Author: Gerald Giam

Parliamentary Question on 8 September 2014

Mr Gerald Giam Yean Song asked the Minister for Manpower (a) whether the Ministry tracks what proportion of the Jobs Bank posts are eventually secured by Singaporeans; (b) if not, whether there are plans to measure and publish such data by requiring employers to disclose the outcome of their job postings; and (c) whether such data can be cross-referenced with data from Employment Pass and S-Pass application processes to yield patterns and causes for PMET jobs not going to Singaporeans.

Mr Tan Chuan-Jin (Minister for Manpower): To date, more than 31,000 Singaporeans have signed up with the Jobs Bank and more than 10,000 employers have come on board and are actively posting job vacancies. There are over 65,000 jobs available on the Jobs Bank today. The feedback from both employers and job seekers has also been positive. It is an encouraging start, and we hope more employers and Singaporean job seekers would use it over time.

The Jobs Bank was intended to facilitate a fair hiring process and greater awareness of job vacancies available for Singaporean job seekers. Singaporean job seekers are now able to make job applications directly through the Jobs Bank for a comprehensive list of job openings.
The Jobs Bank and the Fair Consideration Framework (FCF) was not, however, set up to guarantee local job seekers that they will always get the job. This will continue to be determined on the basis of merit, and to the best applicant for the job. There can be various reasons why an employer may not end up hiring the Singaporean candidate after considering applications fairly.

For example, in the IT sector, there could be jobs that require technical skills or domain knowledge of legacy programming languages, which IT firms use in supporting legacy IT systems of many companies that our local workforce may not possess in sufficient numbers. Likewise, Singaporean job seekers have their reasons for not accepting job offers, for example, if employers are unable to meet their expectations in terms of job scope and other personal considerations.

Singaporeans may also get placed in jobs through means other than the Jobs Bank. For example, Singaporeans may be hired directly by the firm or through head-hunters or private job portals and other job advertisements. Even when Singaporeans apply for a job that they see on the Jobs Bank, we cannot directly track this. For example, job seekers may apply through firms’ in-house HR portals. Therefore, data on the number of Singaporeans who were placed in a job vacancy which was advertised on the Jobs Bank would not be a representative or accurate indicator of how well Singaporeans are doing in the labour market in general.

Rather, what is important to us is whether the overall labour market ecosystem benefits Singaporean job seekers. This goes beyond the Jobs Bank and involves broader factors, such as the number and types of jobs being created, and whether our people have the skills and passion for the job. We track and report indicators of citizen employment outcomes regularly, and the situation is healthy. The seasonally adjusted citizen unemployment rate is 3.0% [1] and remains much lower than those of many other countries, while Singaporean workers have enjoyed positive real wage growth over the last five years [2].

We are, at the same time, keeping a close watch on firms’ hiring patterns. If a firm has a disproportionately low percentage of PMEs who are Singaporeans compared to their industry peers, we will initiate closer scrutiny of the firm to find out more details about the hiring practices and plans to develop Singaporeans for more senior positions. MOM will assess if HR practices are fair in these firms. If they are not, we will ask the firm to work out a plan to make improvements. Should a firm remain uncooperative, or not adhere to the plan, it may have its work pass privileges curtailed.

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[1] Preliminary estimate in June 2014.
[2] The real median gross monthly income from work (including employer CPF contributions) of full-time employed Singapore Citizens grew by 1.7% per annum from 2008 to 2013.

I asked the Minister for Transport this Parliamentary question on 8 September 2014 after speaking at length with a friend who is blind, who told me about the challenges visually-impaired Singaporeans face when navigating around our roads and public transport system. I think there is much more that we can do to make Singapore more accessible for people with disabilities.

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AUDIBLE PEDESTRIAN SIGNALS AT ROAD CROSSINGS

Mr Gerald Giam Yean Song asked the Minister for Transport (a) how many signalised pedestrian crossings are equipped with audible pedestrian signals (APS) for visually-impaired (VI) pedestrians and how many are not; (b) of those that are equipped with APS, how many operate on restricted hours at night and what are those hours; and (c) whether LTA can consider equipping all signalised pedestrian crossings with APS which operate 24 hours a day, if necessary with “on-demand” activation at night, so that all VI pedestrians can cross roads safely especially at night when there are fewer other pedestrians to assist them.

Mr Lui Tuck Yew (Minister for Transport): The Land Transport Authority (LTA) has installed audible pedestrian signals (APS) at 860 of about 6,000 signalised pedestrian crossings (see footnote below), based on requests from the Singapore Association of the Visually Handicapped (SAVH) and from visually-impaired individuals.

LTA takes into consideration the needs of visually-impaired pedestrians as well as the impact on other stakeholders when setting the operational hours of the APS. Generally, the APS is activated from 7.00 am to 9.00 pm daily so that the audio signals do not adversely affect residents living nearby. In some cases, for example, at junctions near the SAVH premises, LTA has acceded to their request for the APS to commence earlier at 6.00 am and end later at 11.00 pm.

“On-demand” APS devices can potentially allow more APS to have longer operating hours. LTA is happy to explore this and other measures that can assist visually-impaired pedestrians to cross the road safely.

This was my speech in Parliament on 8 September 2014 during the debate on the bill amending the Road Traffic Act.

To all my fellow drivers: Please don’t use your phone when driving. You are four times more likely to get into an accident if you do. Think about your family and other road users.

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Madam Speaker,

There were 6,426 fatal and injury accidents on our roads last year.[1] While this is down from a high of 8,625 in 2010, every serious accident is one too many, because they each impact the lives of not just the victims but their families as well. Statistically speaking, our daily commute on the roads is often our most dangerous activity each day.

Because of this, road safety is a matter which warrants serious attention by both policymakers and citizens, drivers and pedestrians. I therefore support any measures to enhance safety on our roads.

This Bill enhances regulations on several road safety and licensing issues, but there are some which could be further tightened. I will focus on two aspects of this Bill today: the use of mobile communication devices while driving, and the recognition of foreign driving licences and driving permits.

Mobile communication devices

First, on mobile communication devices.

I was recently rear-ended by another car while I was stuck in traffic. While the driver claimed that she was not texting while driving, there must have been something that distracted her to cause her to crash into my stationary vehicle.

