More CPF protection for children with special needs; Implementation of the Special Needs Savings Scheme (SNSS)

By Janice Heng, The Straits Times, 22 Nov 2011

THE CPF Board is stepping in to help provide a measure of financial security to children with special needs, when their parents are no longer around to care for them.

This will be done through a new Special Needs Savings Scheme (SNSS), through which parents can arrange to have their Central Provident Fund (CPF) savings disbursed in monthly payouts to their disabled offspring after their deaths.

The scheme was one of several changes to the CPF Act passed by Parliament yesterday.

Usually, the savings of a CPF member who dies are distributed to his nominees as a lump sum.

But under the SNSS, nominee CPF accounts will be created for a special needs child upon the parent's demise, and funds disbursed from those accounts. These will earn the same interest rates as the parent's accounts.

Parents can decide the quantum of the monthly payouts - which must be at least $250.

However, if their savings at death are not enough to provide the payout for 12 months, the entire balance will be paid as a lump sum.

The scheme will be a boon to parents who have little savings outside the CPF.

Today, parents can set up trusts for their children with the Special Needs Trust Company, but this requires a minimum of $5,000 cash.

In contrast, the SNSS has no minimum amount and no administrative charge.

The scheme was recommended by a parents' workgroup for the enhancement of financial security of people with special needs, appointed by the Ministry for Community Development, Youth and Sports.

The workgroup, led by Moulmein-Kallang GRC MP Denise Phua, submitted its report to the ministry in 2006.

Yesterday, Ms Phua thanked the Government for making the idea a reality, but hoped the scheme could be expanded.

The SNSS is open to parents of disabled children who are attending or have attended a special education school, or who need help in at least one activity of daily living, such as getting dressed, eating or moving around.

Calling the coverage 'quite restrictive', Ms Phua proposed that individuals be included 'as long as there is professional assessment that the individuals would benefit from such a service'.

In response, Minister of State for Manpower Tan Chuan-Jin noted that the scheme was designed for people with disabilities who cannot support themselves.

Hence, it does not include special needs children who attend mainstream schools and are physically capable.

Ms Phua was one of seven MPs who spoke on the Bill. Most were supportive but hoped more could be done for those with special needs.

Mr Zainudin Nordin (Bishan-Toa Payoh GRC) asked if SNSS accounts could enjoy higher interest rates.

Mr Christopher de Souza (Holland-Bukit Timah GRC) suggested a review of basic health schemes such as MediShield and ElderShield, so that disabled persons can enjoy the same level of benefits as the non-disabled.

And Singapore People's Party Non-Constituency MP Lina Chiam asked for top-ups of the accounts of parents in the SNSS who have insufficient CPF savings upon their death.

Ms Phua also suggested top-ups for SNSS accounts of low-income nominees.

Addressing these concerns, Mr Tan said the interest rates of SNSS accounts - up to 4 per cent, with an extra 1 per cent on the first $60,000 - are fairly attractive.

The idea of grants or top-ups could be explored in the future, he added.

He also noted that the Ministry of Health intends to study how MediShield can be extended to those with congenital conditions.

The SNSS will be implemented early next year. Parents may approach the Centre for Enabled Living for more information.

What's new in CPF Act

THE Central Provident Fund Act was also amended to enhance the flexibility of the CPF scheme:

Allow voluntary contributions by other parties

Previously, CPF members could contribute to their own account or those of family members. Employers could also contribute to the accounts of employees.

Now, voluntary contributions to a member's account can be made by any person, company or association. This enhances CPF members' retirement and health-care savings.


Allow reversals of some inter-account transfers

Funds can be transferred between an individual's CPF accounts: for instance, from the Ordinary Account to the Special Account, to benefit from the latter's higher interest rates.

Before, such transfers could not be reversed. Now, they can be reversed under special circumstances.

For instance, a CPF member who suffers unforeseen financial hardship after the transfer may need the transferred savings to service his housing instalments.

The amendment allows the CPF Board to make exceptions and allow transfers to be reversed in such cases.


Portability of Home Protection Scheme (HPS)

The HPS is a mortgage insurance scheme which pays off the outstanding housing loan if a CPF member is incapacitated or dies.

Unlike private schemes, it is tied to a specific property. If a member sells the property and buys a new one, they will need new HPS cover.

But a member must be in good health to be eligible for HPS. This disadvantages members who may not be in good health when buying a new property.

The amendment allows the CPF Board to waive the requirement of good health for members who were insured under HPS for their previous property.