Central Provident Fund (Amendment) Bill

Order for Second Reading read.

5.19 pm

The Minister for Manpower (Mr Lim Swee Say): Madam, I beg to move, "That the Bill be now read a Second Time."

This Bill will amend the Central Provident Fund (CPF) Act in four broad areas:

first, to implement previously announced policy changes related to Part 1 of the CPF Advisory Panel's recommendations;

second, enhance the insurance coverage under the Home Protection Scheme (HPS) and Dependants' Protection Scheme (DPS);

third, safeguard the MediSave monies claimed by medical institutions and approved insurers; and

fourth, make various amendments to clarify and streamline the administration of the CPF system.

Let me explain.

Madam, the first set of amendments pertains to Part 1 of the CPF Advisory Panel's recommendations. The Government has implemented the Panel's recommendations since January 2016 based on the provisions within the current CPF Act. We are now amending the CPF Act to enable CPF Board to implement these changes more directly.

Let me recap some new flexibilities that CPF members can now enjoy.

We are amending the CPF Act to make it directly explicit that CPF members aged 55 and above can transfer savings from their CPF accounts, including their Retirement Account (RA), to their spouses if they have set aside the Basic Retirement Sum, or BRS in short.

Previously, members, including those below age 55, would have to set aside the Full Retirement Sum (FRS), which is twice the BRS, before they could make transfers to their spouses' accounts.

We agreed with the CPF Advisory Panel to reduce the requirement from FRS to BRS so that more CPF members can make top-ups to their spouses' CPF savings. This flexibility will be useful for spouses who may not have enough CPF savings to join CPF LIFE for reasons, such as leaving the workforce earlier to take care of their children.

Both husband and wife can then have their own CPF LIFE plans and more secure retirement income for life. When one spouse passes away, the surviving spouse will still be assured of lifelong payouts. As a family unit, both husband and wife can also maximise the extra interest earned on their combined CPF savings.

I encourage members to make full use of this flexibility to enhance their spouses' retirement adequacy.

We are also amending the CPF Act to state clearly that members will not be assessed for inclusion into the CPF LIFE scheme at age 55. This is because members now need to choose their CPF LIFE plan only when they reach their Payout Eligibility Age (PEA). Hence, the previous requirement to select their CPF LIFE plan at age 55, which could be about 10 years before the start of payouts, is no longer necessary. Going forward, members will, therefore, need to be assessed for auto-inclusion into CPF LIFE only at their PEA.

The second set of amendments relates to enhancing the insurance coverage under the CPF insurance schemes. These are the Home Protection Scheme and the Dependants' Protection Scheme, or HPS and DPS for short.

Today, members can only make a claim from HPS and DPS in the event of death or incapacity. By incapacity, it means that a member must not be able to ever continue in any form of employment. Currently, members with terminal illnesses or total permanent disability but can still do some form of work, do not fall within this definition of incapacity and, hence, do not qualify to make claims under HPS and DPS.

We are amending the CPF Act to expand the definition of incapacity to include members with terminal illness and total permanent disability who may still be working or able to do some form of work, but in a diminished capacity. This change will benefit new and existing persons insured under HPS and DPS, subject to the exclusions in their individual insurance covers arising from pre-existing conditions.

I hope that this broader protection from our CPF insurance schemes will provide CPF members with greater peace of mind.

Today, insured members who have run out of Ordinary Account (OA) savings can only use their spouses' OA savings to pay for their HPS premiums if the spouse is a co-owner. We are now amending the CPF Act to allow such insured members to also use the OA savings of other co-owners, including children, parents or siblings, to help pay for their HPS premiums.

By allowing greater household support for the payment of HPS premiums, we can reduce the risk of lapsed insurance covers due to non-payment of HPS premiums. More CPF members and their families will, therefore, be protected from losing their homes in the unfortunate event of death, permanent incapacity, terminal illness or total permanent disability.

Madam, the third set of amendments pertains to strengthening safeguards for MediSave monies claimed by medical institutions and approved insurers.

Today, medical institutions and approved insurers help to facilitate the withdrawals from CPF member's MediSave accounts for approved treatments and uses under the MediSave Scheme. In 2015, about $2.7 billion of MediSave savings was withdrawn.

