Published: 04 November 2019
1. Mr Speaker, I thank the members who have spoken on this Bill, and for their support for the Bill.
2. Mr Melvin Yong asked about the progress of the review of the Home Team uniformed officers’ retirement age and whether the age limit for INVEST retirement contributions would be aligned with any change to the retirement age.
3. The Ministry of Home Affairs (MHA) is in the midst of the review, which will be completed in the next few months. As part of this review, MHA is also studying related areas such as the age limit for INVEST retirement contributions and the INVEST vesting scale.
Decoupling the Closure of INVEST Account with Officers’ Employment
4. Mr Yong also asked whether MHA could decouple the closure of INVEST Account from officers’ employment so as to give officers the flexibility to remain invested.
5. The INVEST Plan was established to help officers transit into their second career as they have an earlier retirement age of 55 as compared to the rest of the Civil Service at 62, and also compared to the Civil Service’s re-employment age of 67. This benefit ceases upon payment of the INVEST monies to officers at retirement. Keeping officers invested with the INVEST Fund when they are no longer in service would not be in line with this principle.
6. When INVEST monies are paid to officers, they can invest in other funds available in the market that best suit their needs at the point of retirement.
Treatment of INVEST Benefits Upon Dismissal
7. Mr Yong asked about the treatment of INVEST benefits of an officer who is dismissed from service. Assoc Prof Walter Theseira asked whether in such cases, the officer’s benefits could be protected from reduction or termination.
8. First, I think it is important to set out that the dismissal of an officer is not taken lightly and is usually based on serious misconduct such as fraud, corruption or other egregious conduct. The dismissal process is a rigorous one provided for by law, such as the Public Service (Disciplinary Proceedings) Regulations and the Police Force Act. It includes an inquiry to consider thoroughly, objectively and fairly the grounds for dismissal.
9. The superannuation scheme is a benefit awarded to officers. This is over and above the market competitive salaries and full CPF contributions. The superannuation benefits are fully funded by MHA; so no funds are actually deducted from the officers’ salary. The superannuation benefits do not vest in the officers while they are in service. The award of the full benefit is contingent on the officer’s satisfactory conduct and completion of term of service. INVEST benefits paid to officers on retirement are exempted from tax.
10. Therefore, if an errant officer has behaved in a manner that is unbefitting of an officer of the Home Team and is dismissed as a result of his misconduct, the superannuation benefits, in part or in whole, can and should be forfeited. The process is fair and transparent and the forfeiture or reduction of the benefits requires the concurrence of the Public Service Commission.
Helping Uniformed Officers Transit to a Second Career
11. Mr Yong asked whether there are programmes to help officers enter high growth job sectors such as cybersecurity and Fintech, and the percentage of retired officers who found a second career within six months of retirement.
12. MHA’s career transition programmes are broad-based as retiring officers have diverse career interests. The various initiatives to help retiring officers prepare for a second career include course subsidies and time-off to learn new skills to enhance their employability. MHA has also recently launched a career transition resources portal to provide officers with information on the different industries, job opportunities, career events and workshops. MHA offers one-on-one career coaching sessions to officers to guide them on their career transition journey.
13. We actively engage prospective employers to source for suitable job opportunities for our retiring officers, and organise regular job networking sessions. We also facilitate officers’ career transition by enabling them to take up a job attachment in a company prior to their retirement to try out the job. This will help both the officer and the prospective employer assess the fit before formal employment.
14. Based on our survey of our retired officers, of those who had actively looked for jobs, more than 50 per cent were able to find new employment within six months of their retirement. About 85 per cent did so within a year. For retired officers who are looking for employment, they can continue to tap on our career transition resources.
Comparing Stable Plan Returns to CPF Returns
15. Assoc Prof Theseira compared the Stable Plan returns with returns from the CPF Ordinary Account (OA).
16. This is not a like-for-like and hence not an appropriate comparison, as they are in fact separate schemes with different objectives.
17. In terms of returns, the CPF Ordinary Account has a guaranteed floor of 2.5 per cent , and this is a special arrangement guaranteed by the Singapore Government. All CPF accounts, including the Special/Retirement Account (SA/RA), are subject to CPF rules on withdrawal and use of funds.
18. In contrast, INVEST offers several options, and the returns of these plans are subject to market conditions.
Placing INVEST Monies with CPF
19. Assoc Prof Theseira asked whether officers who have strong preferences for safety may be allowed to transfer their INVEST funds, as they vest, to their CPF accounts.
20. CPF and INVEST have different structures, rules and entitlement terms. In the case of the CPF, members can use their CPF savings in the OA for housing, investment and education, subject to the terms and conditions. Usage of funds is not contingent on the change in employment or specific rules set by the employer. In contrast, the INVEST monies are paid to the officer only upon the satisfaction of conditions such as satisfactory conduct and completion of term of service.
21. Officers can choose from the three INVEST plans during service. Upon retirement, officers can top up their CPF accounts with the INVEST monies, subject to the CPF limits and rules, or they can choose to invest in other financial products available in the market.
Structuring Investment Choices for Officers
22. Assoc Prof Theseira asked the Ministry to periodically review the investment strategies and investment plan choices by officers, and to structure the default investment choices in such a way as to meet the needs of the majority of officers.
23. Under the INVEST Plan, there are three investment options, namely the Stable, Balanced and Dynamic Plans. Officer can choose from the three Plans to suit their personal circumstances, financial needs and appetites towards risk. Each Plan has its own risk-return objectives, and the Plans’ performance is communicated to officers. As their circumstances change, officers can change Plans over the course of their career.
24. MHA conducts reviews on investment choices as part of ongoing studies on industry best practices. MHA has been reviewing a lifecycle plan and is considering whether to introduce it as a new investment plan option for officers. Advice is being sought from external consultants, the INVEST Board of Trustees and the Investment Committee of the Board, and they include members with relevant industry experience.
More Public Information on INVEST
25. Assoc Prof Theseira asked the Ministry to make more information about INVEST publicly available as it may be attractive to potential recruits to the Home Team and to help existing officers make more informed choices.
26. The current recruitment process informs all potential recruits about INVEST and the information is also available on Home Team Departments’ websites.
27. Officers are kept informed on the investment plans via several platforms such as on-boarding briefings, semi-annual statements of accounts, e-newsletters and an information deck published on the MHA intranet which includes an investment choice guide and the historical performance of the plans.
28. Mr Speaker, I believe I have covered all the points raised by the members. Thank you.