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Annuities for Singaporeans, pension for ministers?

Posted by theonlinecitizen on August 25, 2007

By Andrew Loh

The current debate on the issues of retirement, compulsory annuities and the CPF shows up 2 stark contrasts.

For ordinary Singaporeans, the annuity scheme – to put it simply – is basically a “pool fund” where the old support the old when they retire. When they pass away, their contribution to the fund is used to support the ones who are living, those 85 and above.

For government ministers, their “retirement” scheme is something from way back in the past. I am talking about the Pension Scheme for the Administrative Service (AS). (This includes prime ministers, senior ministers, speakers, ministers of state, mayors, parliamentary secretaries and political secretaries.) (link)

Yes, the pension scheme is still being implemented today, for the AS.

Former Non-Constituency Member Of Parliament (NCMP) Steve Chia had asked then deputy prime minister, Lee Hsien Loong, about this – in Parliament, 2004:

“Sir, how does the Deputy Prime Minister expect citizens to take the uncertainty of retirement planning under the CPF, which is a defined contribution scheme, at their own cost, whereas Ministers and public officers themselves are under a guaranteed and defined benefit pension scheme, using taxpayers’ money? In other words, their CPF may run out before the citizens die whereas qualified Ministers are taken care of by the taxpayers’ money until they die. Am I right to say that?”

DPM Lee’s reply was that yes, Administrative Officers (AO) are on the pension scheme and that the government is “going on market terms”. He also added that:

“There is no free lunch.”

(See the exchange between Mr Chia and DPM Lee at the end of this article.)

“No Free Lunch”. Really?

The question which some of us have is: “Why are Singaporeans being asked to contribute to what is effectively a pool fund – through the proposed compulsory annuities scheme – so that surviving elderly Singaporeans can have “$250-$300” per month, while ministers’ retirement are taken care of by the pension scheme, funded again by taxpayers?

Does not the dictum “No Free Lunch” apply to ministers as well?

And: Why is the pension scheme retained for the Administrative Service when it was phased out for “majority of the civil service since 1986”? (link)

Another question is: Why are our ministers still on the pension scheme when they are already being paid the highest salaries in the world, in any government anywhere on earth?

According to the Prime Minister’s Office, in a letter to the press in April 2007:

“The maximum pension for a Minister drawing a total annual salary of $1.2 million is $176,500 per annum …” (link)

Elderly Singaporeans, aged 85 and above, can expect only $250 to $300 per month from the annuity scheme. As my colleague, Sze Hian said, assuming 1.5 per cent inflation, the $250 to $300 monthly annuity, is equivalent to $149 to $178 today.

This is more astounding when you consider that Singaporeans have one of the highest savings rate in the world!

What else do ministers get?

Paying government leaders an appropriate remuneration has been debated and the government, at least in the foreseeable future, is not going to budge. Indeed, their salaries will be “revised” upwards again at the end of this year and one more time next year. (link)

Further, the government also increased the GDP Bonus for ministers. According to Minister Teo Chee Hean:

“We will increase the bonus to a norm payment of 3 months if the economy grows by 5%. The minimum payment will remain at zero if the economy grows by 2% or less. The maximum will be increased to 8 months if the economy grows by 10% or more.” (link)

And the Performance Bonus (which all administrative service officers receive):

“We will increase the Performance Bonus by 2 months for officers at this level, to a norm of 7 months.” (link)

Making sense of it all

To summarise, ministers receive the highest salaries in the world, they also receive pensions (either after they leave the service or reach 55. There are also active ministers who are presently 55 or above 55 and who are also receiving pensions at the same time. See below exchange between Steve Chia and DPM Lee), they are given a GDP Bonus of anywhere from 3 months to 8 months (conditional on the GDP) and a Performance Bonus of 7 months.

Looking at all these dizzying numbers, should one begrudge the ministers such remuneration? Perhaps not, but as leaders elected by the people, leaders who are suppose to set the tone for society, much more is expected.

The Great Affective Divide – resurrected?

There is a certain sense of unease among Singaporeans – when they compare what their leaders are earning and what they are struggling with.

The widening income gap is indeed well and truly upon us. And it is not just an income gap.

I would say there is also a moral gap. An affective divide, to borrow from Catherine Lim. A return of disaffection.

