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.

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