TANGIBLE RECOGNITION AND - REWARDS FOR FORMER MEMBERS OF - PARLIAMENT, OLDER PENSIONERS AND - OLDER SINGAPOREANS - (Statement by the Prime Minister)
Mr Speaker, Sir, during the parliamentary debate on Competitive Salaries for Competent and Honest Government on 3rd November 1994, I announced that the Government would "accord tangible recognition to three groups of older Singaporeans who had laid the foundation for Singapore's progress and prosperity." These older Singaporeans had planted and nurtured the trees which produce the fruits today. But they did not and could not enjoy the fruits of their labour because they retired early, and before Singapore was as developed as today. To re-cap, the three groups of older Singaporeans I have said that I would like to recognise in tangible ways are: First, the special group of MPs and Ministers "whose stout-heartedness and great personal sacrifice made a difference to Singapore's history. They stood for elections between 1959 and before 1968, and retired by 1984 ... They fought the communists and the communalists, stayed the course despite personal risks to their lives and limbs .... Their salaries were deliberately held down because those were difficult times." Second, the public sector pensioners who retired before March 1972 when salaries were revised and pensionable public officers brought under the CPF Act. They worked with the Government of those turbulent times to tackle difficult problems. Third, the group of older Singaporeans who have mostly retired before Medisave was introduced in 1984. They too, as ordinary Singaporeans, have worked hard, supported the Government but have little or no Medisave today. The studies on how to provide for fair and meaningful recognition have been completed. I shall now give the details. Older MPs and Ministers The older pioneering MPs and Ministers are our very own "Long Marchers". Singapore owes a debt to these robust few. Mr Lee Kuan Yew, as Prime Minister, provided the inspirational leadership and vision. Dedicated MPs and Ministers worked the ground, rallied the people, vanquished threats and overcame challenges. Singapore's successful transformation to a stable, peaceful, secure and affluent country would not have been possible without their courage, commitment and sacrifice during those critical periods, especially the crisis periods of 1961-1963 and 1963-1965 against Communist and communalist attacks. I have initially indicated that we would consider only those MPs on pension who stood for elections between 1959 and before 1968 and retired by 1984. However, the period from 1968 to the early 1970s were also difficult years. Singapore then had to overcome the consequences of the British Forces' withdrawal. The Government has therefore decided that a one-off ex-gratia payment will be paid to all retired MPs and Office Holders who are in receipt of a pension now, and who were elected between 1959 and 1980 and retired before 31st December 1992. Note that not all former MPs will receive this ex-gratia payment. Only those who had qualified for pension and had contributed to Singapore's stability and growth through their support of Government policies will be given this ex-gratia payment. Also, MPs and office-holders who were elected before 1980 but are still serving would not receive this ex-gratia payment because they have enjoyed regular revisions to their allowances and salaries to date. The ex-gratia payment will be based on the number of months of service put in by the eligible MPs and Office-Holders. It will favour those who were elected in the earlier years because they played a more critical role in ensuring the survival of the Government and Singapore. The MP allowances and Office-Holder salaries were also much smaller then. The formula for the ex-gratia payment for former MPs will be as follows: $300 per month for each month of service for those elected on 30th May 1959. $200 for each month of service for those elected on 21st September 1963. $150 for each month of service for those elected between 1st March 1966 to 13th April 1968. $100 for each month of service for those elected between 18th April 1970 to 23rd December 1980. In addition to this ex-gratia payment for MP service, MPs who are also pensioned office-holders will be paid an ex-gratia based on the actual number of months of office-holding service as follows: For those appointed in 1959, the amount paid will be $200 for each month of office-holder service for Minister, Senior Minister and Deputy Prime Minister; $150 for each month of service for Minister of State and Senior Minister of State; and $100 for each month of service for Political Secretary, Parliamentary Secretary and Senior Parliamentary Secretary. For those appointed in 1963, the figures for the three groups would be $150, $100 and $75. For those appointed in 1968 and after, the respective figures would be $100 for Minister, Senior Minister and Deputy Prime Minister; $50 for Minister of State and Senior Minister of State; and $50 for Political Secretary, Parliamentary Secretary and Senior Parliamentary Secretary. The cost to the Government will be about $2.6 million, comprising $1.99 million for MP ex-gratia payments and $620,000 for office-holder ex-gratia payments. I would like to stress that this is merely a token recognition for the sterling and selfless service of these pioneering leaders. It is not meant to and cannot fully reflect their significant contribution to the nation. Older Public Sector Pensioners The early Members of Parliament and Ministers were ably supported by honest, efficient and dedicated public servants who worked tirelessly in the background and effectively carried out Government policies. I had earlier indicated that we reward only those public servants who retired before March 1972. This was a date when all pensionable public officers were brought under the CPF Act. Before that, they did not enjoy the benefits of the employers' contributions to their CPF. But there is another factor which needs to be taken into account. The National Wages Council (NWC), also established in 1972, institutionalised the concept of linking wage increases to economic growth. Prior to this, wage adjustments took into account cost of living but were not linked to economic growth. The establishment of the NWC resulted in a series of annual wage increases (over and above normal salary increments) for public sector officers. For instance, the NWC wage increases up to 1st November 1977 amounted to 30-40% of basic