Speech by Minister for Manpower Dr Tan See Leng at Committee of Supply 2024
Minister for Manpower, Dr Tan See Leng
A. PREAMBLE
1. Mr Chairman, I thank GPC MPs and others who have deep interests in MOM’s work and spoken in support of our workers and employers.
2. Let me first give an overview of the labour market.
a. Overall, the labour market expanded in 2023. Resident employment grew in sectors with higher productivity or pay, such as Financial and Professional services.
b. Resident unemployment rate remained low at 2.7%, one of the lowest among OECD countries.
c. Real income fell slightly last year due to higher inflation, similar to what many other countries experienced.
d. However, businesses are more optimistic this year. Our recent surveys indicate an improvement in hiring and wage growth expectations from employers. Nevertheless, risks of near-term headwinds remain, and this will weigh on our labour market in the year ahead.
3. Beyond the near-term headwinds, we will continue to face tight labour market constraints. Our population is ageing. Our birth rate continues to fall, despite our best efforts. We have to confront a slowing local workforce growth. If we continue on this trajectory, our workforce will taper off and decline.
4. In the next decade, it will become harder for us to sustain high economic growth primarily from workforce growth. The only sustainable approach is to pursue productivity-driven growth — enabling our local workers to move up the value chain, and taking in foreign workers who can complement our local workers.
5. Many have asked what keeps me awake at night. Members of the house, keeping our competitive edge is what we should all be concerned about. If we do not succeed in sustaining our productivity in the next 10 years, my worry is that we will suffer real declines in economic growth. Businesses and talent will find Singapore less attractive. As a result, we will create fewer good jobs for Singaporeans, and incomes will stagnate. You have seen this story play out in other mature economies, whether in Europe, Asia or elsewhere.
6. However, Singapore has a chance to write a different story. There are exciting developments on the horizon. With the accelerating pace of transformation, there will be more opportunities in new areas like the green economy and artificial intelligence, or AI.
7. Mr Edward Chia asked about how we plan to improve the productivity and competitiveness of our workforce. I couldn’t agree with him more that maximising our human capital is key. This means improving the skills profile of both the local and foreign workforce, and ensuring that employers put these skills to the fullest use. As our economy transforms, we must also channel more workers to the more productive areas of the economy. We have to rally and unite our employers and workers towards achieving a new Forward SG social compact. I will elaborate on these points further.
8. In my MTI speech, I spoke about how the Government will support businesses in unlocking resource constraints. I will build on this in my MOM speech by sharing how the Government will work hand-in-hand with workers and employers for a brighter future.
9. Our priorities for this year are centred on three themes: Strengthening you, Uplifting you, and Caring for you.
10. Our first focus is to strengthen you by helping businesses become more productive and helping workers to take on better jobs.
a. I will provide an update on our efforts to spur business transformation through our foreign workforce policies.
b. We will also help employers strengthen the capabilities of their workforce, and empower our local workers to take charge of their career health and seize new opportunities.
11. Our second focus is to uplift you to ensure no one is left behind.
a. As announced at Budget 2024, we will roll out the Majulah Package to support our “Young Seniors” — who are currently in their fifties and early sixties.
b. SMS Koh will recap the measures to provide greater assurance for our seniors who may be more vulnerable.
c. SMS Zaqy will elaborate on how our tripartite partners work hand-in-hand to uplift our lower-wage workers.
12. Our third focus is to care for you by fostering more inclusive and fair workplaces.
a. We will empower senior workers to continue working if they wish to by raising our retirement and re-employment ages. MOS Gan will provide more details. She will also be giving updates on other workplace policies.
13. The Government will continue working closely with our tripartite partners on all three focus areas. On this note, I would like to express my deepest appreciation to President Sister Thana, Sec-Gen Brother Chee Meng, immediate past President Sister Mary Liew from NTUC, and Brother Dr Robert Yap, President of the Singapore National Employers Federation, or SNEF, and all our sisters and brothers in NTUC and SNEF for their strong support in the past year and the years ahead.
14. Let me start with our efforts to strengthen businesses and workers.
B. “STRENGTHENING YOU”: PRODUCTIVE BUSINESSES AND GOOD JOBS
Spur Business Transformation
15. I will first share our approach to spur business transformation through our foreign workforce policies, before outlining our efforts to empower local workers.
16. As an open economy, we will need to welcome global talent to compete on the world’s stage. But as a small country, we cannot increase the number of foreign workers indefinitely due to resource constraints. We have to therefore be selective about the quality of foreign workers that we take in, and ensure that they are deployed in the more productive areas of our economy.
17. With this in mind, we introduced major changes to our work pass framework over the past two years. In January 2023, we launched the Overseas Networks & Expertise Pass, or ONE Pass. It is highly selective and aimed at facilitating the recruitment of top global talent who possess valuable networks, as well as deep skills and expertise.
18. In an era where talent is scarce, businesses follow talent. Our ONE Pass holders are the proverbial “rainmakers” — while not large in numbers, they are the creators of opportunities and generate good jobs in their respective fields.
