unlikely to be able to repay the loans, even through instalments.

Instead, there are a number of financial schemes under the three ComCare pillars of ComCare Self Reliance, ComCare Grow and ComCare Enable to help needy Singaporeans, such as the Work Assistance Programme (WAP) and the Self-Reliance Programme (SReP). But we should also focus on measures to improve the opportunities for Singaporeans, to encourage them to find work, to stay in their jobs and to upgrade their skills. In this way, we will help them gain self sufficiency, help their families retain their dignity and self-esteem, while transmitting sound work values to their children and reinforcing the work ethic that has underpinned the success of our nation.

The Ministerial Committee for Low Wage Workers is working out schemes that will help such Singaporeans meet their short term needs through Workfare. One such proposal being studied, as recently announced by the Prime Minister, is the plan to pay a special one-off workfare bonus to low-income middle-age workers to encourage them to stay employed. More details will be released when the deliberations are completed.

Ms Irene Ng Phek Hoong (Tampines): Sir, while it is true that CPF savings are primarily for old age, can I ask the Minister whether it is also true that CPF savings are also used for investments which are risky? And according to the CPF website, 50% of total CPF investors in FY 2004 maderealised losses from their CPF investments. Would it not be more prudent to allow CPF investors to take out some of the money to pay their outstanding loans which attract high late payment interest rates as well as outstanding debts which would force them to turn to loan sharks? Would it not be more prudent for them to do that than to allow them to use the money to make risky investments?

Mr Gan Kim Yong: Mr Speaker, I sympathise with the Member's concerns.To some extent, we have to also recognise that these are two different groups of people, ie, those who make investments tend to have excess in their CPF accounts, and like all investments,they thus have profits and losses and the risk has to be managed. Whereasthe particular group of people that the Member, Ms Irene Ng, was interested in are the low income workers and those who are jobless.For them, if we were to help them solve their daily problems by extending a loan to them through the CPF, it is consumption in nature, andwe would be storing up bigger problems in the long term.

Ms Irene Ng Phek Hoong: Sir, a recent paper by Department of Statistics, based on the 2003 Household Expenditure Survey, found that households in the bottom 20% have accumulated an average home equity of $138,000 each. Sir, this asset is their only asset. Would it not make sense for us to help them to monetise this asset so that they will not be driven down the welfare route? It is totally consistent with our message of self-reliance, help them to get back on their own feet based on their own assets, so that they can later on start saving for their future again.

Mr Gan Kim Yong: Sir,the Committee is looking at helping our Singaporeans monetisetheir property. One wayto do so is for them to downgrade, for example, to a smaller house so that they will be able to realise some cash that they may need. But Ms Irene Ng is talking about allowing them to withdraw from CPF, what rightfully belongs to the CPF, ahead of their retirement. This is quite a different proposition that the Member is proposing. AsI mentioned before, therearemany schemesavailable to help these lower income workers in Singapore. And I would encourage the Member to approach the relevant authorities forhelp, rather than to work on the CPF which is meant forold-age retirement.