Most medical institutions and approved insurers have made proper claims of MediSave monies and complied with our audit requirements. However, a small number of medical institutions and approved insurers still make errors in some of their claims. For example, in the past three years, we saw an average of about 40 cases a year of claims from wrong members' accounts.

To strengthen the safeguards over MediSave claims, this amendment will allow CPF Board to impose administrative penalties on medical institutions and approved insurers that make wrong or unauthorised claims on members' MediSave monies or do not comply with audits ordered by CPF Board or other administrative requirements.

These amendments will make medical institutions and approved insurers more accountable when they make claims of MediSave monies. The amended CPF Act will also mandate the recovery of any MediSave monies arising from unauthorised or wrongful deductions or uncompleted prepaid treatment packages.

Madam, the fourth and last set of amendments pertains to other amendments that provide greater clarity in the administration of the CPF system. I will provide two examples.

The first example is to revise the method of estimating the additional wages that attract CPF contributions. Today, employers are required to make an estimation based on the previous year's income. We are amending the CPF Act to allow employers to also make an estimation based on the projected wages in the current year.

This amendment will improve efficiency as employers can estimate CPF liabilities more accurately, reducing the chances of employers overpaying CPF contributions. This will minimise the need for employers to apply for refunds for overpayments.

The second example is to allow CPF members to apply to withdraw cash payouts that were credited to their accounts under various Government schemes, such as the GST Voucher. This happens when the cheques were not cashed and subsequently expired. As these payouts are meant to support members' daily needs, this amendment will allow members to withdraw these credited monies without being subject to existing CPF withdrawal rules.

Madam, in conclusion, taken in total, the amendments in this Bill will enable CPF Board to implement policies aimed at providing greater flexibility while enhancing CPF members' retirement adequacy and also enhance insurance coverage and improve the accountability of MediSave usage for CPF members. Mdm Speaker, I beg to move.

Question proposed.

Mdm Speaker: Mr Pritam Singh.

5.29 pm

Mr Pritam Singh (Aljunied): The importance of mortgage insurance coverage struck close to home when I lost an uncle more than a decade ago. He passed away in a motorcycle accident and did not have any HPS coverage. A sizeable mortgage sum remained outstanding and it was left to my aunt and cousins to commit significant resources to continue making mortgage payments on top of their own commitments.

At that time, I thought HPS non-coverage was a rare occurrence. But years later, it was heartbreaking to find out that some of my own residents, albeit a small number, found themselves in exactly the same position as my aunt and cousins when their sole breadwinner passes away unexpectedly.

To that end, I wish to acknowledge the compassion shown by CPF and the Housing and Development Board (HDB) staff to try their best to assist affected families by retrospectively reinstating HPS coverage in certain cases so that the other family members do not face hardship. In my last term, one particular family benefited from CPF's helpfulness and were profuse in their appreciation to me for pursuing the matter, but the appreciation should rightfully go to the agencies concerned.

[Deputy Speaker (Mr Lim Biow Chuan) in the Chair]

According to CPF, as of 2013, about 70% of all HDB flat owners were covered by HPS. In 2012, a total of 1,074 claims amounting to $89.8 million were made to HPS policyholders. At the 2014 Committee of Supply debate, I spoke on HPS, requesting the CPF to require HDB flat owners who are paying for their mortgage in cash to sign up for HPS as a matter of course. More generally, the cut requested the Government to step up education on the importance of HPS, especially for low- to middle-income households.

Separately, the statistics pointed to an increase in the number of members who had lapsed in their HPS premium payments or who were no longer insurable for medical and other reasons. It was 1.7% and 2% respectively in April 2011 and, by October 2013, the percentages had increased to 2% and 3%.

To this end, I welcome the current amendments to allow co-owners, who could be family members, to help pay for HPS premiums, not just spouses. This should mitigate or reduce the number of lapsed policyholders going forward. However, for greater clarity, can the Minister give the House a primer on the regulations CPF has in mind in reinstating HPS insurance cover for paid claims when it is not liable to do so?

Improvements to the scheme. While I welcome all the HPS-related amendments, I have three suggestions to make that could help strengthen HPS.