19. We have received good interest in the ONE Pass. As of 1 January 2024, we have approved nearly 4,200 ONE Pass applications. Let me share with you two examples:
a. Mr Phil Inagaki is the Managing Director of Xora Innovation, an early stage, deep tech investment platform of Temasek. Before he assumed his current position, he founded and raised US$120M in funding across five startups in businesses and industries such as AI, semiconductors, and clean energy. He helps our local start-ups translate scientific breakthroughs into commercial successes.
b. The ONE Pass is also targeted at talents in areas such as sports, arts and academia. Associate Professor Marco Tomamichel from the National University of Singapore is an example of academic talent. His work focuses on quantum cryptography, which allows sensitive information to be encrypted and decrypted securely. Our young local Singaporeans have also benefited from attending his many courses.
20. In 2022, I announced the Complementarity Assessment framework, or COMPASS. It assesses Employment Pass, or EP candidates more holistically based on individual and firm-related attributes. This has been implemented in September last year. Businesses, as well as HR professionals, have welcomed the introduction of COMPASS. The transparent criteria provided clarity for their manpower planning. With the enhanced Self-Assessment Tool, businesses can now see how their potential applicants fare on COMPASS before submitting the application. If their candidates cannot pass COMPASS, businesses will know precisely why and what they need to do to pass.
21. To ensure that the quality of our foreign workforce improves in tandem with our local workforce, I have said previously that the minimum costs of hiring for S Pass and EP holders would be pegged to the top one-third of local APTs and PMETs respectively. By regularly updating the qualifying salaries based on the set wage benchmarks, we ensure a level-playing field for locals. For the S Pass, we had previously announced a three-step increase in the S Pass qualifying salary and levy with the next step taking place in 2025. Therefore, there will be no adjustment to the S Pass qualifying salary and levy this year.
22. For EPs, in line with how the benchmarks have moved, we will be increasing the EP minimum qualifying salary from $5,000 to $5,600 per month. For the Financial Services sector which has higher wage norms, this will be revised from $5,500 to $6,200 per month. The EP qualifying salary will also continue to increase progressively with age.
23. MOM has heard the concerns from the various Trade Associations and Chambers, or TACs, such as the Singapore Business Federation, on rising costs of manpower and constraints in hiring. The revised EP qualifying salary will only apply to new EP applications from 1 January 2025, and to renewal applications from 1 January 2026. This means that firms with existing EP holders have a longer runway, potentially up to 2028, to manage the impact of these changes, and prepare and adjust accordingly their hiring plans.
24. Even as we continue to attract top talent to grow our economy, our work pass framework needs to be strengthened to ensure that firms develop their local workforce and treat locals fairly. Mr Desmond Choo and Mr Patrick Tay asked how our EP framework and Fair Consideration Framework will help to achieve this. Under COMPASS, firms with a lower local PMET share relative to their sector will score fewer points on the firm-level criteria, making it harder to pass COMPASS. These firms are hence incentivised to improve their local PMET share.
25. The Tripartite Alliance for Fair and Progressive Employment Practices, or TAFEP has been engaging and supporting firms that score poorly on firm-related attributes under COMPASS, to help them improve their workforce profile and adjust to COMPASS. More than 440 firms have attended TAFEP’s workshops over the past year. Firms with unfair hiring practices will still be taken to task under the Tripartite Guidelines for Fair Employment Practices, and under the Workplace Fairness Legislation in future.
26. Mr Pritam Singh and Mr Desmond Choo asked about the effectiveness of the Shortage Occupation List in easing skills shortages. The list was designed to award bonus points on COMPASS to EP applicants filling acute occupational shortages in areas of strategic importance for the economy. As COMPASS was only implemented in September 2023, my update is therefore based on very preliminary data.
a. The proportion of EP holders in shortage occupations has increased since COMPASS was implemented, which shows that the list reflects real shortages in the industry. 20% of new EP holders in these shortage occupations used the bonus points to pass COMPASS. Therefore, the Shortage Occupation List is very helpful in ensuring that COMPASS does not hinder business growth because of shortage of skills locally.
b. As we transform our economy, some sectors in the green economy and agritech will have shortages. This is especially so as these sectors are still nascent and we are pivoting to anchor them here alongside with the talent needed. While we partner agencies in recruiting them here, we are contemporaneously investing in developing our local talents for these jobs.
27. To Mr Singh’s question on how MOM works with agencies to develop the local pipeline in areas of skills shortages. We are doing this systematically. As part of the process for evaluating occupations for the Shortage Occupation List, MOM considers sectors, agencies’ commitments to develop the local pipeline to address shortages in the medium term, in addition to the extent of the skills shortage. We evaluate progress on these commitments when we refresh the list every three years.
28. Work Permit Holders are also a critical part of our labour force. Many support essential services that local workers do not want to do. Mr Mark Lee suggested re-evaluating the foreign worker quotas for foreign manpower for Services sub-sectors facing manpower challenges, for specific job roles. Mr Edward Chia supported granting additional foreign worker quotas to firms upon commitments to human capital improvements and training of local workers. On the other hand, Mr Sharael Taha asked about how the Government intends to manage the inflow of Work Permit Holders, given our resource constraints.
