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Speech at Second Reading Speech on CPF (Amendment) Bill 2007

Dr Ng Eng Hen, Minister for Manpower, Parliament

Mr Speaker, Sir, I beg to move, “That the Bill be now read a Second time.”

2.       Sir, the Bill before this House seeks to amend the CPF Act. Firstly, amendments are introduced to strengthen the administration of the Act and to clarify certain existing policies. Secondly, the Bill expands the CPF Minimum Sum Topping-Up Scheme to provide more ways for family members to support one another financially. The third set of amendments will facilitate a smooth and equitable distribution of CPF monies pursuant to a court-ordered division of matrimonial assets in a divorce. Finally, amendments are introduced to deter manipulative transactions under the CPF Investment Scheme.


Strengthen the Administration of the Act and to Clarify Certain Existing Policies


3.       Clause 3 extends the powers of CPF inspectors to inspect and take possession of documents in all mediums, including digital and electronic forms.


4.       Clause 4 gives the Board the exclusive right to use any symbol or representation devised by the Board, and makes it an offence for any person to use a symbol or representation that resembles the CPF symbol or representation in a manner that is likely to deceive or cause confusion. It provides for a fine not exceeding $10,000 or to imprisonment for a term not exceeding 6 months or to both.


5.       Clause 5 makes clear that transfers from a member's savings in the OA and SA to the MA, and deductions for HPS premiums are permitted withdrawals.


6.       Clauses 7(c), 7(d) and 7(e) extend the pledging of HDB flats in lieu of retaining the full minimum sum to properties sold by approved developers, which include Design-Build-and-Sell Scheme flats.


7.       Clause 10 makes clear that the amount of OA savings that a member can transfer to his SA is the difference between the prescribed amount and the sum of the cash amount in his SA and any amount he may have withdrawn under the CPF Investment Scheme – SA.


8.       Clause 17 empowers the Board to make rules regarding CPF nominations.


Expansion of Minimum Sum Topping-Up Scheme


9.       Sir, our population is fast ageing. The proportion of Singaporeans aged 65 and above is expected to grow from 8% in 2005 to 19% in 2030. Correspondingly, retirement and healthcare needs will also increase. As the family unit remains the primary social support structure for Singaporeans, the amendments to expand the Minimum Sum Topping-Up Scheme will provide more ways for family members to take care of and help one another financially.


10.   Firstly, we will increase the top-up limit to the prevailing Minimum Sum. At present, top-ups are limited to the Minimum Sum specific to the cohort of the recipient. For example if the member had turned 55 in 1987, this would only be $30,000 as compared to the prevailing MS of $99,600.  Thus members can increase top-ups to recipients so that their family members will receive a regular income over a longer period.


11.   Secondly, we will expand the list of recipients. Currently, members can only top-up their grandparents' Retirement Accounts using cash and not CPF funds. We will now allow grandchildren to transfer funds from their CPF Ordinary Account to their grandparents' Retirement Account, subject to both meeting the top-up criteria.


12.   To help those who are single or who do not have children to build up their retirement savings, we will also now allow, as a new initiative, members to top-up their siblings' Retirement Accounts with savings from their own CPF accounts, or in cash. As announced by MOF previously, a tax relief for cash top-ups of up to $7,000 a year will be given if the sibling receiving the top-up earns not more than $2,000 a year and is 55 years old or above.


13.   In addition, we will allow top-ups to spouses and siblings below the age of 55 using CPF or cash. The top-ups can be made into members' Special Accounts (SA). In keeping with the intent of the scheme to build up the CPF of recipients for long term needs, the top-up monies can only be used to provide a steady income stream during the recipients' retirement, and cannot be withdrawn as a lump sum. In the event of the recipient's demise, any remaining balance from the top-up sum will revert to the donor.


14.   Clause 8 in the Bill will enable the topping up for grandparents using CPF funds as well as the expansion of the list of recipients to siblings above and below age 55, and spouses below age 55. The increase in the top-up limit from the cohort Minimum Sum to the prevailing Minimum Sum will be done by way of an amendment to the CPF regulations.


15.   Clauses 6, 7, 9, 11 and 12 make consequential amendments to the Act arising from this policy. Clause 6 of the Bill sets the limit of cash top-ups to a recipient's SA at the recipient's Voluntary Contribution (VC) limit. Consistent with top-up limits for family members, Clause 9 makes it possible to allow members to top-up their own RA with their OA or SA monies up to the prevailing MS. As in the current Act, Clauses 7, 11 and 12 enable the transfer of the balance of any unused top-up monies to the donor's CPF account on the death of the recipient.


16.   Other related amendments are Clauses 2, 5 and 25. Clause 2 makes technical amendments to the definitions of “minimum sum” and “retirement account”, while Clause 5 facilitates the transfer of top-ups received before age 55 from the recipient's SA to his RA when he reaches 55. Clause 25 of the Bill enables the making of Regulations for top-ups to the SA for siblings and spouses who are below the age of 55.