How do you explain to an 85 year old that he will only be receiving $250 to $300 per month when he stops working, even with an annuity scheme? (This sum is not much more than the $290 which those on Public Assistance receive from the government, which is for “subsistence”.)

And that when he passes away, he cannot delegate the money to his children or spouse (unless he opts to pay a higher premium) and that it will go into a “pool” to support other 85-year-olds and above who will also receive $250 to $300 per month? (link)

How do you explain to someone who would have worked some 40, 50, 60 years that he will only have $250 to $300 per month when he no longer is able to work?

Moral authority, moral leadership

As in this article published earlier, the question of moral authority or moral leadership re-surfaces.

The question of moral authority is something which some government ministers have denied or brushed aside. Minister in charge of the Civil Service Teo Chee Hean was quoted by Channelnewsasia as saying:

“It is wrong to think that a bigger pay would undermine the moral authority of the government.”(link)

But isn’t this happening right now? That people are questioning the government’s and the ministers’ moral authority? That there is this perception – real or otherwise – that the government (and ministers) are so well-paid that they can no longer empathise with the average Singaporean?

That ministers’ retirement needs are taken care of by tax payers money through the Pension Scheme while tax payers have to fend for themselves when they retire, if ever they do?

Annuities for Singaporeans, pension for ministers?

In the words of Catherine Lim, be mindful of the affective gap.


Additional note:

I do not wish to harp on the vast gap between what the rich deserve and what the average Singaporeans will get as retirement pay-outs. But, if we accept the premise that our leaders deserve such handsome retirement benefits, one still cannot help but ask: how can anyone, especially an aged person, make do with just $250 or $300 a month in Singapore?

This is not just a debate on equity, i.e. what is realistic and fair, but on what’s right by a caring government and those in high positions who have the power to decide what to give themselves as their old age nest egg and what to dole out to those without the power to demand something more.

Certainly, our leaders should not be so tight fisted with the people of Singapore. They should instead do something positive and right to reduce the misery of the lower income, who form a substantial number of Singaporeans.




Parliamentary exchange between NCMP Steve Chia and DPM Lee Hsien Loong, 16 June 2004:

Mr Steve Chia Kiah Hong asked the Deputy Prime Minister and Minister for Finance what is the justification for keeping Ministers on the pension scheme when all other public and civil servants have been converted to the Central Provident Fund scheme.

The Deputy Prime Minister and Minister for Finance (Mr Lee Hsien Loong): Mr Speaker, Sir, when the civil service phased out pensions for most of the public sector in 1986, it consciously decided to retain the pension scheme for officers in a small number of key services, one of which is the Administrative Service. Administrative Officers need deep knowledge and long experience of policy issues. The service takes in some recruits mid-career, but it continues to rely heavily on officers who have joined at the entry level. For these reasons, the pension scheme remains relevant to them. As part of their overall package, pensionable officers receive lower CPF contributions than non-pensionable officers. Political appointees are also on pensions because their terms of service follow those of Administrative Officers.

Mr Steve Chia Kiah Hong: Sir, how does the Deputy Prime Minister expect citizens to take the uncertainty of retirement planning under the CPF, which is a defined contribution scheme, at their own cost, whereas Ministers and public officers themselves are under a guaranteed and defined benefit pension scheme, using taxpayers’ money? In other words, their CPF may run out before the citizens die whereas qualified Ministers are taken care of by the taxpayers’ money until they die. Am I right to say that?

Mr Lee Hsien Loong: Mr Speaker, Sir, it is an entire package. When we calculate the salary, we look into how much a person receives now, how much he receives in the CPF, and how much he can expect to save in pensions. And when a person retires, he has a choice of having a pension stream for the rest of his life or taking a commuted lump sum at the point of retirement. In fact, as a matter of fact, nearly everybody who retires prefers the commuted lump sum. Because you take a lump sum, you invest it, you do what you want. If it runs out, it runs out. There is no free lunch. If you do not have your CPF, you have the pension. If you have the pension, you have less CPF. So it all adds up to a finite amount. The Member’s implicit question is: are the Ministers enriching themselves again? And the answer is, we are going on market terms and, if anything, we are paying below what the market is.

Mr Steve Chia Kiah Hong: Clarification from the Minister. Does any serving Minister who turns 55 actually receive both salary and pension at the same time? If yes, should he be serving?