29. This is therefore the tension that we grapple with constantly. To Mr Lee and Mr Chia’s concerns on whether employers have sufficient manpower, the overall numbers speak for themselves — the number of Work Permit Holders today has surpassed the COVID-19 levels in 2019 by 12.2%. But let me respond to their specific suggestions:
a. On Mr Lee’s suggestion, we already provide targeted flexibility for some essential job roles with limited automation and localisation potential. We will continue to review the areas where more flexibility may be required. However, there is a limit to how much further we can differentiate to more granular job areas within the Services sub-sectors. There are also practical challenges as job roles today can be very fluid and firms can circumvent our rules by declaring a business activity or job role in an area with more generous quota.
b. On Mr Chia’s suggestion, training can take many different forms. For example, workplace learning such as on-the-job training can help employers better manage the challenges around sending staff for external courses. It would not be viable for us to give additional quota to every single company that invests in training of their local workforce. It could also be counter-productive, as the availability of cheaper foreign labour reduces the incentive for employers to re-design jobs and reskill their workers for greater productivity gains. Instead, we support firms in developing their local workforce. I will provide greater clarity in the next segment.
30. As DPM Wong has emphasised, transformation is the only way that Singapore can achieve productivity-driven growth. Our Work Permit framework will therefore need to evolve to spur business. The overall direction is clear — we need to improve the quality of our Work Permit Holders and manage overall numbers. To this end, as announced at MTI’s COS on Friday, we will be making changes to the foreign workforce policies in the Marine Shipyard sector as a first step.
a. The Dependency Ratio Ceiling, or DRC for the Marine Shipyard sector will be gradually reduced. As a first step, the DRC will be reduced from 77.8% to 75%.
b. In addition, the levies will be increased. For ‘Basic Skilled’ R2 Marine Shipyard Work Permit Holders, the levy will be increased by $100, from $400 to $500. For ‘Higher Skilled’ R1 Work Permit holders, the levy will be increased by a smaller amount of $50, from $300 to $350.
c. Changes to the DRC and levies will take effect from 1 January 2026, to give businesses lead time to adjust.
31. Mr Mark Lee asked for an update on the Manpower for Strategic Economic Priorities Scheme, or M-SEP. M-SEP provides additional, time-bound Work Permit and S Pass quota to firms that contribute to Singapore’s economic strategic priorities. Firms from sectors such as Construction, Manufacturing and Retail have benefited from M-SEP since its inception a year ago. We will take in Mr Lee’s suggestion as we finetune the scheme, alongside with industry feedback.
Empower Workers to Seize Opportunities
32. Let me now turn to strengthening our local workers.
33. The Forward SG Report has identified career agility and resilience as an important focus in our refreshed social compact. We encourage workers to take charge of their own career health. In this age of change and disruptions, they should have better awareness of their career prospects, keep their skills relevant, stay on top of the competition, and seize new opportunities.
34. Mr Patrick Tay and Mr Liang Eng Hwa asked about how the Government will work with employers, workers and intermediaries to adopt a collective mindset of building career health. Mr Xie Yao Quan also asked about our plans to develop a future-ready workforce. The Government cannot do this alone. We will need a whole of society effort involving workers, employers and labour market intermediaries. I will start with how we are supporting employers.
Career Health: Empowering Employers
35. Employers that support the career health of their workers will be able to better attract and retain talent, tapping on adjacent talent pools to grow. With an agile workforce, employers will be able to quickly pivot to new opportunities in a more complex and uncertain economic environment.
36. To help employers respond and plan for business transformation, the Government has launched the Jobs Transformation Maps, or JTMs. A total of 16 JTMs have been completed, covering some 1.5 million resident workers. We will progressively launch four more in new growth areas such as Generative AI and Sustainable Finance. These JTMs will help employers better understand how to redesign jobs and reskill workers for new jobs.
37. However, reskilling workers for new roles can be costly upfront and employers bear the risk that some workers may not adjust well to the demands of the new jobs. Hence, Workforce Singapore (WSG) offers the Career Conversion Programmes, or CCPs, to co-share costs with employers who reskill new hires or existing workers for new or enhanced job roles. Between 2017 and 2023, over 7,300 employers and 47,000 workers have benefitted from the CCPs.
38. One such worker who benefitted was Mr Poh Teck Hian. With the support of Workforce Singapore, he secured a Senior Project Manager position with Mdesign Solutions Pte Ltd, a Precision Engineering firm. His employer enrolled him in the CCP for Advanced Manufacturing Engineer to enhance his skills in robotics and electronic firmware. He is performing well in his new role, leveraging his past engineering experience, and the new skills he has picked up from the CCP.