First, covering Singaporeans with pre-existing illnesses. In 2011, the CPF amendment modified the HPS scheme to allow for more portability, so that in the event the homeowner who purchased a new HDB flat was no longer in good health, he would remain insured under the scheme by way of earlier participation. This amendment acknowledges that a member in ill-health could yet be covered so as not to prejudice him or her. With the introduction of MediShield Life by the Government, a seminal change that differentiated it from the old MediShield scheme, was the inclusion of members with pre-existing conditions, albeit with a 30% increase in premiums payable. The philosophical basis of this move was in concert with making Singapore an inclusive society. Similarly, HPS coverage for Singaporeans with pre-existing illnesses will buttress this in.

The Government has raised its concerns about such an expansion, specifically on premium affordability in the past, and this is not an irrelevant consideration. However, similar misgivings were overcome in the move from MediShield to MediShield Life. In August 2015, CPF paid out more than at least $400 in HPS rebates to each of the 470,000 Singaporeans and Permanent Residents (PRs) on HPS. This came up to almost $1.9 billion and with yet many thousands of other homeowners receiving less than the $400 but receiving a rebate nonetheless. The last time such rebates were paid out was in 2006. In between, in 2011, HPS premiums were lowered by an average of 12% for some 80% of HPS members. The remaining 20% were already paying low premiums.

With these numbers in mind, it would appear that there is some scope to relook at the prospect of covering members in poor health under HPS. I hope the Board can commit itself to look seriously to cover Singaporeans with pre-existing illnesses.

Secondly, plugging gaps for lapsed policyholders. While HPS is compulsory for all members who use their CPF to pay for their HDB flats, subject to HDB's approval, members can choose to opt out should they take up a similar mortgage-reducing insurance. In 2015, it was made known that 43,610 flat owners had been given permission to do so by HDB. However, my understanding is that HDB does not monitor these members thereafter, allowing them to theoretically opt out of their mortgage-reducing insurance shortly thereafter. In such a case, these households effectively fall through the cracks. Can the Minister confirm if CPF will consider plugging this hole in future and require them to sign up to HPS in the event their mortgage-reducing insurance lapses?

Thirdly, reminders. I understand CPF sends two reminder letters to the policyholder in the event of HPS premium non-payment. In an effort to highlight the importance of this scheme, can I confirm if these notifications are by ordinary post or registered mail? In addition, early reminders to the policyholders of low CPF balances for HPS premiums may be a powerful signalling tool that can prod members to top up their OA or, at the very least, seek assistance early, if they have other financial problems.

In conclusion, when I spoke on raising the awareness of HPS in the 2014 Committee of Supply debate, the Minister of State replied that HDB issues a booklet, on the purchase of a property, to educate home buyers of the scheme. With a rising senior citizen population and constant reminders in the press about how Singaporeans do not plan well for retirement, the Ministry should step up its efforts to constantly inform homeowners of the benefits of the scheme every few years through brochures and pamphlets as they service their mortgages and seriously look at including Singaporeans with pre-existing illnesses to improve the scheme further. Mr Deputy Speaker, I support the Bill.

Mr Deputy Speaker: Mr Dennis Tan.

5.36 pm

Mr Dennis Tan Lip Fong (Non-Constituency Member): Mr Deputy Speaker, may I speak in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] I support the proposed amendments to the Bill in respect of HPS. HPS is a mortgage-reducing insurance that protects members and their families against losing their homes in the event of death or permanent incapacity before their housing loans are paid up. It is compulsory for any HDB home owner who is using his or her CPF savings to pay the monthly housing loan instalments for his or her HDB flat. The scheme does not cover private residential properties, executive condominiums (ECs) or privatised Housing and Urban Development Company (HUDC) flats. Buyers can only opt out of the scheme if they have taken a similar mortgage-reducing insurance policy.

The Bill seeks to enhance insurance coverage under HPS. Under the proposed amendments, a CPF member who is insured under the scheme will now be allowed to make a claim under the scheme for terminal illness and total permanent disability, even though the member is not incapacitated from ever continuing in any employment. If this is a substantial change, it will represent a departure from the existing ruling under the current Act and it will be a welcomed change as it may provide more flexibility for members who are caught in different situations. I note that the same change is also effected in the same Bill for DPS.

