Wednesday, May 24, 2006

Did you know - Ministers on pension scheme

Someone told me in a forum that Singapore Ministers get pensions. I asked for the source to confirm this, but was told the information is public. Being curious, I took some time to research and was able to find the following sources which confirms that Singapore Ministers get pensions.

I found the following reports under the Singapore Hansard. On 16 Jun 2004:

Mr Steve Chia Kiah Hong asked the Deputy Prime Minister and Minister for Finance what is the justification for keeping Ministers on the pension scheme when all other public and civil servants have been converted to the Central Provident Fund scheme.

The Deputy Prime Minister and Minister for Finance (Mr Lee Hsien Loong): Mr Speaker, Sir, when the civil service phased out pensions for most of the public sector in 1986, it consciously decided to retain the pension scheme for officers in a small number of key services, one of which is the Administrative Service. Administrative Officers need deep knowledge and long experience of policy issues. The service takes in some recruits mid-career, but it continues to rely heavily on officers who have joined at the entry level. For these reasons, the pension scheme remains relevant to them. As part of their overall package, pensionable officers receive lower CPF contributions than non-pensionable officers. Political appointees are also on pensions because their terms of service follow those of Administrative Officers.

Mr Steve Chia Kiah Hong: Sir, how does the Deputy Prime Minister expect citizens to take the uncertainty of retirement planning under the CPF, which is a defined contribution scheme, at their own cost, whereas Ministers and public officers themselves are under a guaranteed and defined benefit pension scheme, using taxpayers' money? In other words, their CPF may run out before the citizens die whereas qualified Ministers are taken care of by the taxpayers' money until they die. Am I right to say that?

Mr Lee Hsien Loong: Mr Speaker, Sir, it is an entire package. When we calculate the salary, we look into how much a person receives now, how much he receives in the CPF, and how much he can expect to save in pensions. And when a person retires, he has a choice of having a pension stream for the rest of his life or taking a commuted lump sum at the point of retirement. In fact, as a matter of fact, nearly everybody who retires prefers the commuted lump sum. Because you take a lump sum, you invest it, you do what you want. If it runs out, it runs out. There is no free lunch. If you do not have your CPF, you have the pension. If you have the pension, you have less CPF. So it all adds up to a finite amount. The Member's implicit question is: are the Ministers enriching themselves again? And the answer is, we are going on market terms and, if anything, we are paying below what the market is.

Mr Steve Chia Kiah Hong: Clarification from the Minister. Does any serving Minister who turns 55 actually receive both salary and pension at the same time? If yes, should he be serving?

Mr Lee Hsien Loong: I believe the answer is yes. That is the rule for the civil service, and the Ministers follow the civil service rules.



So it is confirmed that Ministers are on pension scheme. Interestingly too, that our PM Lee Hsien Loong confirms that serving Ministers who turns 55 actually receive both salary and pension at the same time.

The next question is what is the pension scheme for Ministers (how does it differ from the CPF scheme), and what's the big deal about Ministers being on the pension scheme. Another search result is the debate on Parliamentary Pensions (Amendment) Bill held on the 2002-07-08 sitting.

This Bill was to make modifications to the Parliamentary Pensions Bill (oh, so that is the Bill to look at, so I learnt from this debate) to include the years of service of CDC Mayor to be counted (reckonable, in the terminology used in the Bill) towards for the purposes of qualifying for pension scheme. The bulk of this debate is centered on Mr Low Thia Kiang's questions on the proposed amendment. (Ms Sylvia Lim also wrote an article on the Hammer Online on the points of view towards this amendment - [The Singapore Mayor: A Legitimate Ticket to a Parliamentary Pension?] )

One interesting exchange from this debate is the question raised by Mr Chandra Mohan K Nair:

Mr Chandra Mohan K Nair (Nominated Member): Mr Speaker, Sir, the Parliamentary Pensions Act was enacted in 1978 to provide for the grant of pensions and gratuities in respect of service as Members of Parliament and as holders of ministerial and other offices.

My understanding is that over the last decade or two, the emphasis has been to convert the pension scheme and encourage the granting of Central Provident Fund for our civil servants and employees. Of course, as volunteer employers, one can make voluntary contributions towards their respective CPF accounts. Would it, therefore, not be in line with the general policy of the Government to also convert pensions for Members of Parliament, ministerial and other offices, to keep in line with the rest of the working people in Singapore? In this way, our citizens would observe that Parliament has not introduced in any way any form of discrimination, as perceived by them, in favour of MPs, Ministers or other officers connected to Parliament, eg, Mayor, that is being introduced through this proposed amendment.


Mr Chandra Mohan K Nair was basically asking, "why instead of converting the MPs, Ministers and other office holders to the CPF Scheme, we are adding Mayors to the list of the office holders who could be eligible to the pension scheme" (paraphrasing by me). Mr Wong Kan Seng replied to Mr Low Thia Kiang's other questions before replying to Mr Chandra Mohan K Nair:


As regards Mr Chandra Mohan's question, I was quite curious as to why he is interested in Parliamentary pension when the subject does not really concern him. I now understand he is talking about a different issue, like why do we want to consider office-holders' appointments even as pensionable. He says that the trend has been towards CPF. Yes, indeed, it has been, but there are certain key appointments that we have kept as pensionable service, eg, the Administrative Service, Foreign Service and Intelligence Service are still pensionable services. There are good reasons for this. Similarly, for office holders, we think that it is important that they remain on pensionable service and, hence, we keep them on pensionable service.

