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The Central Provident Fund (Amendment) Bill 2013 Second Reading Speech by Mr Tan Chuan-Jin, Acting Minister for Manpower, 11 November 2013, 6:30 PM, Parliament

Mr Tan Chuan-Jin, Acting Minister for Manpower, Parliament


  1. Mister Speaker, I beg to move, “That the Bill be now read a Second time.”
  2. It is important that employers fulfil their CPF obligations to their employees. This is especially so for the lower wage and vulnerable workers, to help them save up for their retirement needs, and ensure that they benefit from Government assistance schemes such as Workfare which are implemented via the CPF system. Hence, we view non-compliance by employers of the CPF Act seriously and will take firm action against errant employers. This Bill will amend the CPF Act to support enhanced enforcement of the Act. General penalties will be increased and powers of CPF Board inspectors will be strengthened to aid investigations.
  3. Other amendments to the Act will provide some flexibility for the CPF Board to address appeals on withdrawal frequency by CPF members above the age of 55, update pledging rules for private property and close Minimum Sum-related schemes which are no longer relevant. Various technical amendments will also be made to streamline the administration of the CPF.

  4. Let me begin with the changes to enhance our enforcement of the CPF Act. Most employers comply with their CPF obligations, with more than 97% of employers making their CPF contributions for their employees in a timely manner in a given month. However, while compliance is high, for those Singaporeans who have not received their due payments, it matters. I believe that it tends to impact the less educated and those who may be earning less, precisely those for whom the CPF contributions will help more. Since late 2012, the CPF Board has stepped up enforcement to deter errant employers who do not comply with the CPF Act. This has been complemented by outreach activities to raise awareness amongst employees and employers of their CPF rights and obligation.
  5. The CPF Board and the Ministry of Manpower will continue to step up efforts to bring about greater compliance with the CPF Act and Employment Act to better protect employees, including under the WorkRight initiative. The review in penalties under the CPF Act will ensure that the penalties have a stronger deterrent effect on recalcitrant employers.

    Increasing General Penalties
  6. For offences under the CPF Act for which no specific penalty is prescribed, which include non-payment and late payment of CPF contributions and providing false statements, general penalties are imposed on offenders upon conviction. Currently, for such penalties, the Act prescribes a maximum fine of $2,500 for first offences and a maximum fine of $10,000 for subsequent offences. There is at present no minimum fine.
  7. We will increase general penalties, to enhance their deterrent effect so that they are commensurate with the severity of the offences. As such, we will amend Section 61 of the CPF Act to double the maximum fine for first offences to $5,000. For offences involving payment of CPF employee contributions, we will also introduce a minimum fine of $1,000 for first offences and $2,000 for subsequent offences. All these fines apply per charge. Employers who default on their CPF contributions for months or for more than one employee can face multiple charges, and the total fine will be considerable.
  8. In conjunction with the increase in general penalties, we will also double composition amounts, which are collected for compoundable offences, from $500 per charge to $1,000 per charge. These refer to cases where CPF Board compounds the offence by accepting the composition amount instead of prosecuting the employer if the employer has met certain conditions such as paying up CPF arrears.
  9. Among the small group of recalcitrant employers who repeatedly default on their CPF contributions, there may be Directors or officers of incorporated companies who are not personally liable to pay the CPF arrears owed, and therefore might not be deterred by the Court fines imposed. We will therefore introduce a jail term which can replace or accompany the increased fines. A jail term of up to 6 months will be applicable to the first offence, and this will be doubled for subsequent offences. The inclusion of a jail term aligns the CPF Act with the Employment Act which also provides for a jail term for labour-related offences.
  10. The vast majority of employers comply with their legal obligations to pay CPF contributions. But for the minority of employers who take advantage of their employees by not paying their CPF contributions, these changes should send a clear and strong signal.