39. To Mr Patrick Tay’s suggestion, I am happy to announce that we will be enhancing our CCP to provide greater support to employers:
a. First, we will increase the salary support caps. For mature or long-term unemployed workers, the maximum salary support will be raised from $6,000 to $7,500 per month. For other CCP participants, we will increase the cap from $4,000 to $5,000 per month. This means that employers can receive up to $45,000 of salary support for each worker for a six-month conversion programme.
b. We will also similarly increase the monthly training allowance cap for attachments under the CCPs, from $4000 to $5,000. We will also expand CCP for existing workers within the company. Today, CCPs can only be used to reskill existing workers in jobs that are at risk of redundancy. Going forward, we will support employers who are proactively reskilling existing workers to take on new growth job roles.
40. On Mr Tay’s suggestion to expand the range of CCPs, WSG will continue to review the programme offerings in consultation with the industry. I urge and encourage employers to get in touch with WSG to explore how they can tap on the CCP to meet their talent needs.
41. And the Government is not doing this alone:
a. We are supporting NTUC to set up more Company Training Committees, or CTCs, to work hand-in-hand with company management to drive business and workforce transformation.
b. We are working with NTUC, SNEF, and other TACs in the Financial Services, ICT, Retail and Precision Engineering sectors to implement structured career guidance workshops. This will equip line managers and HR with capabilities to support their workers in developing career development plans.
c. Finally, MOM and SNEF has set up the Alliance for Action, or AfA, on Widening Access to Talent last year. This AfA, led by Dr Bicky Bhangu from SNEF and Ms Aileen Tan, a HR Master Professional, is working with progressive businesses and TAC leaders to develop practical solutions to support skills-based hiring and workforce agility.
Career Health: Empowering Workers
42. As employers transform their businesses and raise productivity, workers will benefit from more meaningful jobs and improved wages. Workers must also be motivated to better plan their careers, pick up relevant skills and venture beyond their comfort zone.
43. Business leaders have consistently told me that overseas experience is valuable for career progression, in particular for corporate leadership positions. We will do more to help.
44. To support Singaporeans to venture overseas and progress in their careers, the Government will work with businesses to expand overseas opportunities for professionals, managers and executives. The Minister for Trade and Industry announced that the Government will introduce the Global Business Leaders Programme, or GBLP, to support businesses that send their Singaporean workers with leadership potential on overseas postings. The GBLP adds to the existing range of leadership development programmes.
45. To complement these leadership development programmes, WSG will launch a new Overseas Markets Immersion Programme or OMIP. The OMIP aims to encourage businesses with overseas expansion plans to send employees with little to no overseas market experience for overseas postings. Employees will benefit from reskilling through on-the-job, in-market training in global or regional roles offering good prospects, whether in technology, business development or beyond. Our businesses will also be better positioned to expand and compete in overseas markets, with a strong globally oriented team. The OMIP will provide financial support to the companies. More details on the GBLP and OMIP will be announced in the next few months.
46. To take advantage of programmes like the CCPs, GBLP or OMIP, workers will need to be better equipped to make informed training and career decisions and longer-term career plans. This is why we launched the CareersFinder feature on the MyCareersFuture portal last year. CareersFinder harnesses data and AI to help Singaporeans to explore pathways to acquiring new skills and reach their career goals.
a. In its first six months, more than 15,000 individuals have used CareersFinder. The early signs are encouraging as we find these workers do go on to broaden their horizons by applying for jobs across a wider range of occupations.
47. As Taylor Swift aptly puts it from her hit song, “You Belong With Me”, tell me about your dreams, think I know where you belong. I hope, Members of the House, it is with Forward SG. We will empower Singaporeans to seize their dream career opportunities by helping them take charge of their career health.
a. We are looking at ways to enable workers to better signal their skills to employers or potential hirers, so that they are better recognised and rewarded. This will strengthen the linkage between skills acquisition and career progression.
b. We also want to make career guidance, both in-person and through AI-enabled digital platforms, more accessible to even more Singaporeans.
48. Mr Pritam Singh asked about how we intend to report on the success of our initiatives to improve employment outcomes for Singaporeans. I would like to assure the Member that our broad indicators have shown that our efforts thus far have been quite successful. Resident employment has expanded annually, even through the recent pandemic. And our labour force participation rate remains high at 68.6%. In 2023, the resident unemployment rate was stable and low at 2.7%. The resident long-term unemployment rate also remained low at 0.7%. Real wages have grown over the longer-term, underpinned by sustained productivity growth.
49. Mr Sharael Taha and Mr Liang Eng Hwa have asked for an update on the financial support scheme for involuntarily unemployed jobseekers. As DPM said, we will announce the scheme later this year. We have considered feedback and suggestions from tripartite partners and the public, including recommendations from the NTUC-SNEF PME Taskforce in 2021 and the Citizens’ Panel on Employment Resilience in 2023. We are close to finalising the scheme parameters and I want to assure the House that we have indeed looked at best practices around the world. For example, our pay-outs will be conditional on jobseekers making the effort to actively search for a job. This will avoid the unintended consequences faced by other countries in implementing similar schemes.
