Monday, January 15, 2007

What shape should this piggy bank take?


So it's confirmed: Singaporeans will soon get extra funds from the Government to freely pursue higher education.

Indicating that the Government has embraced the suggestion by a panel of education experts to set up post-secondary accounts for every individual, Education Minister Tharman Shanmugaratnam said, on Saturday, that more details would be announced in March.

The aim is to help Singaporeans get that "edge" that "comes from not just having studied something in the past, obtaining your certificates and degrees, but from continual learning", said Mr Tharman.

What shape this education account takes remains to be seen — but there are already hints, going by some precedents.

In 2005, the National Trades Union Congress (NTUC) launched a pioneering initiative with some of its cooperatives. SkillsSave lets employees open individual-based learning accounts with NTUC Thrift and Loan Co-operative Limited.

Both employer and employee contribute a regular amount to this account and, until 2009, the Singapore Labour Foundation will match the contributions for union members. The result is that a sum of just under $1,000 goes into an account yearly.

SkillsSave has three key characteristics. Firstly, the account is portable — meaning if an employee resigns and joins another organisation, he can take the account to his new job.

Secondly, the funds can be accumulated throughout one's working life and have a savings element. The account can only be closed in limited situations, such as when the person dies or retires.

Thirdly, personal responsibility for one's learning is encouraged; employer approval is not required for the use of the money in the account.

The individual decides what he wants to learn from an array of offerings provided by training providers, which include the likes of the Singapore Academy of Law. Importantly, the learning "need not be of any direct relevance" to one's current role.

Also, at least one of the cooperatives on this scheme allows a person to take learning leave of up five days — on top of the annual leave entitlement.

Would the Government's plans for post-secondary accounts be as ambitious? It's unlikely.

An important consideration would be the costs incurred for employers, and organisations may be expected to resist any attempts to raise the already dear cost of doing business in Singapore. Nevertheless, with SkillsSave, the NTUC and its cooperatives have set the lead for the Government.

Indications are that the plan for post-secondary accounts will take the 14-year-old Edusave Scheme — which sees funds deposited in deserving schoolchildren's accounts for enrichment programmes — a step forward.

Currently, the Government transfers any remaining sum in the child's Edusave account to the Central Provident Fund (CPF) account when he or she reaches 21 years of age. It is likely the post-secondary accounts will thus come under the CPF Board's purview and be linked to one's CPF account.

As such, the advantage that the Government's post-secondary accounts will have, over the SkillsSave scheme, is the protection from creditors accorded to CPF-related schemes.

It could also mean that any balance in a child's Edusave account would be moved to the post-secondary account when the child turns 21.

Perhaps, as part of its plans, the Government will also revisit the CPF Education Scheme. It currently enables one to pay for "approved full-time subsidised undergraduate courses leading to a degree" or "approved full-time diploma courses".

It would be timely to expand the CPF Education Scheme to enable an individual to pay for full-time postgraduate courses at the Nanyang Technological University, the National University of Singapore or the Singapore Management University, using his or her own CPF funds.

The plans for post-secondary accounts is a milestone worth celebrating.

It highlights that the Government is finally putting its financial weight fully behind a principle it, and the labour movement, have long espoused: The importance of life-long learning, and the importance of setting aside funds to invest in one's post-secondary education.

Dharmendra Yadav

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