17.   The changes to the top-up scheme will take effect from 1 Oct 2007, except for top-ups to members below the age of 55, which will take effect from 1 Jan 2008.


Smooth and Equitable Division of CPF Monies in Matrimonial Proceedings


18.   Sir, the next set of amendments to the CPF Act are intended to help divorcing couples achieve a smooth and equitable division of CPF assets acquired during a marriage. I will describe the changes to be effected in terms of a male CPF member and a female ex-spouse, although the new rules will apply equally to a female CPF member and a male ex-spouse.


19.   CPF savings form part of matrimonial assets that are governed by the Women's Charter which provides powers to the courts to divide matrimonial assets. Under current rules, a court order to divide a member's CPF money between him and his ex-spouse is enforced only when the member is eligible to withdraw his CPF and has set aside his Minimum Sum (MS) and Medisave Minimum Sum (MMS).


20.   The current practice may be inequitable to the ex-spouse for two reasons. Firstly, the ex-spouse's access to these monies is delayed till the member is eligible to withdraw his CPF, typically when he turns 55. Secondly, the member's retirement needs take priority over that of the ex-spouse, as only the balance of funds after the member has set aside the prevailing CPF MS and MMS when he turns 55 is available for distribution to the ex-spouse. The MS and MMS at the point of withdrawal in the future may also be substantially different from that when the court order was made.


21.   The principle underlying these amendments is that the CPF Act should facilitate the division of matrimonial assets under the Women's Charter, provided there is no leakage from the CPF system. Hence, amendments will be made to firstly, allow an immediate transfer of CPF monies to the ex-spouse's CPF account if the ex-spouse is a citizen or Permanent Resident (PR). This shall be done without the MS or MMS first having to be set aside once the court has ordered a distribution of CPF monies in a divorce. The CPF money to be distributed will be channelled to the ex-spouse's CPF accounts according to the accounts they originally resided in.


22.   If the ex-spouse is not a citizen or a PR, immediate transfer of CPF monies is not allowed. Instead, the court can order the Board to pay the spouse when the member becomes eligible to withdraw his CPF monies. The member will not be required to set aside the MS and MMS before the ex-spouse can receive her entitled share.


23.   Secondly, the amendments will also facilitate the immediate transfer of immovable property to the ex-spouse if the ex-spouse is a citizen or a PR. Transfer in this context would refer to a transaction where there is no cash consideration at fair market value other than the refund of CPF monies withdrawn for the purchase of the property. In such an instance, the CPF Act currently requires the requisite CPF refunds to be made to the member's CPF account before the transfer can take place so that there is no leakage of CPF monies.


24.   However, with the amendments, the court will have the option of ordering the member to transfer the property to the ex-spouse without all or even any of the refunds being made to the member's CPF account first, provided that a charge is placed to secure the refund of such CPF monies into the ex-spouse's CPF account should she sell the property later. In effect, the CPF used by the member, and the accrued interest on that CPF, will be refunded to the ex-spouse's account in the event the property is sold.


25.   Finally, the amendments will also enable the member's CPF investments to be transferred to or be liquidated to allow the ex-spouse immediate access to CPF assets which she is entitled to. The transfer of CPF investments is only allowed for an ex-spouse who is a citizen or a PR.


26.   Clause 18 of the Bill inserts new sections 27A to 27I to facilitate the smooth and equitable distribution of CPF monies arising from the division of matrimonial assets. In particular, section 27B provides for the immediate transfer of CPF monies to the CPF account of the ex-spouse. Sections 27C to 27F provide for the immediate transfer of property to the ex-spouse. Section 27G provides for the immediate transfer of CPF investments to the ex-spouse.


27.   Other related amendments are Clauses 5, 6, 16 and 19. Clause 5 facilitates the transfers made under section 27B. Clause 6 exempts contributions to the ex-spouse's CPF accounts made under sections 27B to 27H as a result of division of matrimonial assets from counting towards the Voluntary Contribution limit. Clause 16 amends section 24, which provides for the protection of CPF monies and investments from member's creditors, to make it subject to sections 27B to 27H. Clause 19 makes consequential amendments to give priority to transfers of CPF monies in relation to matrimonial division under section 27B over the deduction of Home Protection Scheme (HPS) premium from the member's CPF account.


28.   The changes pertaining to the division of matrimonial assets will apply to court orders made on and after 1 October 2007.


Deter Manipulative Transactions under CPF Investment Scheme


29.   Sir, the intent of CPF Investment Scheme is to provide members investment options to enhance their CPF savings for retirement. Manipulative transactions that lead to leakage of CPF savings before retirement should be prohibited. The amendments will strengthen the CPF Act to deter such manipulative transactions.


30.   Clause 20 of the Bill creates a new offence for any person to manipulate any CPF Investment Scheme transactions. Clause 21 enables the courts, upon a member's conviction in connection with the investment, to order the refund or transfer of any shortfall to the member's CPF account caused by manipulated trades.


31.   These changes will take effect on 1 October 2007.




32.   Sir, I beg to move.