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Due to the large gap between the private sector benchmark and their actual pay, the ministers' increase in salaries will be implemented in three phases, rather than in one go as many had expected.
The annual entry-level salary for ministers, or the MR4 grade, will increase from the current $1.2 million — which is 55 per cent of the current private sector benchmark of $2.2 million — to $1.6 million, or 73 per cent, from this month.
This will inch upwards, by the year's end, to 77 per cent of the benchmark at that point in time. The goal by end-2008 is 88 per cent of the benchmark (see graphic).
As he delivered the closely-watched numbers in Parliament yesterday, Defence Minister Teo Chee Hean, who is also minister-in-charge of the civil service, said it was "not realistic" to completely close this large gap in one go.
On the whole, the average monthly pay rise for the Cabinet will be 25 per cent. The range is from 33 per cent — for junior ministers and senior permanent secretaries at the MR4 grade — to 14 per cent at the higher grades, such as those of the Prime Minister and Deputy Prime Ministers.
The private sector benchmark, to which the ministers' salaries are pegged, now stands at two-thirds of the median income of the top 48 earners across six professions.
The revisions, said Mr Teo, will be implemented by adjusting both the monthly salary and annual components, such as allowances and performance bonuses.
The method by which the pay packet is calculated will also be changed to focus more on performance.
Said Mr Teo: "We will restructure the pay to remove components which are no longer relevant and to build up performance-linked components."
For one, ministers will enjoy higher GDP bonuses — but only if the economy is doing well. If it grows by 5 per cent, they will receive a three-month bonus. If GDP growth soars to 10 per cent or higher, they can expect to pocket up to eight months' bonus.
However, if the GDP growth is 2 per cent or less, they will not get any bonus.
On the individual performance bonus, Mr Teo said, in line with the Government's philosophy of paying for performance, the norm will go up to seven months' bonus, from five months' currently.
These revisions mean that "close to half (47 per cent) of the annual package of MR4 grades and above will be variable, compared to about one-third today".
"Twenty per cent of (the ministers') salaries will be predicated on the GDP bonus. Another quarter is performance dependent," Mr Teo said.
The car allowance for all appointment holders, currently equivalent to 2.5 months of the officer's salary, will also be scrapped as a result of revisions to the bonus system.
As the car allowance is "already counted into the annual salary package of these officers", it does not change the total package but "restructures it to be more performance-based", Mr Teo said.
Previously, the President, Prime Minister and Speaker of Parliament did not have the car allowance factored into their pay as they were each provided with an official car. With the changes, each will see their total salary increase by 25 per cent. The President and Prime Minister, along with Judiciary and Statutory Appointment Holders, will also see their service bonus — in lieu of a performance bonus — increase from five to seven months.
According to new figures released by the Public Service Division yesterday, Prime Minister Lee Hsien Loong will now earn nearly $3.1 million a year, making him the 102nd highest earner across all professions in Singapore.
The President remains the highest-paid officer in the Government with a new pay package of $3.19 million.
Senior Minister Goh Chok Tong and Minister Mentor Lee Kuan Yew will now be paid $3.04 million each. - TODAY/fa
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