changes to the cpf act/wica

besides the special needs savings scheme, there are other changes to the cpf act which was passed by parliament today and they are:

1. allowing 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 by made by any
person, company or association.

2. allowing reversals of some inter-account transers

funds can be transferred between an individual's cpf accounts: for instance,
from the ordinary account to the special account, to benefit from the 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
unforseen financial hardship after the transfer may need the transferred
savings to service his housing instalments.

3. portability of HPS (home protection scheme)

the hps is a mortgage insurance scheme which pays off the outstanding
housing loan if the 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.

besides the changes to the cpf act, there were also significant changes to the wica (work injury compensation act):

1)higher minimum and maximum limits of compensation

from june 01 next year, employers are liable for a minimum of $57,000
($47,000)and a maximum of $170,000 ($140,000) in the event of a work-
place death under wica. if a worker suffers total permanent incapacity,
the range is between $73,000 and $218,000 ($60,000 to $180,000).*

*this excludes the additional 25% compensation that is paid to workers
with total permanent incapacity to offset the cost of care for the
injured worker. figures in brackets refer to the old limits.

2)Disallowing compensation for work-related fights

The rationale for the amendment is that while work disputes may arise from time to time, employees should not resort to fights to resolve them, and employers should not have to bear the cost of injury.

As such, employers will generally not be liable under WICA to compensate workers who are injured in work-related fights, except in certain scenarios such as when the worker was a victim and did not participate in the fight, or when he was injured while exercising private defence, or instructed to break up the fight, safeguard life/property or maintain law and order.


3) Expanding scope of compensable diseases

Currently, diseases are compensable only when they are listed in the Second Schedule, for example noise-induced deafness, or as a result of a specific accident at work. With the change, diseases contracted due to work-related exposure to chemical or biological agents will be compensable. The Second Schedule will also be refined to include a new occupational disease (exposure to excessive heat), remove SARS and Avian Influenza and broaden scope of some of the existing occupational diseases.

4) Disallowing work-related exclusion clauses

Work-related exclusion clauses, except pertaining to asbestos, will be prohibited for the purpose of WIC insurance. With these changes, insurers will be liable to make payment of the compensation even if work-related exclusions exist in the policy. Insurers will continue to be able to seek contractual recovery from the employer if such recovery is allowed in the insurance policy.

5) Clarifying the liability of employer’s insurer to pay when there are multiple insurance policies

Certain industries have the practice of having multiple parties provide insurance coverage for workers. When there is an accident, the various insurers may dispute liability and compensation to the injured worker is unduly delayed. With the change, where there are multiple work injury compensation insurance policies, the employer’s insurance policy will first be used to satisfy a claim. MOM will allow third parties to pay compensation as long as they convey in writing to MOM their intent to pay compensation on behalf of the employer’s insurer, before the notice of assessment is issued.

6) Clarifying the timeframe for filing a claim if one wishes to claim under WICA after having filed a common law claim earlier

Injured employees have up to one year from the date of the accident to decide whether they wish to file a claim under WICA. Claimants who filed a common law claim but subsequently wish to file a claim under WICA have to do so within one year of accident. If the claim was made after this one year timeframe, it will not be admitted under WICA.

my comments:

it is indeed timely to effect changes to the cpf act and wica.

i can understand the rationale for allowing voluntary contributions to be open to any person, company or association and without the previous restrictions in place, it is as good as getting one's godpa/godma/goduncle/godauntie and other kind souls to 'beef up' a cpf member's account.

on transfer of funds, i have always advised against transferring funds from cpf-oa to cpf-sa because of the fact that it is irreversible and because cpf-sa funds are more illiquid than funds in the cpf-oa. but with the change, i will now look at such transfers differently with one caveat because the new formula for computing the cpf interest rates will kick in on january 01, 2013 (if there is no further deferment of the new formula since january 01, 2008).

the change in portability for the home protection scheme is a good move but my feedback to the cpf board is to add another layer of protection for the enhanced hps in the form of a waiver of premium for critical illness. this is really important when a cpf member is hit with a critical illness and the future payment of premiums becomes challenging and unaffordable.

and last but not least, thumbs up also for the changes to the wica (since 2008), taking into account for both inflation and rising healthcare costs to reflect higher minimum and maximum limits of compensation.

even with the improved wica, employers should also consider looking at providing a more comprehensive h&s coverage because the medical expenses are capped at up to $30,000 (from $25,000) or 1 year from date of accident, whichever is reached first.

just my 2 cents' worth to the latest changes to cpf act/wica.