However, it seems to me, from a plain reading of the amendment Bill, that the only situations where a member can make a claim under the scheme for terminal illness and total permanent disability, even though the member is not incapacitated from ever continuing in any employment, are if (a) the member is suffering from terminal illness and is said by a registered medical practitioner to be expected to result in death within 12 months or (b) the member has suffered total or permanent disability of less than two eyes, two limbs or one eye and one limb. The scenarios seem rather limited. May the Minister please clarify whether this is what the Bill intended? Does the Bill provide for any other situation and where is this provided in the Bill?

If the Bill does not provide clearly for any other scenario, I am concerned that the Act may not be clear enough about the circumstances that may apply to the new situation where a CPF member who is insured under the scheme will now be allowed to make a claim under the scheme for terminal illness and total permanent disability, even though the member is not incapacitated from ever continuing in any employment. I seek the Minister's assurance that CPF Board will provide clear communication to CPF members for the circumstances which may apply under this proposed amendment.

The Bill also seeks to allow a non-spouse member who is a co-owner of a property to pay the premium for the HPS scheme of the other co-owner. I welcome this change as this recognises the possibility as well as perhaps the increasing occurrence of the situation where co-owners may not be spouses, for example, in the case of a flat which is owned by a man and his mother. The change will address the current anomaly in the present Act.

Mr Deputy Speaker, I refer to the amendment in clause 28(h) of the Bill whereby the Board has the right not to pay under the scheme where a member was suffering from an illness when he joins the scheme. May the Minister clarify what would be these circumstances where the board may permit a member to join the scheme even though the Board may be aware of the member suffering from an illness at the time of joining the scheme?

Mr Deputy Speaker, I understand that under the current Act, people with certain pre-existing illnesses are not covered by the Act. Can the Minister please confirm whether such members will still not be covered by the scheme after the amendment? Will the Minister consider allowing a special form of coverage under the scheme perhaps on a case-by-case basis and even on a different premium?

The Bill also provides for regulations to be made to prescribe the circumstances where CPF Board may issue or reinstate an insurance cover or pay claims where the board is not liable to do so under sections 36(9) or (10). May the Minister please clarify the intention behind this proposed inclusion?

I also support the amendments which allows the transfer of monies from the member's RA to another member's account for the purchase of an HDB flat.

The amendments also allow CPF members to top up their spouse's RA or Special Account (SA) using money from their RA. This flexibility will benefit both the member and his/her spouse. I support the amendments.

Mr Deputy Speaker: Ms Jessica Tan.

5.44 pm

Ms Jessica Tan Soon Neo (East Coast): Mr Deputy Speaker, thank you for letting me speak on the Bill. CPF monies are, for many Singaporeans, a key source of funds and savings, and many seek greater flexibility on the withdrawal and use of the funds. While recognising the need to allow for greater flexibility, with Singaporeans living longer, CPF funds remain an important source for a basic level of retirement funds.

The amendments proposed provide for changes related to Part 1 of the CPF Advisory Panel's recommendations on enabling flexibility while ensuring retirement adequacy. But at the same time, I would say this is an extremely challenging balance to achieve.

The Retirement Sum and the CPF LIFE plan are to meet the objective of giving members a monthly payout for life. Currently, subject to the amount of the CPF balances and the amount that they desire for monthly payouts, CPF Members have to make a choice of CPF LIFE plan − whether it is the LIFE Standard or the LIFE Basic Plan − when they turn 55 years of age. The difference in the CPF LIFE plans is the monthly payouts you would receive and the amount you would bequest to the beneficiaries after you have passed on.

So, I do welcome this change of not requiring members to make that decision on the choice of the CPF LIFE plan at the age of 55 as this is effectively 10 years before their PEA which is currently age 65. With the amendments, members will now only need to choose their CPF LIFE plan closer to the start of their CPF LIFE payouts, which can be anytime between their PEA or, if they choose, up to age 70. Taking a decision closer to the date of the start of payouts will allow members to decide on the plan that best meets their retirement needs at the time.

