Explaining some points again

Since the release of the Committee’s report on 4 Jan 2012, we have noticed that there are points in our Report that have been misunderstood or not clearly understood.

We have grouped them into questions and would like to refer the reader to the relevant sections of the Report for the answers and details. We hope that readers will read the sections for the explanation on why we made our recommendations, and what they comprise.

Why link salaries to top earners?

This reflects the level of talent we hope to attract and the need to pay competitive salaries to minimise the opportunity cost for these people to come forward to serve. See paras 1 to 3, and paras 32 to 35.

Why have “clean wage”? Why not give perks?

Unlike many countries, Singapore has chosen a transparent system where salaries are fully accounted for through a ‘clean wage’ with no hidden perks and privileges. See paras 15 and 16, and paras 37 and 38.

Why not peg to foreign leaders’ pay?

We studied in detail whether we should peg the salaries to those of foreign leaders. In the end, we decided not to adopt it as the conditions in other countries are different and so are the compensation principles. More specifically, doing so would not allow us to follow the principles of paying competitive salaries and clean wages. See paras 66d.

Why not simply have a fixed salary, with no bonuses?

We decided on a total salary pegged to an annual benchmark. Without bonus, the entire sum would be in the form of a higher fixed salary. We decided against this as there was strong feedback that some elements of the politicians’ pay ought to be pegged to their performance and outcomes linked to the well-being of Singaporeans. So we took a balanced approach of reducing the quantum of bonus to a level that we think is still substantial enough to ensure that the pay packages of the office holders move in accordance to the well-being of Singaporeans. See paras 67 to 71.

Why is there a need to have two bonus components?

The salary formula provides for a Performance Bonus which reflects a person’s work in leading a Ministry or helming a portfolio, as well as contributions at Whole of Government level. The National Bonus is a reward for team effort to raise the socio-economic well-being of the people, especially the middle and lower income earners. See paras 70 to 73.

 What are the components of the National Bonus? Why not have deferred payments since results of policies take time to be seen?

The National Bonus has four socio-economic indicators with each accounting for 25% ie the National Bonus has a strong link to the social-economic progress of average and lower income Singapore Citizens. The Committee did not recommend deferred payments as this would remove the direct link to actual performance in any one year. See paras 72 to 74 and footnote 11 as well as Annex C.

What is in the new MR4 Minister salary? Are there bonuses on top of that?

An entry level MR4 Minister will receive an annual salary of $1.1m if 1 month AVC is paid, he is a good performer and targets for the National Bonus indicators are met ie Annual Salary = fixed pay + variable pay (AVC, Performance Bonus and National Bonus). In line with the “clean wage” principle, this is all the appointment holder gets. In a minimum bonus situation, he gets 13 months ie $715,000. In a maximum bonus situation, he gets 26.5 months ie $1,457,500. See worked examples at paras 82 to 83.

Why do appointment holders also get the MP allowance?

As is international practice in Westminster Parliamentary systems, all political appointment holders will also receive MP allowances as they have the dual roles of being MPs which involve looking after the needs of their constituents and raising their concerns in Parliament. See paras 106 to 109.

We hope this has helped to clarify any misunderstanding of our recommendations.

We note that our recommendations will be discussed in Parliament on 16 January 2012.

Committee releases Report

Ministerial salaries review committee proposes:

Pension scheme to be removed

President sees 51% cut and PM sees 36% cut;
Minister’s salary to be cut by 37%

Minister’s salary to start at $935,000

The Committee to Review Ministerial Salaries recommends cutting the salaries of the President, Prime Minister, Speaker of Parliament, Deputy Speaker of Parliament, and political appointment holders; as well as the allowance of Members of Parliament (MP).

The Committee also recommends removing the pension scheme.

The President’s annual salary should be cut by 51% to $1,540,000. The Prime Minister’s annual salary should be cut by 36% to $2,200,000.

A Minister at the MR4 grade (i.e. entry-level grade) should be paid an annual salary of $1,100,000, a cut of 37%. A Minister at the lower end of this grade will start at an annual salary of $935,000.

As is the current practice, the Prime Minister can also appoint a newly appointed entry level Minister to be an Acting Minister on a lower grade and thus go below the MR4 range, ie Acting Minister who is placed on a Senior Minister of State grade.

The Committee also made recommendations on a new benchmark. A new salary framework and National Bonus linked to the socio-economic progress of average and lower income Singaporeans is also proposed.

Read the full Press Release

Committee to submit report to PM by 30 Dec

There has been speculation on when the Committee would be submitting our Report to the Prime Minister and when it will be made public.

We thank everyone for your continued interest in our work. We have completed our deliberations and are finalising the Report. We plan to submit it by 30 Dec 2011.

We were commissioned by the PM and it is only right that we submit the Report to him. As to how and when the Report will be made public, we will stand guided by the PM.

We take this opportunity to wish everyone “Merry Christmas and a Happy New Year”.

GERARD EE

Review expected to be completed before year end

The Committee to review salaries of the President, Prime Minister, political appointment holders and Members of Parliament, has received some queries recently.

We would like to thank members of the public and media for their continued interest in this review.