50. Ms Yeo Wan Ling, Mr Pritam Singh and Mr Gerald Giam asked if we could better recognise the contributions of tradespeople and make skilled trades more attractive for Singaporeans.
a. As mentioned in the Forward SG Report, the Government will work with the labour movement, industry, and communities of tradespeople to develop and testbed initiatives to professionalise skilled trades, such as developing structured training and career pathways. We will study interventions for electricians first, with a view to scaling to more occupations.
b. On Mr Singh’s proposal to legislate retrenchment benefit, including for those in hand and heart roles, we have no plans to do so. This is consistent with our stance on retrenchment benefit for all employees. Legally mandating retrenchment benefit will affect the viability of businesses which are already in financial difficulty, and put existing employees at risk. Additionally, businesses that can afford to pay more will default to the legislated minimum.
C. “UPLIFTING YOU”: ENSURING NO ONE IS LEFT BEHIND
51. Securing better jobs during your working years empowers you to be financially secure when you retire. We want to assure Singaporeans that as long as you work and contribute consistently to CPF, you will be able to meet your basic retirement needs.
a. Over the last decade, the proportion of active CPF members setting aside their Full Retirement Sum, or FRS, at age 55, either fully in cash or a mixture of property and cash, has improved from five in ten to seven in ten today.
b. Therefore, it is not as alarming as what the Leader of the Opposition characterised retirement adequacy to be: a “serious and ongoing concern”.
c. Even then, the Government is committed to uplifting Singaporeans who need more help as part of our refreshed social compact.
Evolving the CPF System
52. At Budget 2024, DPM announced a significant suite of retirement adequacy measures:
a. First, the $8.2 billion Majulah Package. The Government has enhanced the Majulah Package, after it was announced at the National Day Rally last year, to support all Singaporeans born in 1973 or earlier. This includes the Pioneer and Merdeka Generations. The Majulah Package is now expected to benefit 1.6 million Singaporeans, up from around 1.4 million Singaporeans previously estimated.
b. Second, enhancements to the Workfare Income Supplement, Silver Support Scheme, and the Matched Retirement Savings Scheme.
c. Third, moves to rationalise the CPF system, in particular the closure of the Special Account, or SA, and raising of the Enhanced Retirement Sum, or ERS.
53. With your permission, Mr Chairman, may I ask the Clerks to distribute an infographic. This infographic illustrates how every older Singaporean will benefit from our comprehensive suite of measures for retirement adequacy. Members may also access the infographic through the SG Parl MP mobile app.
54. Since Budget 2024, there has been much discussion on the closure of the SA for CPF members aged 55 and above. Many, including Mr Desmond Choo, have asked why the Government is making this move now.
55. The core principle behind closing the SA is to ‘right-site’ CPF monies, such that only CPF savings committed for long-term retirement earn the higher long-term interest rate. The closure of the SA, together with the significant suite of measures for retirement adequacy that we will be rolling out, is part of the evolution of the CPF system.
56. Fundamentally, the CPF system is designed to provide for members’ basic retirement needs, as well as support their housing and healthcare needs. These are our core priorities. With rising incomes and savings of fellow Singaporeans, stable CPF returns and trust in the CPF system, many of us would like to save more than the FRS. Some hope for higher investment returns; others hope to leave a bequest. We will work hard at providing stable returns appropriate for savings that can be withdrawn in the shorter term, as well as those set aside for longer term retirement needs. And as the CPF system evolves, the fundamental objectives of addressing retirement, housing, and healthcare needs remain, for all Singaporeans.
57. Now let me explain why this evolution is necessary.
a. When CPF was first introduced in 1955, Singaporeans had little retirement savings.
b. As our economy grew, subsequent cohorts benefitted from high employment rates and strong wage growth. As a result, Singaporeans today can set aside more in their CPF accounts.
i.The number of members voluntarily topping up their CPF accounts has more than doubled from 2020 to 2022, demonstrating strong trust in the CPF system.
c. The number and proportion of CPF members with withdrawable SA balances has also increased, and will continue to do so. This is not consistent with the principle that only long-term savings should earn the higher long-term interest rate.
58. During Budget Debate, Ms Foo Mee Har said that closing the SA “affects many middle-income seniors” and suggested for a fairer option of grandfathering the SA for existing members aged 55 and above.
a. Ms Foo’s suggestion will inadvertently create a generational divide — benefitting the current generation of older Singaporeans while disadvantaging younger Singaporeans.
b. Those affected by the move are generally the more well off.
i. Only 8,400 members, who are relatively high-income earners, representing less than 1% of all members aged 55 and above, will not be able to fully transfer their SA savings to their Retirement Account, as we raise the ERS to four times the BRS. In other words, more than 99% of CPF members aged 55 and above today will be able to transfer all their SA savings to their RA to continue earning the higher long-term interest rate, and receive higher retirement payouts, should they wish to do so. I hope Ms Hazel Poa and Mr Leong Mun Wai can see that closing the SA is not a move to save interest payments.
ii. These remaining 8,400 members – the less than 1% – with higher balances can transfer their CPF savings to the RA of their family members, or grow them outside the CPF system.
c. Nonetheless, I note Ms Foo’s support for the raising of the ERS from three times to four times of the BRS from 2025. This move is indeed intended to help the broad middle. To Ms Poa, the ERS cap on RA balances is necessary to ensure that the CPF system continues to serve the broad majority.
i. With the raised ERS, a member turning 55 years old in 2025 can receive about $3,300 per month of CPF LIFE payouts at age 65, if he chooses to top up to the raised ERS, up from about $2,500 today.