This change, while giving greater flexibility and enabling better decisions to meet retirement needs of members, however, does not address some of the concerns that members have with regard to PEA. As PEA currently depends on your year of birth, this is not only confusing as to what your PEA is, there is also concern that this will continue to adjust for the subsequent age group of members. This does cause uncertainty for members as PEA determines when you can start receiving your CPF LIFE payouts. This gives a sense that access to CPF payouts is getting further delayed and can only be accessed when you get much older. While I understand the need to make the adjustments to be in line with people living longer and the standard of living, it is also important to give members some certainty.

Setting the expectations on previous PEAs, some members also –when they set the expectations, they kind of expect the payouts at that age – they feel misled that they had been expecting payouts at a certain age and, when that moves, it gets a little bit disappointing and, at other times, it leads to mistrust. So, it would be good to understand the criteria for changing the PEA and what members can expect in the future for PEA.

The proposed change also provides flexibility to allow for CPF members aged 55 and older, once they have set aside their BRS, to then transfer monies from their CPF accounts to their spouses’ RA or SA. So, this, until January this year, was twice the BRS. Therefore, this change is definitely welcomed because it will help them help their spouses to grow their retirement savings, as well as to benefit from the extra interest on lower CPF balances. This, as the Minister has pointed out, clearly will give the spouses better assurances of LIFE payouts for either of the spouses.

So, for older Singaporean women, this flexibility is important because, to receive top-ups from their spouses – as many of them have not accumulated as much CPF savings as men in that age group. In 2013, the median CPF savings for women aged 51 to 54 were about $90,000, compared to males in that age group which is about $130,000.

The changes proposed in the Bill of including terminal illness and total permanent disability as grounds for claims under HPS and DPS will allow members with terminal illness and total permanent disability to make claims on their HPS and DPS even when they are able to do some work, as the Minister has shared, although in a diminished capacity.

I applaud this change as it not only enhances, but it really does give assurance to members as well as their families that they will have access and support when their family most need it.

Similarly, this amendment also allows the OA savings of other co-owners, whether it is their children, parents or siblings, to help pay for the HPS premiums of insured members who have run out of OA savings. This additional flexibility will help to reduce the risk of lapsed insurance covers due to non-payment of premiums and this is especially so when members are facing financial challenges because this is exactly what they need, and home ownership, as we all know, is the key tenet for retirement adequacy.

HPS, as a mortgage-reducing insurance, gives members peace of mind that protects them and their families against losing their homes in the event of death or permanent incapacity before their housing loans are paid up. So, as I have mentioned, those facing financial difficulties and, hence, perhaps will have challenges to keep up with their HPS payments with their OA savings being low, this change will allow them to get help from co-owners and not have them having to trade-off not paying the premium hence leading to a policy lapse.

I have personally seen this happen when a family had their policy lapsed and they did not even know that the member had purchased HPS. When he passed on, they then realised that he had actually lapsed on his policy. It is quite sad because they still had to provide for the family. That is the time when you need it. You are grieving and homeownership is one aspect. If you had that addressed, that gives the remaining family members peace of mind.

MediSave – MediSave for many Singaporeans, is the fund for our and our immediate family's medical and future medical needs: hospitalisation, day surgery and other expenses. It is, therefore important and I am glad that this change looks to safeguard members' MediSave monies. While the Minister shared that there are not many cases, every case, to any person whose MediSave funds are important, is one case too many, as we all know. So, I am glad that this change is being done because what it does is that it not only sets aside the penalty framework, it also mandates the recovery of MediSave monies from the medical institutions as well as the approved insurers for those that have been mistakenly deducted as well as refunds for monies from the institutions due to uncompleted medical treatments.

The proposed amendments to the CPF Act are welcomed as they will benefit members with greater flexibility and enhance support and protection in the use of their CPF funds to build their retirement adequacy. It does not, however, address the frustration that members have expressed with regard to the complexity and changes in the CPF schemes when they do happen. This uncertainty does lead to angst and mistrust of the scheme; and the irony of offering more choices in the usage of members' CPF monies is that it adds to the complexity of the scheme.