Mr Lee Hsien Loong: I believe the answer is yes. That is the rule for the civil service, and the Ministers follow the civil service rules.

Thanks to “Totally Confused” for recording the parliamentary exchanges quoted above. The Parliament Reports website no longer provides transcript to these past sittings.

You can read about the Parliamentary Pensions Act here and here.

Cartoon courtesy of My Sketchbook



27 Responses to “Annuities for Singaporeans, pension for ministers?”

  1. at82 said

    1 country, 2 system.

    Now we know why Mr Lee KY like Deng Xiao Ping so much.

    Enough said.

  2. peasant said

    Thanks for pointing out that ministers are receiving pensions. Previously I was given an impression that pensions were a thing of the past. Looks like for many people, we tend to forget all too easily and it wouldn’t be good for Singapore if no one is checking on our government.

  3. Despite the assurance by PM Lee back in 2004, that pensions or life-long annuities should be provided by our politicians do we today have a team of ministers apart from taking more and more monies from the people by whatever means worth keeping or who could be counted on as our saviors to lead the country into the next millenium ?

    Is the original intention of retaining ministers’ and MPs’ life-long pensions fulfilled or is it creating a heavy financial burden on the people that citizens have to set aside their taxes to pay for such multi-billion life-long annuities?

  4. LifesLikeThat said

    I don’t believe that we do not have enough money to take care of the old. How many people will actually live beyond 85, anyway? If the govt can’t even take care of this small group of people, then why are they the govt?

    Besides, aren’t we already paying taxes for everything already? And aren’t taxes suppose to support society? It seems that everytime they want to do something, singaporeans are asked to pay for it again, separately.

    Why the hell collect taxes then?

    And what is more insane is that ministers still get pensions!

    It really is getting out of hand.

  5. shoestring said

    “You need to have enough people in, so that I have a big insurance pool and I have the costs down.”
    PM Lee Hsien Loong

    Using “you” and “I” separately instead of “we” speaks volumes to me. It’s not about taking care of us and staying together, it’s about keeping the costs of solving the country’s problem low for him, likely to compensate for losses/wastage and/or maintain extravagance elsewhere.

    Taking money from us by force is akin to robbery.

  6. scb said

    “Taking money from us by force is akin to robbery.”; unquote. Shoestring; even if it is daylight robbery, what can we do ? There were those who suggested banging against wall, mrt or just straightforward suicide, You think anyone will be bothered with poor citizens ? Honestly, I have no solution to our common problems but would like to say to fellow countrymen not to be bothered with how others are ‘running’ our live, just let them do what they like. At the end of the day we all know we depend on ourselves to survive no matter what others claim. There are no virtues and values in selfish and greedy men even if they claim ‘to lead’ you !

  7. A long long time ago, in the name of avoiding welfarism government has already set up many GLCs to take over provisions of essential government services from medicare to postal, housing, transportations and utilities etc, with the intention to reduce their liability for provisions of government services.

    Thus the same government which keeps telling people about the danger of welfarism has no longer provided anything to the citizens as it has largely farmed out provisions of such services originally paid under taxes back to the citizens.

    Such government linked companies charge monopoly fees like the transport and utility companies to cover their costs of operations plus making of a profit. These profits are being used to reduce government costs and enrich the state coffers as well as to pay ministers and civil servants higher salaries and bonuses.

    If all these back-charging of costs through GLCs are taken into account, citizens in effect are paying much more than taxes to support the government.

    Instead of showing surpluses and profits from government linked companies, land sale profits from URA and HDB, ministers still keep increasing taxes and making more profits to justify paying themselves more and spending on extravagant seven wonders.

    It is using people’s monies to self-reward their own scholars and connection in many GLCs instead of passing profits back to the people. It is denying responsibility of helping the citizens who have been paying all kinds of costs unnecessarily on top of the taxes.

  8. I am truly shocked that ministers can receive both pensions and salary at the same time.

    Why do they ask common folks to work beyond retirement for lower pay and lower status while they themselves continue to go senior, senior and more senior?

    This is revelation, indignation and helplessness all at once.

  9. rotties said

    The “I” and “You” thing is really true, since when the ministers and the average singaporeans are EVER TOGETHER? So much for the “Staying together and moving forward together”. All bullshit.