59. We recognise that close to 720,000 members with withdrawable SA balances, with a median balance of about $2,000, may experience some loss in liquidity. These members have a few options to choose from when the SA is closed next year:
a. First, these members with a median balance of about $2,000 in the SA, can retain these balances in the OA for liquidity. Compared to the SA, there will be lower interest earned — with a difference of about $3 per month, or about $30 per year, at the median.
b. Second, invest in safe instruments such as Singapore Government Securities through the CPF Investment Scheme.
c. Third, top up their RA, up to the raised ERS, to receive higher retirement payouts.
d. Finally, if they so choose, they can also choose to withdraw the monies to invest outside the CPF system.
60. Mr Louis Chua said that interest committed to CPF LIFE “will not accrue to the CPF holder” but is pooled together for all members. Let me explain why this risk-pooling is necessary.
a. CPF LIFE is an insurance scheme that addresses the risk of outliving one’s savings by providing members with lifelong monthly payouts.
b. This risk-pooling allows CPF members to get monthly payouts for as long as they live. Upon a member’s passing, any unused premium is refunded to the member’s beneficiaries.
c. Hence, members need to be clear about what they are getting with their RA savings. CPF LIFE is a form of insurance. It is not an investment vehicle. Each member will need to assess for themselves what level of retirement payouts they desire.
d. I would also like to highlight that CPF LIFE premium continues to earn interest, which is factored into members’ CPF LIFE monthly payouts that will last as long as they live.
61. The Business Times published an article about a week and a half ago, that called CPF LIFE “the best annuity in the market”. Members today are allowed to opt out if they have an annuity or pension that pays the same or higher monthly payouts for life. If Mr Chua knows of any similar or better products, he too can apply to opt out of CPF LIFE.
62. The Government is not locking up members’ savings. By age 70, members are required to start drawing down on their CPF savings through retirement payouts, in line with CPF’s core objective of providing a lifelong retirement income.
a. In fact, some members have written to me, requesting to defer their payout start age to beyond 70 years old. But it is not possible. We want members to enjoy their hard-earned monies by that age.
63. With these clarifications, I trust that members of this House and Singaporeans will better appreciate why we are closing the SA for those aged 55 and above.
a. As DPM said, the changes announced are “very much in line with the purpose and intent of the CPF” , which is for retirement, housing, and healthcare.
b. It is a matter of principle, not about saving costs for the Government.
c. Nearly all CPF members can continue to earn the higher interest rate if they choose to transfer their SA savings to their RA.
d. Furthermore, the SA closure should be seen alongside the other significant measures we are making to boost the retirement adequacy of Singaporeans.
e. We must evolve our CPF system while retaining its focus on serving the broad majority, and providing more support to those with less. I am heartened that MPs, like Mr Neil Parekh, have expressed support for this as a step in the right direction.
Uplifting Older Singaporeans
64. Ultimately, we want to assure Singaporeans that the Government remains committed to uplifting those who need more support. The Government is therefore rolling out the Majulah Package to support our “Young Seniors” who are currently in their fifties and early sixties. Our “Young Seniors” face unique challenges:
a. Compared to younger Singaporeans, they generally earned less during their working years, and had a shorter runway to benefit from recent improvements to the CPF system.
b. Many of them are sandwiched between caring for both the young and old in their families.
65. The Majulah Package has three components. Members may refer to the infographic distributed earlier:
a. First, the Earn and Save Bonus of up to $1,000 per year. The Earn and Save Bonus will cover around seven in ten lower-to middle-income Singaporean workers earning up to $6,000 per month — with more support going to those earning less. The first Earn and Save Bonus will be credited into your CPF account in 2025 based on the work done last year.
b. Second, a one-time Retirement Savings Bonus of up to $1,500 for those with lower CPF retirement savings. This bonus will be credited into your CPF account by the end of this year.
c. Third, a one-time MediSave Bonus of up to $1,500. We recognise that healthcare cost is a concern for all. Hence, all older Singaporeans will receive this by the end of this year.
66. Beyond the Majulah Package, the Government is also enhancing existing schemes to help those who may need more support:
a. We will further enhance the Workfare Income Supplement to help our lower-wage workers build up their retirement savings. We will spend around $300 million more, spending a total of around $1.4 billion in 2025. This will benefit around half a million lower-wage workers. SMS Zaqy will provide more details.
b. We will update the Silver Support Scheme to better support seniors who have less for retirement. We will spend an additional $260 million, spending a total of around $860 million in 2025. About 290,000 Singaporeans will benefit.
c. We will enhance the Matched Retirement Savings Scheme, or MRSS, by increasing the annual matching cap from $600 to $2,000 per year, and extending the scheme to those who are older than 70 years old. This will double the number of eligible Singaporeans to about 800,000 per year.
d. In addition, we will proceed with the next step of the increase in senior workers’ CPF contribution rates.
e. SMS Koh will elaborate on these measures to support older Singaporeans in his speech.