According to a study published in the British Medical Journal (BMJ), a driver is about 4.9 times more likely to get into an accident when holding and using a mobile phone while driving. Even using a hands-free accessory is not much safer – it has been found to increase the risk by about 3.8 times.[2] The UK’s Department of Transport said reaction times for drivers using a phone are around 50% slower. Even careful drivers can be distracted by a call or text, and a split-second lapse in concentration could result in a crash. [3]

While there are many studies with varying conclusions, one thing is clear: Driving a car safely requires high levels of attention and concentration, and the use of mobile devices is a distraction which could result in serious accidents and even deaths.

Ideally, no one should be allowed to use their mobile devices while driving. However, we don’t all live in Road Safety Community Park. Our people lead busy lives and multi-tasking is the order of the day, sometimes even when driving.

At a minimum, we should have a regulatory regime where the most risky and distracting activities are clearly banned, while at the same time the authorities constantly remind drivers through public education of the dangers of using their mobile devices while on the roads.

Our message to drivers should be clear: Realise that all use of your mobile devices will distract you from driving safely. If you choose to use your mobile device while driving, be aware that certain particularly risky activities will attract heavy penalties.

Clause 14 of the Bill replaces Section 65B and attempts to clarify the law by changing “mobile telephone” to “mobile communication device”, so as to encompass not just phones, but also tablet computers. It prohibits using any of the device’s functions while the vehicle is in motion.
However, there are some situations in which it appears this Bill does not cover. For example, if the device is mounted on a holder, the driver could be checking email, watching videos or playing games, while the vehicle is in motion.

Introducing a definition of “communicative function” in the Bill could unintentionally limit the scope of prohibited devices. With a very fast-changing technology landscape, the scope of “communicative functions” of mobile devices could render this definition obsolete soon.
There is a new breed of emerging technologies called “wearables”, like smartwatches, which essentially function like portable computers, but do not need to be held in the hand. Were these considered when drafting this legislation?

Members may know about Google Glass, which is a wearable computer with an optical head-mounted display developed by the Internet giant, Google. It is worn like a pair of spectacles with a small LCD screen attached, which can display maps, text or videos within the user’s field of vision. It can also snap pictures and record videos. The device is voice activated, so there is no need to “hold” the device to operate it.

Some regulators and lawmakers around the world have raised safety concerns about Google Glass, which was introduced last year. The UK’s Department of Transport has indicated that it is “not acceptable” under existing regulations for motorists in the UK to wear it.[4] In West Virginia in the U.S., a state legislator introduced an amendment to ban the use of Google Glass while driving.[5]

I would like to ask the Senior Minister of State (SMS) two questions:

What is the Government’s position on the use of the communicative functions of a mobile device while the vehicle is in motion, if the device is mounted and not held in the hand? This includes using the normal phone functions or GPS navigation software, whether installed on the phone or on a third party device.

Could the SMS clarify whether using “wearables”, including Google Glass or smartwatches, are prohibited while the vehicle is in motion?

Recognition of foreign driving licences

I would now like to raise some concerns about the recognition of foreign driving licences and driving permits. Clause 8 seeks to tighten Section 38 to require that work pass holders, who need to drive as part of their job, must now obtain a local driving licence within a “prescribed period” from the date of issuance of their work passes. From MHA’s press release on 4 August 2014, I understand this prescribed period is 6 months.

This is shorter than the 12 months that is currently allowed for all holders of valid foreign driving licences who are not citizens or permanent residents of Singapore. However, I believe that the regulations may not be tight enough.

Six months is a long time for someone who does not have a valid Singapore driving licence to be driving around on our streets. In fact, it only takes a few minutes for a serious accident to happen – and indeed such accidents are more likely to happen within the first few days for a driver who is new to our roads, than several months later when he is more familiar with driving in Singapore.

A foreign driver who is new to Singapore will tend to be unfamiliar with our roads – our street signs, our road markings and our driving culture. In many cases, they may be used to driving on the opposite side of the road that we drive on.

In addition, there is a risk that even a “valid” foreign driving licence may not mean that the person is sufficiently trained and competent to drive. In some countries, corruption plays a big part in the issuance of driving licences.

A research study which appeared in The Quarterly Journal of Economics, which is published by Harvard and MIT, found that 71% of people who obtained a driving licence in New Delhi did not even take the licensing exam. [6] Equally worrying is that 62% were deemed not competent enough to drive after taking an independent test organised by the researchers just after they obtained their licences.

The study found that the average licence applicant paid about 2.5 times the official fee to obtain a licence. Most of these extra-legal payments are not outright bribes to officials but fees to “agents”, who “assist” individuals in the process of obtaining their driver’s licences without taking a test. This is corroborated by a report in Bloomberg Businessweek, which gave an account of how dozens of men stand outside the front gate of the Road Transport Office of a certain Indian city, swarming around prospective licence applicants, offering “shortcuts through the red tape for just 3,000 rupees”, or 65 US dollars.[7]

Madam, it is not my intention to single out any country, as many other countries have similar corruption problems in their bureaucracies. But I am very concerned that many of these unqualified drivers may be on our roads right now as we debate this Bill. They could be driving through our school zones and housing estates, posing a danger to pedestrians, other drivers, their passengers and even themselves.

Can I ask the SMS:

How does the Police satisfy itself that a foreign driving licence is legitimately obtained when allowing a foreigner to use it to drive in Singapore without a valid Singapore driving licence?

Why is there a need to give a 6 to 12 month window for foreigners to drive in Singapore without a valid Singapore driving licence? I note the SMS said in his speech that this is based on the practices of other jurisdictions and the views of industry stakeholders. Can I ask who these stakeholders are and do they include drivers and pedestrians who do not employ foreign drivers?

Would it not be more prudent, and in the interest of public safety, for all foreigners to take and pass the theory and practical driving tests in Singapore before being allowed to drive?
I understand there are other categories of foreigners besides work pass holders who may need to drive. These include visiting forces or tourists. Can we be more selective about the countries from which we recognise foreign driving licences, just like we do for foreign university degrees in certain professions? Many countries do operate clean bureaucracies that ensure that only drivers who have legitimately passed a driving test are issued licences.

Conclusion

Madam Speaker, with thousands of fatal and injury accidents on our roads each year, closing every gap in our legislation that lets less-than-competent drivers ply our roads could save many lives and limbs. I urge the Government to consider these suggestions to further enhance road safety and I look forward to the SMS’s responses to my questions.

