Ministers' pay review to scrap pension scheme - 04Jan2012 Video

SINGAPORE: The hotly-debated issue of pensions for political office holders was finally laid to rest, after the ministerial salary review committee recommended that the pension scheme be scrapped.

This is in line with the principle of having a transparent wage system, where there are no hidden perks.

Under the Parliamentary Pensions Act, political office holders such as parliamentary secretaries and ministers who have served at least eight years are eligible for a pension.

The idea behind it was to recognise their role in policymaking, and their experience.

The quantum is calculated based on the pensionable component of the monthly salary, and includes a cap on how much office-holders can receive. For instance, retired ministers who have served 18 years or more, get an annual payout of about 11 per cent of their last-drawn annual salaries.

The salary review committee has now proposed that the scheme be scrapped, and replaced by the Central Provident Fund scheme, which is the basic retirement scheme for Singaporeans.

Office-holders appointed on and after May 21, 2011, when the new government took office, will not receive any pension.

Those appointed before May 21 will have their pensions frozen, meaning that they will only be eligible for pension accrued up to May 20, 2011.

Gerard Ee, chairman of the ministerial salary review committee, said: "What is really important here is, whatever pension that is already accrued, where previously once you reach 55 you are entitled to the pension, we said no, it should only be paid when you step down or retire."

The change covers office holders from parliamentary secretaries all the way to the Prime Minister.

MPs elected after January 1, 1995 are already not eligible for pension.

As for the President, the Constitution currently provides for a pension at a sum to be decided by Parliament. However, this provision has never been exercised and no President has ever received a state pension.

MPs said the scrapping of the pension scheme is significant.

Zaqy Mohamad, MP for Chua Chu Kang GRC, said: "I think it keeps us aligned with most Singaporean workers, who today have moved to the CPF system for some time. So I think in a certain sense, it's a welcome move and keeps us grounded as well."

Hri Kumar Nair, MP for Bishan-Toa Payoh GRC, was one of the 500 people who had submitted suggestions to the review committee, and said he had proposed that the pension scheme be removed.

He said: "It is good for two reasons. Number one, it makes the wage much more transparent and easier to understand. I think that's important for people to understand. And number two, pensions have become a bit out of date. Most, in fact no one has it any more, and I don't think political office holders should have a benefit which no one else has."

Political observer Eugene Tan said having a more transparent pay package can also take away some of the sting associated with political salaries.

That should be fair ...
That should be fair, Since we already are stuck with CPF.... They should be the same. I just do not understand? why it tool them so long to make the move!!!! They should display fairness by changing to CPF scheme first before us!