salary. The NWC wage increases were non-pensionable. Thus, while they benefitted the officers in service, they had no impact on the officers' pensions. However, on 1st November 1977, the NWC wage increases were consolidated into basic salary. This resulted in a corresponding increase in subsequent pensions. Between 1st November 1977 and 1st January 1982, NWC wage increases amounting to 33-44% of basic salary were paid. These wage increases remained non-pensionable until 1st January 1982 when there was a second consolidation of NWC wage increases into basic salary. This benefitted officers who retired after that date, but not those before it. Thereafter, until the introduction of the flexi-wage system, NWC wage increases were automatically made pensionable. Thus, it is only fair for the Government to recognise not only pensionable public officers who retired before April 1972 and did not enjoy the CPF benefits, but also those who retired during the 1972-1981 period of rapid NWC but non-pensionable wage adjustments. The Government has therefore decided to give all public sector pensioners who retired before 1st January 1982 a one-off ex-gratia payment, instead of confining it only to those who retired before March 1972. This ex-gratia payment will be given to deserving Singaporean public sector officers only. Those who were retired in the public interest on disciplinary grounds under the PSC Disciplinary Proceedings Regulations will not receive the ex-gratia payment. Nearly 5,000 public sector pensioners will benefit from this scheme. The ex-gratia payment will be based on an officer's pension as this reflects his divisional status and years of service. The rate will be as follows: Retirement date before 1st April 1972, the ex-gratia payment will be 13.5 months of pension, subject to a maximum of $13,500. Retirement date between 1st April 1972 and 31st October 1977, the ex-gratia payment will be 10.5 months of pension, subject to a maximum of $10,500. Retirement date between 1st November 1977 and 31st December 1981, six months of pension, subject to a maximum of $6,000. The ex-gratia payment for the eligible public sector pensioners will amount to $15 million. Older Singaporeans Who Retired Before Medisave Was Introduced I will now move on to the third group, ie, those older Singaporeans who retired before Medisave was introduced on 1st April 1984. The Medisave scheme requires all working Singaporeans to save in their Medisave Accounts an amount equivalent to 6% of their wages. Medisave has now become an essential component of our health care system. In 1994, 89% of hospital admissions used Medisave to pay their hospital bills. Total Medisave withdrawals of $291 million paid for 60% of hospital billing in that year. Singaporeans who retired before April 1984, however, have no Medisave Accounts. Also, those who retired soon after 1984 have little time to build up their Medisave balances. In view of the strong performance of the economy and the healthy budget surpluses in recent years, a Pre-Medisave Top-up Grant will be given to these Singaporeans. This will be a one-off exercise to recognise their valuable contributions. Under the Pre-Medisave Top-up Grant, the Government will help the older Singaporeans to build up their own Medisave Accounts. The primary target of the Pre-Medisave Top-up Grant are those who were 55 and above before April 1984. They would generally have retired by then and hence would have no Medisave Accounts. However, as those who retired soon after April 1984 would not have sufficient time to build up their Medisave balances, the Pre-Medisave Top-up Grant is extended to those who were between 50 and 55 years of age on 1st April 1984. But they will receive smaller top-ups. The Government will pay $1,050 into each Medisave Account of all Singaporeans who were 55 years or above on 1st April 1984. For those who were between 50 and 55 years on 1st April 1984, their top-ups will follow a sliding scale: Age Group Quantum of (on 1st April 1984) Pre-Medisave Top-up Total 55 & above $1,050 54 - <55 $ 900 53 - <54 $ 750 52 - <53 $ 600 51 - <52 $ 450 50 - <51 $ 300 The Pre-Medisave Top-up Grant will amount to about $250 million, benefitting nearly 300,000 older Singaporeans. Timing of Payments The ex-gratia payment for the former MPs and Ministers, and public servant pensioners will be paid out in January 1996 into their CPF Ordinary Accounts. The one-off Pre-Medisave Top-up Grant by the Government will be made in three equal yearly instalments, on 1st January 1996, 1st January 1997 and 1st January 1998. However, the second and third payments are subject to continuing strong economic growth and healthy budget surplus, as the Government cannot use past reserves for this top-up grant. While the January 1996 payment, which amounts to $85 million, will proceed, the Government would review its ability to make the January 1997 and January 1998 payments in 1996 and 1997 respectively. The decision will be made each year, after the Budget but before 1st July. To qualify for each yearly Pre-Medisave Top-up, a small co-payment into the Medisave Account of $50 is required. Family members are expected to contribute this token sum on behalf of their elders. This co-payment aspect of the Pre-Medisave Top-up Grant underlines our approach of joint responsibility towards health care financing. It is also in line with our traditional family values. The eligible Singaporeans will be given six months, from 1st July to 31st December, to make the co-payment to qualify for the Pre-Medisave Top-up on 1st January of the following year. Conclusion Singapore has done well because a generation of retired MPs,Ministers, public servants and Singaporeans had sacrificed and worked hard in order that future generations may enjoy. We should, as the Chinese saying goes, "Remember the source when drinking water". It is only right that Parliament recognises the contributions of those older Singaporeans who have laid the foundation stone for today's high standard of living. Where Singapore goes from here will depend on today's generation of MPs and Ministers, public servants and Singaporeans. What are the implications of being classified as a developed economy? What will be the challenges ahead? How do we prepare for the future? These are issues my colleagues and I are grappling with. But one thing is sure, we must not let the older generations down. We must all carry on their good work and give the generations of Singaporeans after us a better future. [Applause].