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[1] http://www.police.gov.sg/mic/2014/02/20140210_others_TP_stats.html
[2] http://www.bmj.com/content/331/7514/428. Driver’s use of a mobile phone up to 10 minutes before a crash was associated with a fourfold increased likelihood of crashing (odds ratio 4.1, 95% confidence interval 2.2 to 7.7, P < 0.001). Risk was raised irrespective of whether or not a hands-free device was used (hands-free: 3.8, 1.8 to 8.0, P < 0.001; hand held: 4.9, 1.6 to 15.5, P = 0.003). [3] http://think.direct.gov.uk/mobile-phones.html
[4] http://www.telegraph.co.uk/technology/news/10214822/Drivers-to-be-banned-from-wearing-Google-Glass.html
[5] http://edition.cnn.com/2013/03/25/tech/innovation/google-glass-driving/index.html?hpt=hp_c3
[6] http://scholar.harvard.edu/files/remahanna/files/driving_qje_nov_2007.pdf
[7] http://www.businessweek.com/magazine/content/10_51/b4208012561750.htm

I asked the Minister for Trade and Industry this parliamentary question on 4 August 2014. There are concerns about the Investor-State Dispute Settlement (ISDS) provision in the Trans-Pacific Partnership (TPP) free trade agreement (FTA), which could grant foreign investors (usually MNCs) the right to sue national governments in an international tribunal if they believe TPP commitments have been breached.

Australia is currently engaged in legal battle with tobacco giant Philip Morris over the country’s plain packaging requirements on cigarette packs to reduce smoking rates. Philip Morris challenged this in Australian courts and lost. So they took the legal challenge to Hong Kong under the Hong Kong-Australia Bilateral Investment Treaty. While not part of the TPP, this is an example of how some multinationals may attempt to use international courts to overcome adverse rulings against themselves in domestic courts.

I would not want to see similar legal challenges against Singapore, especially against regulations that are meant to protect the public health of Singaporeans and our environment. Any FTAs that we sign should also not constrain us from enacting such regulations for fear of attracting legal challenges by MNCs at international tribunals.

The TPP is a proposed regional free trade agreement that is currently being negotiated by twelve countries throughout the Asia-Pacific region, including Singapore, Australia, Japan, the United States and Canada. While it is important that Singapore is included in the TPP, it is equally important that our trade negotiators ensure that the interests of SMEs and ordinary Singaporeans — and not just large MNCs — are promoted under the TPP.

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Mr Gerald Giam Yean Song asked the Minister for Trade and Industry (a) what mechanisms and processes are in place to allow Singapore to implement legislation in areas such as public health and the environment given the Investor-State Dispute Settlement (ISDS) provision in the Trans-Pacific Partnership (TPP) which grants foreign investors the right to sue the Singapore Government in an international tribunal if they believe TPP commitments have been breached; and (b) how many ISDS challenges by multinational companies have been brought or have been threatened to be brought against Singapore in the past.

Mr Lim Hng Kiang (Minister for Trade and Industry): The TPP commits Singapore to ensuring a stable and fair regime for foreign investors. In return, Singaporean investors in TPP countries are also ensured the same stability and fairness. The ISDS mechanism gives foreign investors the right to initiate dispute settlement proceedings against host countries to enforce this commitment. At the same time, to prevent misuse of ISDS, there are also provisions within the TPP which discourage and allow the dismissal of frivolous suits, and allow TPP governments to direct the arbitral tribunals in certain situations.

Our FTAs, including the TPP, do not restrict Singapore from adopting measures for legitimate public policy reasons, including the protection of public health and the environment.

To date, no multinational company has challenged or threatened to challenge Singapore.

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Source: Singapore Parliament Reports (Hansard)
Image: Canada Department of Foreign Affairs, Trade and Development

These were the questions I asked DPM Tharman Shanmugaratnam on 4 August 2014 in Parliament regarding the Government’s “net assets” and how the returns from the reserves managed by GIC make their way back to CPF members. The DPM’s answers and my supplementary questions are below.

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Mr Gerald Giam Yean Song asked the Deputy Prime Minister and Minister for Finance (a) whether the buffer of “net assets” that are used by the Government to ensure that Special Singapore Government Securities (SSGS) interest rates are paid to the CPF Board even in years when GIC’s returns are weak refers to (i) past Government reserves requiring Presidential assent for drawdown (ii) current Government reserves or (iii) current or past reserves accumulated by GIC or MAS; and (b) what limitations apply to the use of these net assets.

The Deputy Prime Minister and Minister for Finance (Mr Tharman Shanmugaratnam): Mdm Speaker, I thank Mr Gerald Giam for his question.

Let me first reiterate the basic framework that enables the Government to ensure that SSGS obligations are met. The CPF Board invests CPF members’ savings in Special Singapore Government Securities (SSGS), which are guaranteed by the Government. This assures that CPF savings are safe, regardless of financial market conditions. The interest rates on SSGS also match those on CPF savings, so that CPF members will receive the annual interest rates that they are promised, including the minimum 4% to 5% interest on SMRA balances (Special Account, Medisave Account, Retirement Account balances) and the 2.5 % to 3.5% interest on the Ordinary Account balances, that they receive this even when market interest rates fall to low levels. So, the interest rates on SSGS match these interest rates on CPF savings regardless of financial market circumstances.

The Government pools the SSGS monies with the rest of its funds, such as proceeds from issuing Singapore Government Securities or SGS in the markets, i.e. the tradable securities in the markets, as well as unencumbered assets that reflect past Government surpluses and receipts from land sales. These co-mingled Government funds are first deposited with MAS as Government deposits. A major part of these funds, being of a longer-term nature, are then periodically transferred to the GIC to be managed over a long investment horizon.

Before GIC was formed in 1981, the Government’s monies including those derived from SSGS were managed by MAS. MAS continued to manage a good part of the monies especially during the first decade after GIC was formed, while GIC built up its capabilities for long-term global investment in diverse asset classes. Currently, GIC manages a major part of the Government’s funds, including those derived from long-term liabilities such as SSGS.

Importantly, GIC is not managing SSGS or CPF monies on their own, but a combined pool of Government funds including a significant sum of unencumbered assets. This is why the GIC’s mandate is to take calculated investment risks aimed at achieving good, long-term returns on the Government’s funds, without regard to the Government’s liabilities. It is precisely because the GIC is managing a combined pool, which includes a significant amount of unencumbered assets, that it is able to invest for the long term, take risk in expectation of long term returns, without regard to the government specific liabilities.