To achieve simplicity is a very difficult balance, but CPF Board must continue to work on this. CPF is and will continue to be an integral part of the retirement adequacy for Singaporeans. The Ministry must continue to find effective channels to communicate and provide more timely and specific information to enable members to better understand the CPF schemes and changes as well as appropriate financial counselling. This will ensure that members have a good understanding and can make informed choices that are best suited to each of their retirement needs. Sir, I support the Bill.

Mr Deputy Speaker: Minister Lim.

5.53 pm

Mr Lim Swee Say: Mr Deputy Speaker, Sir, I thank Members Jessica Tan, Dennis Tan and Pritam Singh for speaking in support of the amendment.

First, on the issue of the HPS, I share the sentiments of the Members that it is very important that we do whatever we can to help to minimise the risk of losing a home when the home owner passes away. At the end of the day, it is very hard to keep a family together without a place to stay in. So, in that regard, we are very concerned that on the average every year, we see about 4,000 to 5,000 policy-holders dropping out of HPS due to various reasons.

On the part of the Ministry of Manpower (MOM) and CPF, we are doing what we can to minimise or reduce these cases of lapses. The amendment today, we believe, will help maybe 1,000 to 2,000 CPF members to overcome the inability of the home owner to pay the premium.

Having said so, we also continue to step up our efforts to remind and educate the homeowners of the importance of HPS. Mr Pritam Singh asked about cases where we paid the HPS claims even though we are not liable to do so. Here, I would like to give an illustration.

A policyholder fell sick; seriously ill and was hospitalised at the time when the premium payment was due. As a result, he was not able to take action, knowingly or unknowingly, to pay for the premium and, subsequently, he either passed away or suffered permanent disability. So, under such circumstances, CPF could have taken the position that since the policyholder did not pay for the premium, as a result, the policy has lapsed.

But we think that will be a wrong thing to do because the fact that the policyholder was not able to pay the premium was beyond his control. He was hospitalised at the time of the renewal. So, these are examples whereby the Board has exercised its judgement, knowing that if this is really beyond the control of the policyholder, in fact, we will find a way to pay them rather than to reject the claims.

Mr Pritam Singh asked what kinds of serious illnesses would we exclude an application due to pre-existing illnesses. For example, for a home owner who suffers from cancer, kidney failure or heart disorder and so on, the Board does look at the severity of the illness because if it is too severe and will lead clearly towards terminal illnesses, then I think we would have no choice but to reject such applications. Because at the end of the day, we would have to strike a balance between taking care of as many home owners as we can and yet, at the same time, be fair to the other home owners, bearing in mind that this is a risk-pooling programme.

Mr Pritam Singh also asked whether we can step up our efforts to send early reminders. The answer is yes. In fact, today, not only would we remind every new home owner when they collect the keys from the HDB of the importance of HPS, we also make sure that for any case of a lapsed payment, we would follow up with a repeated reminder. Obviously, more can be done; and we will keep doing more.

Mr Dennis Tan asked whether we can expand HPS to private housing. Mr Deputy Speaker, HPS' primary focus would be on HDB housing to cover the vast majority of home owners and the mass market. For owners of private properties, our advice to them is to take care of themselves by purchasing mortgage-reducing insurance in the private market.

Mr Tan asked whether we can be more specific with the definition of terminal illnesses and total permanent disability. All these are defined under the CPF Act and I would like to confirm that he is right that terminal illness, by and large, refers to a remaining lifespan of less than one year. In the case of total permanent disability, it refers to a loss of two eyes, two limbs or one eye and one limb.

Mr Dennis Tan also asked for section (39) regarding premium with interest. This refers to cases where the policyholder did not declare their serious pre-existing illnesses. So, at the time of claim, when it was discovered that the claim was not supportable, we will refund the remaining premium together with interest.

Ms Jessica Tan touched on a few important points. First, regarding PEA. I share her concern that each time, when PEA is adjusted, it will affect the retirement planning of those CPF members who are affected. And this is the reason why we take the review of PEA very seriously. The last time we made a revision to PEA was in 2007, when we raised PEA from the age of 62 to 65. We phased in this increase of 62 to 65 over 10 years.

It was announced in 2007 that the final adjustment of going up from age 64 to 65 will only take place in 2018, which is about two years from now. I agree with Ms Jessica Tan that this is a very major decision and should we decide to amend PEA, we should do so by giving policyholders and CPF members enough advance notice.

