Ministerial pay should be cut by 37%: panel

Updated (6.24pm)

Singapore ministers, among the highest-paid in the world, should have their salaries cut by 37 per cent to S$1.1 million and their pension benefits stripped, the panel to review political pay said in a press release to the public on Wednesday.

According to the release, the panel recommended that the annual salary of the President be brought down by 51 per cent to S$1.54 million.

It also advised that the Singapore Prime Minister’s salary, the highest of all elected government leaders in the world, be reduced by 36 per cent to S$2.2 million.

The committee, headed by National Kidney Foundation chairman Gerard Ee, said that the new salaries are based on its recommendation that the formula for pegging ministerial pay be changed to the median income of the top 1,000 Singaporean earners less 40 per cent "to signify the ethos and sacrifice that comes with political service".

Currently, ministerial pay is benchmarked to two-thirds of the median income of the top eight earners in six professions: banking, accountancy, engineering, law, managing local manufacturing companies and multinational corporations.

Ministerial pay came under fire from opposition parties during the watershed general election in Singapore last year during which the ruling People’s Action Party lost a group representation constituency for the first time.

Acknowledging the public’s concern over ministers’ high pay, Prime Minister Lee Hsien Loong announced the creation of the salary review committee after the election.

On Wednesday, Lee reportedly said the government would adopt the panel’s recommendations. He earlier said ministers' salary changes would be effective retroactively from 21 May last year. The change in salary of the President will take effect from the start of President Tony Tan’s term on 1 September last year.

Removal of pension scheme

Aside from suggesting changes to the level of salaries, the committee also recommended that the pension scheme for all political appointment holders be removed, and that only the Central Provident Fund system, which is the basic retirement scheme for Singaporeans, be adopted.

"With this recommendation, political appointment holders appointed on or after 21 May 2011 will not receive any pension. For office holders who were appointed before 21 May 2011, they will have their pension frozen, i.e. they will only be eligible for pension accrued up to 20 May 2011. The frozen pension will be paid when they step down or retire from office," the committee said.

Regarding benefits, the panel recommended that current medical benefits for political appointment holders, which are the same as for civil servants, be retained.

Under the Medisave-cum-Subsidies Outpatient scheme, political appointees do not receive hospitalisation benefits but receive S$70 per month in their Medisave account, which can be used to buy Medisave-approved medical insurance.

Changes in bonus components

Based on the recommended salary package, an entry-level grade minister stands to earn up to $1,100,000 (20 months at S$55,000 each month) but at least $715,000 as fixed salary (covering 13 months) as the rest is based on variable components.

The committee proposed changes to the variable component of the ministers’ annual salary so that it links to the socio-economic progress of average and lower-income Singaporeans and not just the country’s economic performance, according to the report.

It recommended that the GDP bonus component be replaced with a National bonus component wherein ministers can receive up to three months bonus only if the targets – to be set by the Cabinet -- are achieved.

The targets will be measured in terms of Singaporeans’ real median income growth, Singaporeans’ unemployment rate, real growth rate of the lowest 20th percentile income of Singaporeans, and real GDP growth.

Apart from the national bonus, the variable component of the salary will also include a typical one month annual variable component and a three months individual performance bonus.

Meanwhile, the committee did not suggest any changes to the fixed component of the salary which usually comprises 12 months pay and the 13th month bonus.

Under the prime minister’s salary package, the committee suggested he should no longer receive a fixed service bonus and instead be given a higher national bonus of six months.

The committee also proposed that the salary framework should be reviewed every five years to ensure it remains “appropriate” over time. An independent committee whose members can be anointed by the prime minister should conduct the review, it said.

 Additional reporting by Faris Mokhtar