GIC has achieved good long-term returns to date. However, as investment markets are uncertain and volatile, GIC’s returns over shorter periods could be low or even negative. The Government is able to absorb these short-term market risks, because it has a strong balance sheet. It has a substantial buffer of net assets that enables it to meet the obligations on its liabilities, including its SSGS commitments.

The Government’s net assets, or its assets in excess of its liabilities, are the Government’s reserves as defined under the Constitution. The bulk of the Government’s reserves are those accumulated during previous terms of Government, also known as its Past Reserves. It is the Past Reserves that the Constitution seeks to safeguard, especially through the powers vested in the President.

In particular, the Constitution guards against profligate spending, which can draw down Past Reserves. The President can withhold his assent for the Supply Bill if the Government intends on its annual Budget to spend more than its Current Reserves, in other words, reserves accumulated during the current term of Government.

The Constitution also enables the President to state and gazette his opinion if he considers that the Government has entered into liabilities that will likely draw down Past Reserves. This scenario could for example arise if the Government were to set interest rates on SSGS at artificially high levels, without reference to market interest rates, and above what can reasonably be expected to be earned in investment returns on the Government’s funds over the long-term. This would run down the reserves systematically and deliberately. The President has not been put in a position where he has had to state such an opinion. CPF and SSGS interest rates are set with reference to returns on similar market instruments, and are both fair and sustainable.

The scenario of entering into liabilities that will lead to a systematic and deliberate drawdown of reserves should not be confused with the fluctuations in the value of the reserves due to market volatility and cycles that happen all the time. Volatility and cycles are part and parcel of the investment world. Indeed, the GIC’s mandate is to take risks aimed at achieving long term returns, in full knowledge that the Government’s portfolio will be exposed to market risks that could mean weak returns or even declines in value on a mark-to-market basis for a time, before cycles reverse and values rebound.

Hence, although GIC’s returns over the last 20 years – ending March 2014 – have averaged 6.5% in USD terms, or 5.3% in SGD terms, it has experienced several years where its returns were low or negative – several years during that 20 year period. To take the most recent episode, the Global Financial Crisis led to a significant reduction in GIC’s annualised five-year return ending March 2013 – i.e. as of a year ago – to just 0.5% in nominal SGD terms. But moving just a year forward to March 2014, its five-year annualised return rebounded strongly. This volatility is part of the market. It was also seen in comparable market portfolios.

The President and the Council of Presidential Advisers (CPA) have full information about the size of the reserves and all of the Government’s financial assets and liabilities. What matters in determining if there will be a likely draw on Past Reserves is whether Government has entered into liabilities that are sustainable and will not result in a systematic erosion in the reserves. It is not the short-term fluctuations in investment returns due to market risks that matter here – even if these ups and downs in investment returns, taken together with the Government’s SSGS and SGS obligations, imply fluctuations in the value of net assets.

A decline in investment returns or a drop in the market value of assets in the course of market cycles is not considered a draw on Past Reserves that the Constitution seeks to guard against, because any strategy of investing the reserves for long-term returns must mean taking investment risk and will involve ups and downs in market value of the portfolio, not just from one year to another but very frequently within the year.

The only way to avoid fluctuations in the value of our reserves is to avoid taking investment risk, for example by investing all of our assets in cash-like instruments. However, this will mean accepting low returns over the long term, and indeed returns that would likely fall below the interest rates on SSGS and even SGS over the long term.
To summarise the point, what the Constitution guards against are actions that lead to a systematic erosion of reserves, not the investment of reserves in order to gain long-term returns, which must involve investment risk and fluctuations in market value.

Let me return to the basic features of the system. The Government’s strong balance sheet enables it to take investment risks and ride out the market cycles that are inherent in investing for the long-term. It has a significant buffer of net assets, with important benefits for Singapore. These net assets enable the Government to guarantee CPF savings, and pay fair interest rates on CPF savings despite financial market cycles. The Government’s significant net assets, on which we expect to earn long-term returns, are also why we have a significant stream of investment income in the form of NIRC (Net Investment Returns Contribution) on our Budget each year, which can be used to meet important spending priorities.

Mr Gerald Giam Yean Song (Non-Constituency Member): Thank you, Madam. I thank the Deputy Prime Minister for the answers. I have three supplementary questions. GIC has reported that over the 20-year period ended 31 March 2014, the GIC portfolio has generated an average annual real return of 4.1%. Does this figure take into account the interest payable to CPF for the SSGS?

Second question: can the Deputy Prime Minister explain what is the mechanism by which the investment returns from GIC are transferred back to the Government and then to CPF? Does the GIC only return the NIRC to the budget and then leave it to the Government to disperse the SSGS principle plus interest to CPF using net assets?

And third question: specifically on the eight years in the past 20 years where GIC’s investment returns were below what the Government pays on SSGS, were these shortfalls funded from the Government’s net assets or from the GIC’s assets?

Mr Tharman Shanmugaratnam: First, let me explain that GIC is managing Government assets. It is not GIC’s assets. GIC is a fund manager, so the assets are assets on the Government’s balance sheet, rather than on the GIC’s balance sheet. When the GIC reported that it has earned a real return over 20 years of 4.1% on an annualised basis, it is referring to the return on the total assets that it is managing for the Government.

The NIRC which enters the Government’s budget is computed after netting off what is payable on the Government’s liabilities, SSGS and SGS. That is already netted off. So, what enters the Government’s budget, which is up to 50% of the expected investment returns, is after Government has paid what is necessary on the liabilities.

And as for the eight years within the last 20 years, which was what I had stated in response to Mr Gerald Giam’s question at the previous Sitting – just to reiterate, that is eight years in the previous 20 years ending 2013 – that is when in fact the GIC’s returns on the total assets that it is managing fell below the SSGS rates. That by definition would have meant that net assets would have been lower than otherwise because the Government has fixed obligations on its liabilities, and because of the fluctuations in returns on its assets.

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Source: Singapore Parliament Reports (Hansard)

I attended the National Day Rally on 17 August 2014 at ITE. After the speech, reporters from various media outlets asked for my views on the Prime Minister’s CPF announcements. These are some of my brief thoughts. My parliamentary colleague Yee Jenn Jong (NCMP) responded to the media’s questions about education.