    Empowering CPF Board inspectors to obtain information from other relevant sources
  11. Another enhancement we are making to strengthen our enforcement of the CPF Act is to better equip CPF Board inspectors in their ability to carry out their duties.
  12. With non-traditional work arrangements becoming more prevalent, our CPF Board inspectors are increasingly hampered by employers’ complex HR practices. For instance, for cases of non-payment of CPF contributions for outsourced employees, the Board’s inspectors may need to obtain relevant documents and records from the company where these employees are working, rather than from the employer of these employees. Such documents and records may include records of wages and attendance logbooks.
  13. In view of this, it is necessary to equip CPF Board inspectors with the ability to obtain documents and records from person other than the employer. Section 5(3) of the Act will be amended to empower the Board’s inspectors to obtain documents or records from any person connected with the employment of the workers in the course of an inspection. Inspectors will also be empowered to obtain information, documents or records from any person in the course of an investigation into a specified offence under new section 5(3A) of the Act. These amendments will aid CPF Board in its enforcement efforts, and help the Board protect the interests of employees, particularly those in non-traditional work arrangements.

  14. Sir, I will now move on to the next amendment that will give the Board flexibility in handling appeal cases related to withdrawal frequency made by CPF members above the age of 55. Currently, CPF members above the age of 55 are allowed to withdraw balances above their cohort Minimum Sum and the prevailing Medisave Required Amount once within each birthday year, subject to applicable withdrawal rules.
  15. We have seen cases of CPF members who have made a withdrawal within their birthday year, but subsequently request to make another withdrawal before their next birthday for various reasons. At present, CPF Board already has discretion to allow for an additional withdrawal within a year, for example, where it is satisfied that the member has been unemployed for 6 months prior to his application. That said, there may be other cases where one more withdrawal within the year is merited.
  16. We will therefore amend Section 15(4) of the CPF Act to provide CPF Board with the flexibility to assess and allow a CPF member to make more than one withdrawal within the same birthday year. However, the amount of money that the member may withdraw will still be based on the applicable withdrawal rules.

  17. Let me move on to the next amendment that will update the pledging rules in relation to private property owned by a CPF member and one or more persons who are not related to the CPF member. CPF members who own property can choose to pledge their property up to half of the Minimum Sum upon reaching the age of 55, to withdraw cash from the Retirement Account. The CPF Act currently specifies that owners may only pledge their respective shares of their private property if they are related. However, this is incongruent with the policy where non-related singles are allowed to use their CPF savings to jointly purchase a private property under the CPF (Residential Properties Schemes) Regulations since July 2005.
  18. We will therefore amend section 15(11A) of the Act to allow a CPF member to pledge a private property jointly owned by the CPF member and any other person.

  19. Sir, I will now move on to the next amendment that will give effect to the closure of the Minimum Sum Bank Deposit Scheme (BDS) and the Minimum Sum Plus Scheme (MSPS). The BDS and MSPS were introduced in 1987 and 2000 respectively as an alternative to the Minimum Sum Scheme and to encourage members to purchase annuities for more retirement income. However, with the introduction of the CPF LIFE scheme, lower bank interest rates and more annuity products granted tax exemption, members’ participation in the BDS and MSPS has dropped significantly over the years. All participating banks and insurers have also stopped accepting new deposits or annuity purchases under the BDS and MSPS.
  20. Since both schemes have become defunct, amendments will be made to Sections 15(6C) and 15B of the Act to cease the BDS and MSPS with effect from 1st January 2014. Members who are already on the BDS and MSPS can continue to remain on their respective schemes.

  21. The other amendments in the Bill are to clarify and streamline the administration of the CPF Act. We will constantly refresh and update the CPF Act based on the feedback provided by the public and these changes, like many over the years, have been the result of your inputs and suggestions. Thank you and please do continue to let us know how to improve the system.
  22. Sir, taken in total, the amendments in this Bill will strengthen compliance with the CPF Act, and refine and update the CPF system for the benefit of members.
  23. Sir, I beg to move.