67. To address the concerns raised by Mr Desmond Choo and other MPs — caregivers and homemakers, who are unable to work and are thus ineligible to receive the Earn and Save Bonus, can still benefit from the Medisave Bonus, Retirement Savings Bonus, enhanced Silver Support Scheme, and MRSS.
68. A “Young Senior” who will benefit from the Majulah Package is Ms Caroline Ng. She is 54 years old this year, and lives with her husband and son in a 4-room flat. Together with her sister-in-law, Ms Ng is also supporting her elderly mother-in-law. Ms Ng and her husband are in a sandwiched phase of life; 上有老，下有小.
69. Ms Ng started her career in HR, but stopped working to take care of her young son then and elderly in her family. As her son grew more independent, Ms Ng rejoined the workforce in 2020 with the guidance of a career coach from WSG. She subsequently took a temporary career break, and is now looking forward to return to the workforce again.
70. Ms Ng is excited about the Majulah Package:
a. The Earn and Save Bonus and Retirement Savings Bonus can help her set aside more CPF savings, as they translate into higher retirement payouts.
b. In addition, Ms Ng, her husband, and elderly mother-in-law will also receive the MediSave Bonus to pay for their own healthcare needs.
71. I am happy to hear that in her free time, Ms Ng volunteers as a Silver Generation Ambassador, engaging seniors in her community through home visits, and encouraging them to stay active.
72. Speaking of active ageing, another “Young Senior” who is looking forward to the Majulah Package is Madam Norizan. She is 59 years old this year and works in F&B. Madam Norizan enjoys working at her F&B outlet and interacting with customers from all walks of life. Madam Norizan believes in the value of keeping her mind and body engaged. This is why she is keen to continue working for as long as she is able to.
73. Madam Norizan said that she is very appreciative of the Earn and Save Bonus, which gives an added boost as she carries on working. I hope that the Earn and Save Bonus will encourage many more older Singaporeans like Madam Norizan to continue working, if they can and wish to.
74. Now, let me address members’ queries on other aspects of the CPF system.
75. Ms Hazel Poa suggested to improve flexibility and returns on CPF savings. I would like to remind the member again that the primary purpose of the CPF system is to help CPF members save for long-term retirement needs.
a. CPF balances earn returns pegged to market instruments of comparable risk and duration. The only difference is the investment risk is now entirely borne by the Government.
b. CPF members who have the appetite to take on more investment risk for potentially higher returns, can participate in the CPF Investment Scheme. However, I would like to remind members that the higher returns come with higher risk.
76. Ms Poa and Mr Louis Chua called on the Government to implement the Lifetime Retirement Investment Scheme, or LRIS.
a. With the benefit of hindsight on historical returns these few years, it is easy to comment on what should have been done. Although the current outlook for 2024 has improved, there is still considerable uncertainty, with risks tilted to the downside. No one can be sure how the markets will move.
b. Hence, as per DPM’s and my previous explanations to Mr Chua, it is not as straightforward as it is to introduce LRIS. LRIS will introduce a new element of risk for retirees. Regardless, we will continue to study the LRIS proposal and work on making the CPF system even better for Singaporeans.
77. Mr Saktiandi Supaat and Mr Louis Chua talked about the interest rate peg for the Ordinary Account, or OA.
a. The Government is aware that the OA interest rate has remained relatively stable, while yields of market instruments of comparable risk and duration have increased.
b. But let us take a long-term view. Over the past two decades of low-interest rate environment, we have paid 2.5% interest, as well as extra interest, while the market was paying well below that. On average, the annual OA interest rate was 1.7 percentage points higher than the 12-month fixed deposit rates from 1999 to 2021.
c. Nonetheless, we are still monitoring the situation, and will continue to review CPF interest rates periodically, to ensure their relevance in the prevailing operating environment.
78. Mr Ong Hua Han suggested expanding the Home Protection Scheme, or HPS, to cover more members with pre-existing conditions.
a. Let me explain. The HPS today already covers members with pre-existing health conditions, including persons with disabilities, if they are assessed to be generally in good health. Nearly all HPS applications are issued covers. In the last three years, about 1.2% of HPS applications were not approved due to serious pre-existing medical conditions.
b. Nevertheless, we are reviewing ways to further expand the coverage of the HPS, taking into consideration the affordability of premiums across the wider group.
79. Hence, taken together, the significant suite of measures that I have talked about will ensure that the CPF system retains its focus on serving the broad majority, while uplifting those who need more support. We want to assure Singaporeans that you can retire with peace of mind in your golden years.