Let me say this, right now that we are on schedule to raise PEA to age 65 by 2018. At the same time, I want to highlight to this House that since January this year, CPF members have the option of deferring the start of their CPF payouts from PEA up to the age of 70. In other words, if a CPF member is in employment and he does not need to start his payouts at the age of 64 now and 65 come 2018, he has the option of deferring the starting of his pay-out up to the age of 70. For every year of deferment, he is expected to receive about 6% more every month permanently from the date of the pay-out.

We believe that the combination of progressively raising PEA to age 65 by 2018, coupled with the new flexibility of each member being able to, on a voluntary basis, defer the payout start age to 70, is about the right combination – providing the kind of flexibility that the members are looking for.

I also agree with Ms Jessica Tan regarding MediSave claims that are unauthorised or made by mistake. In fact, we are stepping up our efforts and one of our objectives for this amendment is to send a very clear message to medical institutions and approved insurers that we take this seriously. Whenever we discover any case of error, first, we mandate the recovery. And second, with this amendment, CPF Board will have the right to impose administrative penalties as well.

Last, but not least, Ms Jessica Tan also suggested stepping up our communications. Again, I fully agree. In fact, CPF Board is not only going to do more, we are going to do more in a simpler way so that more members out there can understand what is the purpose of CPF, why it is structured this way and what are the changes that are coming along the way to ensure that the CPF system will always be relevant and able to meet their needs better. With that, Mr Deputy Speaker, I beg to move.

Mr Deputy Speaker: Mr Dennis Tan.

6.03 pm

Mr Dennis Tan Lip Fong: I thank the Minister for the clarification. I have one further question. It is more of a clarification regarding the question I raised earlier, which maybe I did not make it clear. I would just raise it again.

I understand that under the current Act, people with certain pre-existing illnesses are not covered by the Act. This presents a conundrum for members as it is normally compulsory for all members servicing their HDB loans through their CPF accounts. Can the Minister please confirm whether such members will merely be exempted from the scheme without any coverage from the scheme after the amendment?

Even if such members are exempted from the scheme, will the Minister consider allowing a special form of coverage under the scheme, perhaps on a case-by-case basis, and even perhaps on a different premium? This will certainly give a better peace of mind to affected members. After all, surely the original intention of the scheme is to provide peace of mind to all members who have taken loans to pay for their HDB flats.

Mr Lim Swee Say: Mr Deputy Speaker, in my reply, I thought I did explain that cases which are excluded from this coverage will be home owners who suffer from severe pre-existing conditions such as cancer, kidney diseases, heart disorders. So, only those who suffer from fairly severe pre-existing conditions, such as cancer, kidney, heart diseases, will have their applications rejected.

Mr Dennis Tan asked whether they can be exempted. In fact, I would like to clarify that HPS is not mandatory for members with severe pre-existing conditions. In other words, we encourage every home owner of HDB flats to come under HPS. We do whatever we can, including this amendment, to help them stay with HPS. So, for those who due to their medical conditions and had their applications rejected, are excluded from HPS. I hope that answers the Member's questions.

Mr Deputy Speaker: Mr Leon Perera.

Mr Leon Perera (Non-Constituency Member): Thank you, Mr Deputy Speaker, just a brief clarifying question to the hon Minister. I think this question was contained in Mr Pritam Singh's speech which is that for members who are on HPS who fail to make the premium payments and reminder letters are sent to them, are these sent by registered mail or non-registered mail? And if they are sent by normal mail, could CPF Board give some thought to perhaps sending those reminders by registered mail?

Mr Lim Swee Say: Mr Deputy Speaker, as I have mentioned, we will make every effort possible to ensure that the members are notified whether it is through registered mail, normal mail, and through other channels as well. CPF Board does have regular communications with our members. For example, members who have recently received their CPF statement will see that CPF Board puts in tremendous efforts to provide a one-page summary of the status of all their transactions with CPF Board. I am happy to say that their coverage under HPS is part of that presentation. Obviously, we will keep looking for ways to improve our communications.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Lim Swee Say.]

Bill considered in Committee; reported without amendment; read a Third time and passed.