    We can say all we want but nothing is going to change.

    We voted for this government ourselves, we can blame no one. Unfortunately, there was no vote from me, no thanks to the uniquely singapore GRC system.

    Able young singaporeans like me are always trying to find ways and means to find job overseas and eventually leave this god damn place. Oh yes, we are quitters, but the ministers daughters/sons living/studying/working overease are elites and talents.

    1 country, 2 system, how true

  10. Sg Punk said

    eh. wow ! $300 so much money! i’m going to be rich !! peasants are rich!!

  11. RaymondChua said

    “I don’t want to have anybody who is 85 years old or 90 years old and say ‘my CPF finished, I have no insurance, and now I need to live. And I have nobody to look after me… then what happens?”
    PM Lee Hsien Loong

    You have a PM that very thick skin that seem to concern about our future where our future already been crippled by the PayAndPay scheme. Is this PM worry about his empire’s legacy and wealth or the people of Singapore ?

    You have a PM that voice a concern because he feel that his empire will be burdened by old people depending on gov. Then I ask the PM the same question:

    “We don’t want to have gov who use our CPF for bad investment and endup wasting our taxmoney with no accountability and responsibility and then telling us no choice, and keep increasing tax (GST, ERP, medical etc) without a bloody good damn reasons, and then now say to me that ‘my CPF is gone, insurance money lost in bad investment and gone to millions dollars to gahmen’s salary, and now I need to live. And I have nobody to look after me… then what happens?”
    Concerned Singaporean Citizen.

  12. JS said

    You can make all the noise here on an online forum. Who will be raising it in the Parliament?

    Here is a question for all voters: where is Steve Chia today?

    I rest my case.

  13. sevenleleven said

    And suddenly we have to think for ourselves our old age problem, solve ourselves our old age problems and take care of their “old age” pension problem too.

    look! we don’t need a million dollar minister to solve them whn we can do them ourselves

  14. Lai CF said

    66.6% said YES in 2006.

    How many percent will say YES in 2010/11?


    There is a lot of hype about citizens living longer in the PM’s National Rally speech.

    Let us examine what he has said to see whether the whole proposal to defer CPF draw down from the macro-CPF retirement original scheme is based on truths or untruths, fallacies or look-good presentation.

    Truth is some people 55 and above tend to live longer but are citizens being told as if all of them are going to live till 85-120? What is the % distribution for this group of oldies living beyond the past life span of 76-78?

    How many thousands of oldies indeed will live past 85-120 at the last count? How much will the state have to pay for the shortfalls of say S$200 pm in CPF savings beyond 78 pa.

    How much windfall profits are HDB/URA/LTA creaming off from the population over a lifetime from double-charging on lands and how much will be the % given back to them for unexpectedly living beyond 85-120 based on 10% or 15% or 20% of oldie living beyond their normal average span.

    If say 15% of older people 55 and above are living longer by 2020, must we assume that 100% of the population 55 and above must live longer and have to give up their life-long dream of using their CPF savings to brighten up their struggling lives for their twilight years.

    BY PM Lee’s assumption, the remaining 85% of oldies better help to pull together their resources in order to save the state some monies to help out a couple of millions retirement supplements (which can easily be derived from land sale profits or GLCs profits). This is how fallacious top-down autocracy can cause suffering to the whole population – always based on some look-good detached statistic garbage to get away from solving real problems created by them due to wrongful policies of squeezing people in the first place.

  16. Mandy said

    Lai CF says: ‘ How many percent will say YES in 2010/11?’

    My answer is 100% because no one will get to vote at all. Given that the gahmen hold power and abuse their authority and becoming increasingly unpopular, I do not see why they would even allow people to easily vote at all. GRC machine will be the vehicle to prevent majority from voting again.

    Why ? Because they know that even if they resort to dirty trick and inethical means, there nothing the public can do about at all, just like when GST, ERP, annualities, retirement age, cpf isse etc. They have tested the water now and realize that the blogosphere is nothing more than view, voice, and things that really don’t impact them heavily, and that they still can get away with it and implement their own decision and action. So why will it be different in next election ?

    Given that the power of the citizen is totally non-existent, why should these gahmen ever listened and care about the people ? Moreover, these citizen have taken loan to mortage their house etc, and what can these citizen can do given that they have liability ?

