On 14 October 2024, Singapore’s Parliament passed the Central Provident Fund (Amendment) Bill, which will bring significant changes to CPF schemes.

One of the major changes is the closure of CPF Special Accounts (SA) for members aged 55 and older from January 2025. This change, announced earlier during Budget 2024 in February, has been a subject of public debate, particularly due to its impact on retirement savings.

Changes to CPF Special Accounts and Retirement Accounts

Starting January 2025, members aged 55 and older will see their Special Accounts closed, and any funds remaining in the SA will be transferred to their Retirement Account (RA).

The RA and SA currently offer the same annual interest rate of 4.14 per cent. However, if members’ RA funds exceed the Full Retirement Sum, excess funds will be moved to their Ordinary Account (OA), which only earns 2.5 per cent interest annually.

Dr Tan See Leng, Singapore’s Minister for Manpower, explained that the aim of this change is to better “right-site” CPF savings, ensuring that only funds allocated for long-term retirement earn the higher interest rate.

The option remains for CPF members to voluntarily transfer OA funds to their RA up to the Enhanced Retirement Sum (ERS) starting in 2025. The ERS will be raised from three times the Basic Retirement Sum to four times the amount beginning in January 2025.

Dr Tan emphasised that more than 99 per cent of CPF members over the age of 55 will be able to transfer their SA funds to their RA.

While this will allow most members to continue benefiting from the higher interest rates, those who wish to maintain access to their savings for withdrawal purposes can keep their funds in the OA, albeit at the lower interest rate.

Concerns raised in Parliament

During the parliamentary debate, some Members of Parliament (MPs) raised concerns over the impact of these changes.

Associate Professor Jamus LimWorkers’ Party MP for Sengkang GRC  highlighted that a small group of CPF members—around one per cent, or about 8,400 people—will be unable to transfer all their SA funds to their RA due to caps imposed by the Enhanced Retirement Sum. These individuals, often higher-income earners, would be left with funds earning lower interest in their OA.

Dr Tan acknowledged this but stressed that these individuals still have other options for growing their financial assets, such as through commercial investments outside the CPF system.

Expansion of the Home Protection Scheme

In addition to changes to the CPF accounts, the CPF Amendment Bill also introduced updates to the Home Protection Scheme (HPS). The HPS is an insurance plan that safeguards CPF members and their families from losing their Housing and Development Board (HDB) flats in the event of death, terminal illness, or total permanent disability.

From mid-2025, the HPS will expand its coverage to include individuals with pre-existing health conditions that are not considered severe, such as some forms of heart disease or strokes.

This change is expected to benefit approximately 100 members annually. However, premiums for these members will be higher due to their increased likelihood of making insurance claims, a common practice in the insurance industry.

While these changes will allow broader access to HPS coverage, there will still be limitations for those with more severe medical conditions, such as ongoing cancer treatment. Such individuals will continue to be excluded from the scheme in order to maintain its sustainability.

Premium fairness

MP Yip Hong Weng, People’s Action Party MP for Yio Chu Kang SMC, voiced concerns regarding the higher premiums for those with pre-existing conditions, arguing that these members may feel penalised for their health status.

Mr Yip questioned whether premium loading based solely on health risks was fair.

In response, Dr Tan clarified that premium loading is necessary to maintain the sustainability of the HPS without imposing undue financial burden on other members. Without premium adjustments based on health risks, premiums for all members, including those from lower-income groups, could rise, which would not be equitable, said the minister.

Dr Tan also noted that, despite the premium loading for those with higher health risks, the HPS remains one of the most affordable insurance schemes in Singapore.

This approach, he argued, ensures fairness across the board while maintaining the financial sustainability of the scheme.

SINGAPORE: During the parliamentary sitting on 14 October, Ms Sylvia Lim, Chairman of the Workers’ Party and Member of Parliament for Aljunied GRC, raised critical questions regarding the corruption charges against former Transport Minister S. Iswaran.

She filed Parliamentary questions to seek to assess the impact of the former Minister-in-charge for Trade Relations’ case on public confidence in Singapore’s anti-corruption culture and inquired whether the definition of “public servant” under the Penal Code is adequate for enforcing Section 165 related to corruption.

In response, Mr Chan Chun Sing, Minister for Education and Minister-in-charge of the Public Service, emphasised the expectation that individuals in the Public Service uphold high standards of conduct.

This expectation extends to those executing public duties on behalf of the Government, which is crucial for maintaining public confidence.

He outlined the conditions under which an offense under Section 165 can occur:

• It applies only to public servants, including public officers and individuals performing government-related duties.
• The public servant must accept a valuable item for free or at an inadequate payment.
• The item must be accepted from someone involved in business transactions related to the public servant’s official functions.

He stated that the definition of “public servant” in the Penal Code is broad, encompassing those entrusted with public duties, and noted that this definition provides legal protections for these individuals.

Addressing the impact of recent developments on public trust, Minister Chan acknowledged the importance of stringent measures against corruption but cautioned against knee-jerk reactions to tighten laws.

He suggested that the focus should be on whether the issues are individual or systemic, asserting that clarity in regulations is essential and that decisive action must be taken against offenders when rules are violated.

Sylvia Lim Questions Whether Charge Reductions Indicate Weakness in Corruption Case Against  Iswaran

In her supplementary question, Ms Lim remarked that the handling of the case has raised more questions than it answered, particularly regarding the sudden reduction of charges to non-corruption cases on the first day of the trial in September.

She asked, “Would the public be justified in concluding that the corruption case against the former minister was weak, hence resulting in the reduction of charges away from the Prevention of Corruption Act (PCA)?”

Minister Chan replied that such amendments are “not uncommon” and “occur regularly in the courts… due to developments and representations by the prosecution and the defense.”

Minister Chan: Section 165 Is a Corruption Charge Applicable to Public Officers

Following Iswaran’s sentencing to 12 months in prison on 3 October, Ms Lim noted Prime Minister Lawrence Wong’s statement that Singapore must remain free of corruption.

She inquired whether this reflected PM Wong’s belief that Iswaran acted corruptly, regardless of the charges against him.

Minister Chan clarified that Section 165, which applies to public officers, is indeed a corruption charge.

Ms Lim then sought further clarification, pointing out that under Section 165, no corrupt element needs to be proven, making it easier to secure a conviction under this section.

Minister Chan responded, “In Section 165, you do not need to prove a quid pro quo on both sides. You just need to prove that the person has taken. It doesn’t mean that it’s not a corruption charge.”

AGC Cited Evidentiary Risks in Reducing Iswaran’s Corruption Charges

Iswaran had originally faced 35 charges, including two counts of corruption.

The charges were amended on 24 September from two counts of corruption under the PCA to offences under Section 165.

This section, unlike Section 8 of the PCA, does not include a presumption of corruption, which would have placed the burden on the accused to prove the gifts were not given as inducements.

The AGC in an explanation cited substantial evidentiary risks in proving the original corruption charges, which involved  Ong Beng Seng and Lum Kok Seng.

The AGC noted that proving the original corruption charges under PCA would have been difficult due to the involvement of both Iswaran and Ong as primary parties.

Both would have had to implicate themselves to establish corrupt intent.

The AGC explained that “there are two primary parties to the transactions, and both would have an interest in denying corruption in the transactions.” This made securing a conviction for corruption highly uncertain.

In light of these risks, the AGC amended the charges to offenses under Section 165 of the Penal Code, which carries a lower evidentiary threshold and a reduced maximum sentence of two years’ imprisonment.

According to AGC, the amendment was made to ensure a fair and just outcome while considering public interest.