We received more than 500 suggestions through emails and letters at the close of the public feedback on 20 June 2011. We are carefully looking through all the inputs, including views and proposals, some of which were very detailed. We want to repeat that we appreciate all the ideas and suggestions submitted to us and the Committee will consider every one of them for their suitability and appropriateness. We are doing all these with the help of a HR consultant, Mercer (Singapore) Pte Ltd.

We are getting comments from both retired and current politicians. We want to do a thorough job. The Committee expects to complete the task before the end of the year.

Just to reiterate, the Committee is reviewing the basis and level of salaries for the President, Prime Minister, political appointment holders and Members of Parliament to help ensure honest and competent government

The Government has said that it will base the new salaries on the Committee’s recommendations, and the Prime Minister earlier announced that the new salaries arising from this review will be backdated to 21 May 2011, the date when the new Government took office.

As announced earlier by PM Lee Hsien Loong, the revised salary for the President will commence from the new term of the President ie 1 September 2011. The former President, Mr S R Nathan, has earlier informed PM Lee that he would adopt the new salary from 21 May 2011.

GERARD EE

Thank you for your ideas and suggestions

We invited Singaporeans to send their feedback to the Committee through emails and a PO Box. The ideas and suggestions have been flowing in since we launched the blog on Tuesday 7, June 2011.

Altogether, we received some 500 emails and letters from members of the public as well as Members of Parliament by the end of 20 June 2011, the deadline for submissions.

We received feedback and suggestions on salaries for the President, Prime Minister, political appointment holders and Members of Parliament.

Even as we sort out the suggestions and seek to understand them, we want to say that we are impressed that some of the proposals are rather detailed with involved explanations on why this and why that.

We also have feedback on pensions, and whether to have “clean wage” ie just salaries or to have benefits.

While some contributors gave their views, there are others who also offered proposals, articulating the pros and cons of various approaches. Some even offered formulae for calculation.

It is not possible to list all the suggestions, but we have noted the range of views, from recommending drastic cuts to salaries to those who cautioned against going overboard.

We will get down to analysing all inputs in detail as well as work with HR advice. We want to repeat that all the ideas and suggestions are valued and the Committee will consider every one of them for their suitability and appropriateness.

Just to reiterate, the Committee will review the basis and level of salaries for the President, Prime Minister, political appointment holders and Members of Parliament to help ensure honest and competent government.

The Government has said that it will base the new salaries on the Committee’s recommendations, and that the new salaries for political appointment holders will take effect from 21 May 2011, i.e. the date when the new Government took office.

Although the salary for the President will in-principle commence from the new term of the President, the President has informed Prime Minister Lee Hsien Loong that he will adopt the new salary from 21 May 2011.

Lastly, we want to thank all contributors for sharing their ideas and suggestions. We are very grateful that contributors have been very constructive in their comments. This has helped tremendously for us to start looking through the ideas.

GERARD EE

We want to hear from you

The Committee has been asked to review the basis and level of salaries of political office holders. The responsibility is heavy, to say the least. But we will try our level best to discharge our duty as comprehensively and fairly as we can, based on facts without forgetting the strong emotions involved.

Each of us has been poring over the sea of suggestions, whether received personally or forwarded by others. We have also sought to understand the history and background on the whole matter, examining the facts and reasons for various proposals considered over the decades.

An understanding of the history is important so we are aware of the fundamentals. But we intend to start on a clean slate and consider all angles in search of answers to two questions: what fair compensation would accord due recognition for the contributions of our political office holders? And then, what discount would signify the value and ethos of political service?

To determine how much to pay for the job, we will look at it from the HR perspective, in terms of appropriate salary for the individual grade, job size, scale and impact of the work. We will look at the entire package, including bonuses, pensions and benefits, and work with the benefit of HR expert advice to ensure that there is rigour in the analysis.

The second question is more subjective. But we will try to find an answer even though there is no silver bullet.

To get us started on our task, we have attempted to summarise the suggestions offered so far:

  • Have a performance-based system, looking at a set of key performance indicators, national and individual
  •  Have a fixed component and variable component based on performance of the individual
  •  Compare with salaries of leaders of developed nations
  •  Look at indicators such as median salaries, Gini coefficient, GDP growth as a basis
  •  Use private sector best practices but factor in the calling for public service
  •  Peg salaries at a level that will attract the best talents to serve
  •  Peg salary to the job size
  •  Pay more only after the person has proven himself
  •  Keep the formula simple and easy to understand
  •  A combination or permutation of the above

These ideas have been gleaned from mainstream and online media, emails and letters. The Committee will consider every one of them for their suitability and appropriateness. As we will not have the resources to keep track of every idea, we would really appreciate it if you could help us by sending in your additional suggestions by 20 June 2011.

Please send to Mr Gerard Ee at 
Email: reviewcommittee2011@gmail.com or 
PO BOX 539, Singapore 910504

We have also written to all Members of Parliament to likewise seek their views and inputs.

While the Prime Minister has not given us a timeline to deliver on our recommendations, we do want to get down to work as soon as possible, hence the deadline for sharing your ideas.

You have our assurance that we will consider all inputs. We would appreciate it if contributors not flame, even though we fully understand the need to vent.

Lastly, as all the committee members are volunteers, we are grateful that we have a small secretariat of civil servants supporting us as resource persons with background, history and fact finding, as well as logistical and administrative work. This will help us get down to our work faster.

We thank everyone for helping us make the best of this assignment.

GERARD EE