Saturday, May 14, 2011

Ministers' pensions: Official statement

May 14, 2011

When a Cabinet minister retires, the maximum annual pension he is entitled to would be about 10 per cent of his annual salary while he was in service.

But to qualify for the maximum pension, he must have served as an office holder for 18 years, said Mr Tan Kee Yong, secretary to Prime Minister Lee Hsien Loong, in a letter sent to the media on Friday.

Also, Members of Parliament (MPs) elected after January 1995 are not eligible for pension.

Mr Tan's clarification on the pension issue for political office holders and MPs came in the wake of the May 7 General Election, which has seen several veteran ministers and MPs retiring before the hustings started and Cabinet ministers, Mr George Yeo and Mrs Lim Hwee Hua, due to leave office after losing the electoral contest in Aljunied Group Representation Constituency (GRC).

The changing of guard has sparked discussion on ministers' pensions, especially in cyberspace.

Mr Tan said ministers have to serve a minimum of eight years to qualify for a pension.

Noting that the various aspects of the pension issue are a matter of public record, Mr Tan said: "A minister's pension is determined based not on his total monthly salary but only on the pensionable component of this salary at the point of retirement.

"This pensionable component has been frozen since 1994".

To contain pension costs, he added, all salary increases since that year have been added to the non-pensionable component of a minister's salary.

"Thus over time the pensionable component has shrunk as a proportion of total monthly salary," Mr Tan said.

A minister qualifies for the maximum pension of two-thirds of the pensionable component of his monthly salary only if he has served for 18 years.

"The annual components of salary, which account for a significant proportion of the annual salary, are also not pensionable," Mr Tan said.

The Parliamentary Pensions Act also provides for an office-holder to receive a pension at the age of 55, should he qualify for one, while he continues to hold office.

"This provision is being reviewed," Mr Tan said.

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