D. “CARING FOR YOU”: INCLUSIVE AND FAIR WORKPLACES
80. Finally, we want to provide all Singaporeans with opportunities to participate in our transformation journey. The Government will work hand-in-hand with employers and workers to build more inclusive and progressive workplaces.
a. For seniors who wish to continue working, our tripartite partners have agreed in 2019 to increase the retirement and re-employment ages to 65 and 70 by 2030. We successfully made one round of increase in July 2022. Today, I am pleased to announce that we have reached a tripartite agreement to implement the next round of increase to the retirement and re-employment ages. In 2026, the retirement age will be increased from 63 to 64 while the reemployment age will be increased from 68 to 69. MOS Gan will share more.
81. MOM will also introduce two important bills in Parliament this year.
a. First, we recognise the importance of fair workplaces. This is why the Government accepted the recommendation by the Tripartite Committee on Workplace Fairness to introduce a new Workplace Fairness Legislation. This will further strengthen protections against discrimination, and provide greater assurance to workers who wish to report grievances. We note Ms He Ting Ru’s views, and we look forward to discussing this bill robustly in the House in time to come.
b. Second, we will update our regulatory frameworks to strengthen protections for our platform workers. This will include areas such as housing, retirement adequacy, work injury compensation and representation.
E. CONCLUSION: THE WAY FORWARD
82. Let me now conclude.
83. Whether you are a youth starting your career, a mid-career worker looking at the next steps, or a senior in your golden years, the Government will walk every step with you.
a. For youths, we will empower you to plan out your careers and seize new opportunities.
b. For mid-career workers, we will equip you with the means to stay relevant and competitive. This includes replenishing your skills to stay ahead and reskilling support if you want a career change.
c. For seniors approaching retirement, you will be able to meet your basic retirement needs as long as you have contributed consistently to your CPF. We will continue to strengthen support for those who may need more help along the way.
84. Workers can also look forward to more inclusive and progressive workplaces. These measures support a refreshed social compact to take us forward together.
85. We are aware that some of our policy measures announced today will have an impact on business cost. However, I must emphasise and I want to seek everyone’s support, understanding and indulgence, that a significant part of the cost increase is going into uplifting our own local lower-wage workers and improving the livelihoods of our fellow Singaporeans. At the same time, as we analyse that, we also look at the profitability of our businesses. We still remain competitive compared to other economies. Therefore, I hope our employers can support us and carry the shared burden and responsibility of our refreshed social compact. With the labour movement, employers, workers, and Government working hand-in-hand, I am confident that we can build a better future together!
F. MANDARIN SPEECH
86. Mr Chairman, let me now say a few words in Mandarin.
87. 这一年来，我参加了许多 “新加坡携手前进运动” 的对话会，聆听国人对就业和退休的期望。
88. 人力部非常理解和关注国人对未来的担忧和期望。无论国人处于哪个年龄层，或面临什么挑战，我们都将与你同行：
a. 如果你目前持有工作， 政府将推出新的海外市场浸濡计划，支持你到海外任职，拓展视野。
b. 如果你想要转换工作，职业前程配对网站上的职业搜寻功能可以推荐合适的工作和培训课程，帮助你更好地进行职业规划。而雇主也可以通过转业计划吸取新的人才。
c. 对于低收入员工，渐进式薪金模式能为你提供良好的收入保障和职业规划。我们今年将会提高本地员工薪金门槛和加强就业入息补助计划来为你提供额外的支持。
d. 如果你已经超过五十岁，我们会通过共同前进配套为你提供更多帮助。这个耗资八十二亿元的配套有三个部分:
i. 如果你继续工作，并且月薪在6000元以下，你就能获得顶限为1000元的就业储蓄花红。
ii. 公积金户头里还未达到基本存款额的国人可以获得一次性，顶限为1500元的退休储蓄花红。
iii. 所有五十岁以上的国人都够获得一次性，顶限为1500元的保健储蓄花红，来帮助你支付医疗和保险费用。
e. 政府也会逐渐提高退休和重新雇佣年龄，并提高年长员工公积金缴交率来帮助你积累更多的公积金储蓄。
f. 对于弱势群体和需要更多支持的退休人士，我们会加强乐龄补贴计划和退休户头配对填补计划来增强你退休后的经济保障。
89. 在人生的不同阶段，我们都会有不同的追求和要求。
a. 青年时，我们充满志气，觉得天生我才必有用，希望能够闯出一番雄伟的事业 。
b. 壮年时，我们继续提升和挑战自己，希望能够在我们的职场，攀登另一个高峰。
c. 而老年时，我们希望能够安享晚年，与此同时发挥余热，指导和开导下一代。所谓长江后浪推前浪，希望我们的下一代能够青出于蓝而胜于蓝，对社会做出更大的贡献。
90. 在朝往目标的过程中，挫折是难免的。在人生低谷，我们都希望能够有同甘共苦的朋友在身边，伸出援手，帮助我们渡过难关。
91. 这让我想起周华健一首家喻户晓的《朋友》： “朋友不曾孤单过，一声朋友你会懂”。政府和劳资政伙伴会与雇主，员工，和国人肩并肩，一起走。这是我们的社会契约。只要我们能够团结一致，相互扶持，就一定可以迈向更加光明和美好的未来！谢谢！