    Unless, effort other than voicing is needed , what we have is nothing but just disillusion that gov will ever care about its citizen.
    Remember gov is made up of people, and these majority of these higher rank people are money-hungry and they care more about their wealth accumulation than the people.

  17. statistician said

    The purpose of this unpopular policy is to ensure the garmen will never need to look after those old people who may not be able to look after themselves. Its no point in supporting this group as they are of no more economic value. So, they need a policy that will ensure they do not need to look after them.

    The garmen will embark on their usual strategy to push this unpopular policy through. They will offer to ask everyone to contribute only a small amount of your minimum sum. Maybe 5k or 10k. The idea is to get it approved first. After that they can keep increasing it over the years.

    You can recall the following :

    1. ERP gantries. First to start with a few and now it’ll probably grow to cover every single major road.
    2. GST. Start off with 3%. Now its 7%. Watch out for it to grow past 10% in the next 5 years.
    3. Minimum sum. It’ll never stop at 99k. It’ll just keep growing.

    We must insist on a referendum on this as it affects every single Singaporean. It involves our money which comes directly from us.

    Its is afterall the garmen’s training over the years that we cannot rely on the state for anything. Why is the garmen expecting us to comtribute to a pool so that they can avoid responsibility? Don’t the people living past 85 deserve some support?

    I would prefer that the garment create a organization that sues the family if they do not look after their >85 year olds.

    I say this to the garmen. Stop interferring with our lives. Leave our money alone and stop meddling with it.

  18. At first we are told as citizens there is no free lunch and welfarism for any one.

    Now look who is asking for free lunch and welfare ? Are citizens getting free lunches ?

    Who are taking tax payers’ monies without their clear consent including double salaries – one for above-market bill-collector over-blown salaries passed by their own party members insidiously benchmarked to the few lucky lottery winner CEOs/bosses in the market while another salary called pension for topping up on supposedly underpaid but actually uppish above-market overpaid salaries.

  19. Mandy said

    “At first we are told as citizens there is no free lunch and welfarism for any one.”

    For one, the gahmen, MIW etc are the only citizens in Singapore to receive free lunch and welfarism because they set their own system and freedom to do what they want without accountability to the people. They are more than free lunch and welfarism. I should say they live a live better than the China Emperor in the past because these gahmen just keep taxing the people without guilt. I foreseen that Lee’s dynasty which will take 40 years will be crumbled in just one day because of God’s punishment of greedy government.

  20. Yeo Toon Joo said

    The furore over the Government’s proposed oppressive CPF change in the face of the appalling parsimony of our avaricious cabinet ministers towards poor Singaporeans, brings to mind the parable of the profligate rich man and Lazarus, the beggar.

    This rich man lived in luxury every day and dressed in fine linen. At his gate was this half-starved beggar, who laid at his gate longing to eat the crumbs that fell from his table, together with dogs.

    One day both men, the rich and the poor, died.

    They ended in different places, where the roles were not only reversed but the avaricious rich man found himself suffering a horrible fate, but found it too late to go back to make amends.

  21. Pui yee said

    I’m calling all those concerned Singaporeans who think they would never ever get to vote in a general election, to go down to Centrepoint this 8th September and WEAR BLACK and shop.

    We need to show that garbage-men that we “support” their hare-brained annuity scheme.

  22. James Chia said

    We serve the nation in NS and also contribute to the economy but all we’ve got is a compulsory annuity policy which is not going to benefit most of us by the age of 85; the ministers who are also serving the nation as government officials, however, enjoy both pensions and million-dollar salary. Is there justice?

  23. scb said

    ‘kong tao zi zhai ren xin’ literally translates into ‘justice naturally resides in the hearts of man(kind). And man(men) will be brought to justice when need be!

  24. […] debate on annuities has moved on, with many bloggers having said their piece. There are those like Aaron who find the idea of being forced into buying annuities a tad […]

  25. po said

    World Class leader.
    World Class salaries Package.
    This is best solution to aging population.

    Very disappointing.

  26. poker en internet

  27. Gary Teoh said

    we are just like slaves, earning enough just for food and electricity bill, somtimes have to borrow money from loan shark, this is the product of PAP gahmen

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