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SINGAPORE: The government has passed the amendments to the Central Provident Fund Bill, which will facilitate the implementation of the new CPF interest rate framework, as well as provide low-wage workers with a new long-term income supplement scheme.
As Singaporeans are living longer, they need more money to last them through old age.
One of the changes made to the CPF Bill is to help members improve their retirement adequacy by providing them with an extra one percentage point in interest on the first S$60,000 of a member's CPF monies every year.
Manpower Minister, Dr Ng Eng Hen, said: "However, under the new interest rate structure, the extra interest that could have been earned would depend on the amount of combined CPF balances at each relevant period, as well as the balances in each CPF account at any one time, which would change due to contributions and withdrawals, including for uses other than housing.
"As such, it may be quite complex and indeed costly to determine whether the additional 1 percent interest could have been accrued at each relevant period. We therefore propose to adopt a practical approach and the amendments in these clauses allow the CPF (Board) the discretion to recover up to the additional interest that could have been earned."
The amendments also give a leg-up to low-wage workers by helping them to increase their incomes and CPF savings through the Workfare Income Supplement Scheme (WIS).
But MP of Jurong GRC, Mdm Halimah Yacob, was concerned about the income ceiling eligibility.
She said: "Currently the WIS applies only to those who earn not more than S$1,500. However, in computing this quantum, the current definition of salary under the Employment Act is used.
"Hence, instead of just using the basic pay as the basis for computation, all allowances, bonuses and overtime pay are included in the computation of the S$1,500 ceiling salary.
"I would like this to be reviewed as it is very common for low-wage workers to work overtime, which can, on average, come up to about 20 percent to 30 percent of the monthly wages."
Dr Ng said for now, the scheme will remain targeted at older workers, earning up to S$1,500 a month.
He said: "We don't want to spread the help too wide because then it becomes difficult. Every time we raise it, we have to give more and certainly, there will be a fiscal impact. As it is, we think that it will cost S$400 million a year, every year."
Dr Ng, however, assures that the scheme will be reviewed in three years.
The changes to the CPF Act will take effect from 1 January 2008.
- CNA/so
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