1. While I understand the PM’s explanation that sufficient CPF balances are needed for people to have a decent monthly pay out after retirement, many low-income (or no-income) Singaporeans simply cannot save up enough to meet the Minimum Sum of $155,000 or $161,000, even with the property pledge included. They are caught in a Catch-22 situation. We need to do more to help those who cannot meet the Minimum Sum. I am glad to hear about the new Silver Support scheme. It is an acknowledgement that some poor elderly Singaporeans need more Government support, and that self-reliance or family-reliance has its limits.

2. I would like the Government to focus more on ways to improve retirement income without asking the elderly to sell their homes and downgrade. It is good that the Lease Buyback Scheme (LBS) has been extended to 4-room flats. The LBS has not seen a very good take up rate so far, in large part because it was restricted to only 3-room or smaller flats. But as I had stated in my 2012 Budget debate speech, I would prefer for LBS to be extended to all flat sizes. This will help more elderly folks monetise their flats without having to sell and move out of their flats, which many of them attach a lot of sentimental value to. This is what I said in 2012:

“…most elderly folks prefer to remain in their current homes, rather than get displaced to unfamiliar surroundings in their old age.

To give the elderly more choice, the Lease Buyback Scheme should be extended to owners of 4-room or larger flats, just like the Silver Housing Bonus. Currently only owners of 3-room or smaller flats are eligible. This could be a reason for the low take up rate.

An enhanced Lease Buyback Scheme will enable more of our elderly to age in place, and to live their golden years in familiar surroundings, without having to worry too much about finances.”

3. It is good to give CPF members more flexibility to withdraw part of their CPF upon retirement. My colleague Png Eng Huat (MP for Hougang) had spoken on this in Parliament in May this year. Different people have different needs. Some might have more pressing needs for their CPF, like healthcare expenses, immediately after retirement. The Government should not seek to dictate every aspect of how retirees spend their own CPF monies.

These are the questions I will be asking the Ministers during today’s Parliament sitting:

QUESTIONS FOR ORAL ANSWER*

*9. Mr Gerald Giam Yean Song: To ask the Deputy Prime Minister and Minister for Finance (a) whether the buffer of “net assets” that are used by the Government to ensure that Special Singapore Government Securities (SSGS) interest rates are paid to the CPF Board even in years when GIC’s returns are weak refers to (i) past Government reserves requiring Presidential assent for drawdown (ii) current Government reserves or (iii) current or past reserves accumulated by GIC or MAS; and (b) what limitations apply to the use of these net assets.

*37. Mr Gerald Giam Yean Song: To ask the Minister for Trade and Industry (a) what mechanisms and processes are in place to allow Singapore to implement legislation in areas such as public health and the environment given the Investor-State Dispute Settlement (ISDS) provision in the Trans-Pacific Partnership (TPP) which grants foreign investors the right to sue the Singapore Government in an international tribunal if they believe TPP commitments have been breached; and (b) how many ISDS challenges by multinational companies have been brought or have been threatened to be brought against Singapore in the past.

*46. Mr Gerald Giam Yean Song: To ask the Minister for Transport (a) what are the reasons for having SMRT and SBS Transit continue running 9 out of 12 bus contract packages without a competitive tender in the initial period of the new bus contracting model even after their Bus Service Operating Licences (BSOL) expire on 31 December 2016; (b) whether during this initial period SMRT and SBS Transit will benefit from being paid the service fee with no fare revenue risk while not being subject to competition for their nine negotiated packages; and (c) when does LTA expect to put out a competitive tender for all 12 bus packages.

QUESTIONS FOR WRITTEN ANSWER

16. Mr Gerald Giam Yean Song: To ask the Minister for Health (a) what is the size of the MediShield Fund’s reserves as at 31 December 2013; and (b) what is the percentage of the reserves that support (i) claims incurred but not yet submitted or paid; (ii) claims not yet incurred but expected to be paid in the future; (iii) continuing claims which have a long tail; and (iv) future premium rebates.

This is the question I asked the DPM and Finance Minister on 8 July 2014 in Parliament, regarding GIC’s investment of CPF monies. His reply is below.

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11. Er Dr Lee Bee Wah asked the Deputy Prime Minister and Minister for Finance a) how CPF monies are invested; b) what are the returns from the CPF Board’s investments; c) how does the CPF Board determine the interest to be paid to CPF account holders and whether it will review the current interest rate to pay a higher rate; and d) whether CPF account holders can be given a risk-free option to invest their funds directly in Temasek Holdings to earn better returns.

12. Mr Gan Thiam Poh asked the Deputy Prime Minister and Minister for Finance (a) where and how has the Government invested the proceeds from the Special Singapore Government Securities, which the CPF Board invests in with the CPF monies; (b) whether it is possible to invest these proceeds such that they yield high returns with no risk even though high-risk investments typically yield high returns and vice versa; (c) what steps are put in place to ensure that these investments are sound, prudent and viable; and (d) whether independent internal and external audits are conducted regularly to ensure and safeguard the CPF investments and funds.

13. Mr Lim Biow Chuan asked the Deputy Prime Minister and Minister for Finance (a) what are the rates of interest paid by the CPF Board on CPF funds for the past 10 years; and (b) whether the CPF Board will consider paying a higher interest rate or pegging the interest rate paid on CPF funds to the rate paid on 10-year Singapore Government bonds.

14. Mr Gerald Giam Yean Song asked the Deputy Prime Minister and Minister for Finance (a) how many years, if any, in the last 20 years is GIC unable to pay the interest on the Special Singapore Government Securities (SSGS) owed to the CPF Board from its normal investment returns; (b) what are the returns from GIC’s investment portfolio after accounting for the interest payable on the SSGS in each of the past 20 years; and (c) what extraordinary measures, if any, are taken in the last 20 years when normal GIC returns are insufficient to pay the SSGS interest rate.

The Deputy Prime Minister and Minister for Finance (Mr Tharman Shanmugaratnam): Mdm Speaker, may I take Question Nos 11 to 14 together?

Mdm Speaker: Yes, please.

Mr Tharman Shanmugaratnam: Thank you, Mdm Speaker. Minister Tan Chuan Jin has explained the basic features of the CPF system, the reasons for the Minimum Sum scheme, and the areas which can be improved. Dr Lee Bee Wah, Mr Gan Thiam Poh, Mr Lim Biow Chuan, Ms Tin Pei Ling and Mr Gerald Giam have asked further questions on whether higher returns can be paid without changing the risk-free nature of CPF accounts, and how CPF funds are invested and safeguarded. They have also asked about the GIC’s investment returns.