But for Members of Parliament, we have made a decision way back in 1995 that all new Members of Parliament, elected henceforth, shall be paid CPF.


Two observations I have from the above exchange:
  • Mr Wong mentioned that there are certain services that are pensionable services, and went on to say that there are "good reasons" for this, without further elaborating. And for office holders, "we think that it is important....", and also there was no explanation why it is thought to be important.

  • Of the "urban legends" that I heard, that part about MPs being also on the pension scheme is not entirely true. According to the debate, MPs elected after 1995 are paid CPF.



So it is now getting clearer: office holders (later I learnt that this includes the PM, DPM, Speaker, Senior Minister, Minister, Senior Minister of State, Minister of State, Mayor, Senior Parliamentary Secretary, Parliamentary Secretary or Political Secretary, puzzling that the Minister Mentor is not on the list) and MPs elected before 1995 should be on the pension scheme.

I went on to find out more by attempting to read and understand the Parliamentary Pensions Act available at http://statutes.agc.gov.sg/

The legalese gave me a giddy head, after reading and re-reading to try to understand it. I shall try to list down what I understand of the Parliamentary Pensions Act, but if anyone out there is able to understand it better, kindly point out my mistakes .

First I try to understand who really qualifies.
From PART I - PRELIMINARY:

"future Member" means a person —

(a) who becomes, by election or appointment, a Member at any time after 1st January 1995 without previously having been, before or after that date, a Member or an office-holding Member;

(b) who, having been a Member before 1st January 1995 but not being a Member on that date, becomes, by election or appointment, a Member at any time after that date; or

(c) who, being an elected Member on 1st January 1995, becomes —

(i) a non-constituency Member or nominated Member at any time after 1st January 1995 with or without a break in his service as a Member; or

(ii) an elected Member at any time after 1st January 1995 with a break in his service as a Member after that date,

and for the purposes of paragraph (c), a Member’s service shall be deemed not broken but continuous if, following the dissolution of Parliament or his seat therein becoming vacant under the provisions of the Constitution, he is elected as a Member at the ensuing general election or the ensuing by-election to fill that vacancy;


(a) is straightforward - any new MP after 1 Jan 1995.
(b) is for MPs who were elected before 1 Jan 1995, but are not an MP on 1 Jan 1995 itself. When these MPs subsequently get elected again, they will be considered future Member.
(c) is quite puzzling. (c)(i) basically says any one who was an elected MP on 1 Jan 1995 but subsequently become an NCMP or NMP. As far as I know, only JBJ falls under this category. (c)(ii) applies to any elected MP on 1 Jan 1995 with a break in the service subsequently.

From Part II, under Future and Nominated Members’ eligibility for pension:

2A. —(1) Unless otherwise expressly provided, a future Member shall not be eligible for any pension or gratuity under the provisions of this Act in respect of his reckonable service as a future Member, including any period which may be counted as such service by virtue of section 6.

(2) For the avoidance of doubt —

(a) a future Member who holds any office shall remain eligible for a pension under the provisions of this Act in respect of his reckonable service in that office; and

(b) a person who, on the date immediately before he becomes a future Member, has the minimum period of reckonable service as a Member to be eligible for a pension under section 3 (including any period of reckonable service which may be counted by virtue of section 6), shall remain eligible for a pension under the provisions of this Act in respect of his reckonable service as a Member as of that date.

(3) Any person who on 1st January 1995 is a nominated Member shall not be eligible for a pension under the provisions of this Act in respect of his service as a Member on or after that date.


Combine the above with the definition of future Members, essentially this is what I learnt:

  • the office holders will be eligible for a pension

  • MPs elected after 1995 who don't hold office, will not be eligible for a pension

  • MPs elected before 1995 will be eligible for a pension, with exceptions in the next line

  • MPs elected before 1995 but fall under the definition of future Member, will not be eligible for a pension.



Next I would want to find out is how the pension is calculated. However, after spending some time digesting it, I come to the conclusion that the formula for calculating the pension is too complicated as it involved too many variables. It is probably best left for another post later. The key thing though is that qualifying MPs have to serve at least 9 years and office-holders have to serve at least 8 years (as office-holders) to qualify for pension.

7 comments:

Anonymous said...

with so many minister, minister of state, 2nd minister, senior minister, mayors and parliament secretaries, how many MP are not in the pension scheme?

Anonymous said...

I believe most MP except nomninated and NCMP are on pension scheme too, but I am not sure about opposite MPs, as they seem to get lower pay than PAP MPs.

dunPanic said...

From the information published in the sources stated above, there is no indication that Opposition MPs should be excluded from the Parliamentary Pension Act. Based on my understanding of the lenght of service of both Mr Chiam ST and Mr Low TK, I think they should qualify too.

As for the question about Opposition MPs getting lower pay than PAP MPs, what gives you the impression, or do you have some source that suggests this? As far as I know, in terms of MP's salary, it should be the same across the board.

kk said...

what i would love to know is how many PAP MPs are not on pension.

Hun Boon said...

Thanks for the info. I was wondering about the pensions for MPs.

Anonymous said...

Minister PENSION is reason why there are so many multiplicated ministerial appointments?
Finding ways and means to pay more money instead of saving cost for the nation?
Mercenary of Mercenaries?

Anonymous said...

One whole gang of GOLD DIGGERS!