Before I get into the details on these questions, it will be useful to provide some perspective on the challenges faced by retirement savings schemes around the world. There is a looming pensions crisis in most of the advanced countries, and the challenges remain largely unresolved.

The first challenge is financial sustainability. In many advanced countries, the “pay-as-you-go” social security system has become unsustainable. As more of their citizens are retiring, the pensions they have been promised are becoming unaffordable to those who have to pay for the system, in other words, the younger citizens who are working and contributing through social security taxes.

Some of these countries have responded with politically difficult but necessary reforms, such as postponing the retirement age or cutting retirement benefits for younger workers. Most recently, the Australian government has proposed major reforms to its Age Pension scheme, which is the primary source of income for the majority of Australian pensioners today. These reforms include raising the age at which pensions can be withdrawn from 65 to 70 years old.

But in many cases, the severity of the problem has not been acknowledged and reforms have been postponed. In the US for example, most public pension funds still over-estimate their future investment returns, and understate their liabilities. With more realistic assumptions, it is estimated that about 85% of US public pensions will go bankrupt within the next 30 years. So this is the first challenge – financial sustainability.

The second challenge is to give individuals a fair return on their retirement savings but avoid exposing them to more risk than they can bear.

As both governments and employers face increasing difficulty in funding “pay-as-you-go” pension schemes, more risk is being shifted to the individual in many countries. The shift is to pension plans where the worker’s savings go into his own account, and he eventually draws on his own account in retirement. The 401(K) schemes in the US are an example. These schemes which are called “defined contribution schemes”, are like the CPF in that the eventual payouts are funded by the contributions by the worker and employer into his account, not payouts funded by future workers. But in many such schemes, unlike the CPF, the worker has to choose his own investment plan, and bears the risk on his investments.

In theory, individuals can expect to earn higher returns over the long term by taking more risk on investments, such as investing more in equities or equity-heavy funds. In practice, there are three problems. First, the evidence from the advanced economies shows that most individuals underperform the market, even when they invest in funds rather than do their own stock-picking. Some individuals do well, but most face daunting and unfamiliar investment choices, and are swayed by sentiment. They tend to buy into the funds after gains have been made, and sell after losses. As a result, in the US, for example, individual investors in equity funds earned only one-third of what the market index earned over the last 30 years; one-third of what the S&P Index earned over the last 30 years. Fees charged by private pension funds eat into the returns earned by individuals. In Europe this is another reason why returns on private pension funds have been low in the last decade.

A second risk is that you may retire when the financial markets are down. A recent article in the TheEconomist magazine described the typical retirement scheme as a lottery, because the individuals’ pot of money at the time they retire will depend on the state of the markets at the time. For example, an individual who retired just before the Global Financial Crisis will have much more income in retirement compared to an individual who retired during the crisis. One year can make a big difference.

A third risk is that you retire when interest rates are low. The current prolonged low-interest rate environment is in fact a major challenge in many countries, because the pot of money that you have upon retiring now gives you a smaller stream of annuity income for the rest of your years. This is the consequence of low interest rates, either the annuity becomes more expensive to buy or for the same pot of money you get a smaller stream of income for the rest of your years.

Many retirement schemes require or encourage members to convert their capital into an annuity or monthly payout. However, interest rates matter greatly when buying an annuity, and unlike CPF LIFE, these schemes do not provide a floor on interest rates. So when market interest rates go down, the member experiences has to buy an annuity that is either more expensive or he gets a smaller stream of income in retirement for the same pot of money that he has.
Even if individuals are relieved of the requirement to buy an annuity that pays out for life, which some governments have been tempted to do, it does not solve the problem. Low market interest rates mean that retirees will receive less income even if they invest on their own in suitable retirement portfolios.

I have provided this background, Mdm Speaker, to explain why our CPF system has worked well and provides a strong foundation for the future. It has protected members from risk. The scheme is aimed at meeting basic retirement needs. As many members have had relatively small balances, it has been right to shield them from risk. The CPF has also avoided imposing risk on taxpayers, unlike many countries where ordinary citizens face a much larger tax burden in future, on account of under-funded social security schemes.

The CPF is not a perfect retirement savings scheme, but it is amongst the better regarded internationally. As the Prime Minister has stated, we want to improve the CPF to provide greater security in retirement, especially for those with lower wages and to help retirees cope with inflation. We also want to give those who are “asset-rich and cash-poor” more convenient options to get cash from their homes.

But as we seek to improve the CPF or to add any flexibility, we must retain its basic strengths and avoid the huge problems seen elsewhere:

First, our CPF system is sustainable. There are no unfunded or sudden liabilities that will burden our children’s generation.

Second, the CPF offers some flexibility for members to withdraw savings, indeed more so than many other social security systems. In particular, by tapping on their Ordinary Account (OA) savings, the vast majority of Singaporeans have been able to own their homes and service their mortgages with little or no out-of-pocket cash, which Minister Tan has just emphasised.

Third, while the CPF scheme does not provide the highest returns, it gives fair returns and certainly one of the safest in the world. Whilst the CPF does not provide the highest returns, it provides one of the safest in the world. These are fair returns. Few systems offer the guaranteed floors on interest rates – 3.5% of the OA and currently 5% on the SMRA (Special, Medisave and Retirement Accounts) for those with smaller balances, who comprise the majority of members. And for those with larger balances, it is 1% less. The interest rates are guaranteed by one of the few remaining triple-A rated governments in the world.

The CPF also offers the option to members who wish to place more money in their Special Account (SA) account, so that they can earn a higher interest rate than on their OA Account, and it allows them the option of taking higher risks through the CPF Investment Scheme (CPFIS) in the hope of higher returns. So that is the third strength – fair returns and safe returns.

Fourth, on top of the guaranteed interest rates, the Government subsidises CPF members through the Budget in a targeted and sustainable manner. We provide significant help to lower income members to build up retirement assets, by giving them housing grants in their OA and CPF contributions through the Workfare Income Supplement (WIS). Members of the Pioneer Generation also now get top-ups for life in their Medisave accounts.

Taken as a whole, our CPF system prepares Singaporeans well for the future. Based on current policies, a new entrant into the workforce today can expect to draw a retirement income of about two thirds of his last-drawn pay if he is a median income earner. This is around the OECD average. He gets a much higher ratio of his previous pay if he is a lower income earner, chiefly because of Government subsidies. As Minister Tan has said, our key concern is to help the current generation of older Singaporeans who have lower balances, often very low balances, due to their much lower wages in the past and the more liberal withdrawal rules then.

Let me now address the specific questions on how CPF interest rates are determined. The current CPF interest rate structure was implemented in 2008. It was an enhancement, especially for members with smaller balances. We debated the changes in Parliament in 2007, as part of the broader package of reforms to strengthen retirement security.
The fundamental principle is to peg CPF interest rates to returns on investments of comparable risk and duration in the market. We also structured the interest rates to provide greater benefit to members with small and medium-sized balances, by paying Extra Interest (EI) on the first $60,000 of balances.

Let me start with the OA rate. In determining the interest rates, we have to recognise the fundamental difference in the purpose of the OA compared to the longer term SA, MA and RA (or SMRA). OA savings can be withdrawn at any time for home purchases, servicing mortgage loans, or education. It is a liquid account. The interest rate on OA has therefore been pegged to the 12-month fixed deposit and month-end savings rates of the major local banks. However, unlike market interest rates, it pays a guaranteed floor rate of 2.5%, or 3.5% for OA balances of up to $20,000. More than half of all members enjoy the full 3.5% on their OA.

Tu Members also have options to earn more than these OA interest rates. They can transfer OA savings to the SA so that these become long-term savings, earning higher returns. That is an option that members have. It is a useful option for those who have paid up their housing loans. Those who want to take on market risks in the hope of earning better returns can also invest part of their OA balances through the CPFIS.

Furthermore, the CPF interest rates are not the only help that members get to build up their savings. As I had just mentioned, the Government also provides subsidies through the Budget to CPF members, targeted especially at lower and middle-income members. These subsidies in effect amount to a significant boost to what a typical lower income member earns on his balances.

If we look at his OA, in particular, on top of the 3.5% interest rate on his OA, he gets Workfare payments and housing grants. When he sells his home to upgrade or downgrade later, the housing grant is returned to his OA as part of his savings for retirement. Based on current policies, these grants (amortised over his working life) will in effect grow his savings by at least 2.5% per year over a 30-40 years of working life. So, in effect, his savings ‘earn’ 6% per annum through the combination of CPF interest rates and Government subsidies.

This does not include the OA savings used to purchase the housing asset, which benefits separately from appreciation in housing value. As Minister Tan explained, his home is an important retirement asset, and based on its value, he can withdraw monies from his CPF balances at age 55.

The OECD highlighted this critical role of homeownership in its recent analysis of pension systems in the advanced countries. Homeownership “can make a big difference for many pensioners, both reducing the need for cash and providing a way to generate income later in life.”

Mr Lim Biow Chuan asked if CPF interest rates could be pegged to those on 10-year Singapore Government Securities (10Y SGS). The OA interest rate, pegged to market deposits that can be withdrawn at any time, is fair. However, for several years now, the OA has earned the floor rate of 2.5% to 3.5%, well above the market rates. It also means that the OA has in fact been earning more than what 10Y SGS earns. The average yield on 10Y SGS over the past 10 years has been 2.4% and it is currently about 2.3%. So the floor rate of the OA at 2.5% to 3.5%, depending on the size of your balances, has in fact been higher than even the 10Y SGS.

The SMRA, on the other hand, is pegged at 1% above the 10Y SGS, which I will now explain. The Special Account and Retirement Account are as we all know held for retirement. It is long-term savings. As Medisave (MA) balances are also mainly used as Singaporeans get older, we have treated them like the SA for purpose of determining interest rates.

The returns on the SMRA have been enhanced over the years. When we set the new basis for SMRA rates in 2007, our aim was to peg it to the rates for similar long-term, risk-free investment. This was what the Economic Review Committee (ERC) had recommended in 2002.

The best peg would have been a 30-year government bond, because 30 years is the typical duration for which SMRA monies are held. However, as we had not started issuing 30-year SGS in 2007, SMRA rates were pegged to the yield on 10Y SGS plus 1%, to approximate the 30-year rate. 10Y SGS plus 1% was an approximation of what a 30-year government bond would have paid.

As I told the House then, when we debated the changes to the CPF, the 1% spread on top of the 10-year government bonds was in fact a little generous, as it was higher than what had been observed for 30-year bonds in international markets. However, it was fair and reasonable, giving allowance for future economic and market uncertainties, such as if inflation picks up sharply over the long term.

Going by the formula for SMRA rates, we would be paying about 3.4% today on SMRA. This is higher than the actual yield of 3% on the 30Y SGS, which we now have but is not widely traded. So 3.4% is what the formula would dictate for SMRA. However, we have maintained a floor of 4% on SMRA, or 5% on balances of up to $60,000. We have renewed this floor each year since 2008. Two-thirds of CPF members in fact earn the full 5% on SMRA.

This is a fair system of returns for the SMRA. The CPF in essence pegs SMRA returns to long-term SGS, but it has also been paying a floor of 4% to 5% that is well above market rates in the current environment. As I explained earlier, we have shielded members from the risk of low market interest rates.

I will next explain how CPF monies are invested, as asked by Er Dr Lee Bee Wah and Mr Gan Thiam Poh. The CPF Board invests CPF members’ monies in Special Singapore Government Securities (SSGS). These are issued specially by the Government to CPF Board. They are not traded instruments. The payout from the SSGS is pegged to the interest rates that the CPF Board is committed to pay its members.

The Government guarantees these SSGS bonds, so that CPF Board faces no risk of being unable to meet its obligations to its members. This is a solid guarantee, from a triple-A credit-rated government. The triple-A credit rating reflects Singapore’s very strong financial position, with the Government’s assets comfortably exceeding its liabilities. Both Standard and Poor’s and Moody’s recently reaffirmed our triple-A credit rating, noting that our strong net asset position provides ample cushion against shocks.

What does the Government do with the proceeds from SSGS issuance? It pools them with the rest of the Government’s funds, such as the proceeds from the tradable Singapore Government Securities (SGS), any government surpluses as well as the proceeds from land sales which under our Constitutional rules have to be accounted for as past reserves. So, the Government pools the SSGS proceeds with the rest of the Government’s funds.

The comingled funds are first deposited with MAS as Government deposits. MAS converts these funds into foreign assets through the foreign exchange market. A major portion of these assets are however of a longer term nature, and are hence transferred over to be managed by the GIC.

The SSGS proceeds are not passed to Temasek for management. Temasek manages its own assets, and does not manage any CPF monies.

What these investment arrangements mean is that CPF members bear no investment risk at all in their CPF balances. Their monies are safe, and the returns they have been promised are guaranteed. Neither does the CPF Board bear any risk, regardless of whether the GIC’s investments earn or lose money in any particular year. The risk is wholly borne by the Government, on its own balance sheet.

The Government pools the proceeds from SSGS with its other assets, and invests long-term funds through the GIC. The GIC does not, in fact, manage SSGS monies on their own, separate from the Government’s other assets. This is an important distinction, which I will come to later. GIC is fund manager for the Government, not owner of the assets and liabilities. It seeks to achieve the Government’s mandate of achieving good long-term returns, without regard to the sources of the funds that the Government places with it – for example, whether they are proceeds from SGS, SSGS or government surpluses.

Over the long term, our investments in GIC have earned a creditable return. For example, over the last 20 years, GIC earned 6.5% per annum in US dollar terms, which translates to 5.0% per annum when expressed in Singapore dollar terms.

But that is not the whole story. The average long-term return masks wide fluctuations in returns from year to year. You can have good average, long-term returns but what it disguises is variations which can be very significant from year to year. To answer Mr Gerald Giam’s question, over the last 20 years, there were eight years where GIC’s investment returns were below what the Government pays on SSGS.

A good example was the Global Financial Crisis. As I stated in Parliament at the time, GIC’s portfolio value in US dollar terms declined by about 25% during the 14 months from October 2007. October 2007 was a peak and from then to December 2008, GIC’s portfolio value declined by 25%. GIC’s performance was similar to that of other funds with a similar mix of asset classes, but it illustrated the market volatilities faced by every long-term investor.
Even over the five years following the crisis, ending 31 March 2013, GIC earned an annualised return of just 2.6% in US dollar terms, which translates into a mere 0.5% in Singapore dollar terms. GIC’s Annual Report explains the reasons for this weak recovery from the crisis, especially in illiquid asset classes that it was holding, like real estate. Its five-year annualised returns are expected to improve significantly going forward.

Hence, while the Government expects to earn returns through the GIC over the long term that exceed what it pays on SSGS, and has done so in the past, there is no assurance of GIC’s returns exceeding SSGS interest rates over shorter periods, much less every year. This is also because of the guaranteed floor on CPF interest rates, which do not follow declines in market interest rates.

How then is the Government able to meet its SSGS obligations in the years when the markets are weak and GIC’s returns fall below what the Government has to pay SSGS? The reason is that the Government has a substantial buffer of net assets – net assets meaning assets in excess of liabilities – which ensures that it can meet its obligations. In years when investment returns are poor, the net assets have helped to absorb any losses and ensure that the Government can meet its obligations on the SSGS as well as its market-traded SGS. Correspondingly, when investment returns are strong, the net assets grow.

To address Mr Gerald Giam’s further question, therefore, no extraordinary measures have been necessary to enable the Government to meet its SSGS obligations in the years when GIC’s returns fall short.

It is this role of the Government, with its significant net assets, that ultimately allows the CPF Board and CPF members to be shielded from risk. The Government, through GIC, expects to earn good returns over the long term, but the volatility can be substantial from year to year. The Government has been absorbing that volatility, and protecting CPF members.

This is also the reason why no market player, other than the Government, is able to take on the CPF obligations. The guarantor is not merely playing the role of a long-term investor. It also must have significant capital that provides a buffer when the markets are down.

Our CPF system is hence sustainable, so long as the Government continues to run prudent budgets, and invest the reserves wisely. Then the Government’s balance sheet will remain strong and investment returns over the long term can continue to meet our debt costs.

However, the GIC’s good long-term returns also reflect the fact that it is managing the Government’s assets as a pool, which includes the Government’s unencumbered assets – in other words, assets that are not matched by liabilities. This is a critical feature of our system. The GIC is managing Government assets as a pool, and the pool comprises not just assets that are backing the SGS and SSGS but also the Government’s unencumbered assets – past Government surpluses, proceeds from land sales, which under our Constitutional rules have to be accounted for in, past reserves, these are unencumbered assets – and the GIC manages the whole pool of assets as one pool. This allows the GIC to invest for the long term, including investing in riskier assets such as equities, real estate and private equity.

It would be quite different if the GIC, instead of managing the Government’s pooled assets, were to manage a separate, standalone fund to provide backing for CPF liabilities. A standalone fund would have to be managed much more conservatively, to avoid the risk of failing to meet CPF obligations. It would not be aimed at accepting risks that enable good long-term returns, but at avoiding any short-term shortfalls. Consequently, the returns it would earn over time will be lower than what the GIC can achieve in its current role.

Finally, I should emphasise that the investment returns in excess of the SSGS rates that the GIC expects to make as a long-term investor are not simply hoarded away in the reserves. Fifty per cent of the returns from our reserves flow back to our annual Budget through the Net Investment Returns Contribution (NIRC). This currently adds about $8 billion to our Budget annually. The NIRC has provided the Government valuable resources that have allowed us to embark on new priorities for Singapore, including enhancing our social safety nets.

Mr Gan Thiam Poh asked about independent audits and other measures to safeguard CPF investments and funds. As I have explained, CPF monies are invested in SSGS that are guaranteed by the Singapore Government. The Singapore Government’s guarantee is a key safeguard.

CPF Board, besides its own internal auditors, is externally audited by professional audit firms approved by the Auditor-General.

As for the Government’s investments, I can assure Members that GIC is audited on a regular basis. GIC’s financial statements are independently audited by the Auditor-General every year. Its audited financial statements are submitted to the President and the Council of Presidential advisors annually. The President also has full information about the size of the reserves and the performance of GIC’s investments. GIC’s investment performance over 5, 10 and 20 years is also made public through its Annual Reports.

To conclude briefly, let me just reiterate that our CPF system is sound, and provides a solid foundation for Singapore’s future. It is not a static system. Over the years, we have adjusted the system, such as to reduce the scope for housing withdrawals and focus increasingly on retirement and medical needs in old age.

As the Prime Minister has said, we intend to make important future improvements to the CPF to strengthen retirement security. Minister Tan has assured Members that we are open to different views and suggestions.

Whatever we do to improve the system, we must provide fair returns to the ordinary member who is unable to take on much risk, and ensure that the CPF remains sustainable over the long term. The Government should continue to subsidise CPF members, especially those with lower incomes, but these subsidies should be provided through the Budget, so as to ensure the CPF is sustainable.

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Source: Singapore Parliament Reports (Hansard)