Second Reading Speech by Senior Minister of State for Law, Indranee Rajah SC, on the Public Trustee (Amendment) Bill
03 NOV 2014
3 Nov 2014 Posted in Parliamentary speeches and responses
- I beg to move, ‘That the Bill be now read a second time’.
- The main role of the Public Trustee is to function as an administrator of last resort for estates of deceased individuals, which do not exceed $50,000 in value. The Public Trustee manages about 8,000 estates each year, including cases involving un-nominated CPF monies. The Public Trustee can also be appointed as an ordinary trustee where there is a clear public interest, or a litigation representative of minors in suits relating to trusts or the administration of a deceased person’s estate.
- The Public Trustee (Amendment) Bill 2014 seeks to make three main changes to the Public Trustee Act (“the Act”):
- First, to introduce a new system for paying interest to the estates governed under the Act;
- Second, to change the name and composition of the Public Trustee Investment Board; and
- Third, to require the Public Trustee’s views or written consent to be sought or obtained, before it is appointed to assume various duties under the Act.
- These amendments arose from the Ministry of Law’s regular review of the Act, and seek to enhance the operations of the Public Trustee.
- I will now take the House through the main features of the Bill.
- First, the New System for Paying Interest to Estates
- First, the new system for paying interest to estates. Madam Speaker, presently, trust monies held by the Public Trustee are pooled into a common fund established under the Act and invested with the sanction of the Public Trustee Investment Board. These monies are invested primarily in fixed deposits. Interest income is paid to the individual trust estates each year, at a rate which is declared in advance by the Minister.
- This practice of declaring the interest rate in advance means that the actual interest earned may differ from the interest rate that was declared earlier, resulting in a surplus or deficit for any given year. Surpluses are held in a reserve fund and are used to top up potential deficits.
- Clauses 10 and 12 introduce a new “flow-through” system for the payment of interest income. The Public Trustee will specify the rate of return payable to each trust estate at the end of each pre-determined investment period. This rate of return will thus be based on the actual interest received during the investment period, after accounting for the costs related to the investments.
- Changing the Name and Composition of the Public Trustee Investment Board
- Second, Madam, I move on to changing the name and composition of the Public Trustee Investment Board. The second set of amendments is connected to the first. Presently, the Public Trustee Investment Board oversees the Common Fund by, amongst other things, sanctioning the investment mandate and activities of the Public Trustee.
- First, the Public Trustee Investment Board will be renamed as the Investment Board.
- Second, the composition of the Investment Board will be changed to comprise:
- the Permanent Secretary of the Ministry of Law as chairman;
- the Public Trustee; and
- 3 other members to be appointed by the Minister, of whom at least one must be a public officer.
- The Chairman of the Investment Board will be the Permanent Secretary of the Ministry of Law, since the Public Trustee’s office is under the Ministry of Law.
- While public officers will continue to form the majority of the Investment Board, two members of the Investment Board may be from the private sector. This will enable the Ministry of Law to tap on members from the private sector with expertise in investment and fund management, in the oversight of the Common Fund.
- Requiring the Public Trustee’s Views or Written Consent to be Sought or Obtained
- The third amendment pertains to requiring the Public Trustee's views or written consent to be sought or obtained. Currently, the Act provides that the Public Trustee may be appointed to:
- represent a minor;
- administer small estates;
- become a trustee of any will or settlement or instrument creating a trust; or
- be granted probates of wills or letters of administration.
- However, the Act does not require the Public Trustee’s views or written consent to be sought or obtained before being appointed. As a result, there have been cases where the Public Trustee was appointed even though the parties were well able to afford the engagement of a private trustee.
- To address these concerns, clauses 5 and 6 require the Public Trustee’s views to be sought before being appointed to represent a minor or administer small estates. In such cases, it is more likely than not that the public interest will be served by having the Public Trustee to act in these cases. Hence the Court can order the appointment of the Public Trustee on giving notice to the Public Trustee and hearing the Public Trustee’s views.
- Clause 7 requires the Public Trustee’s written consent to be obtained before being appointed to a trustee of any will, settlement or instrument creating a trust.
- Clause 8 requires similar consent before an executor who has obtained probate or an administrator who has obtained letters of administration may apply to transfer the estate to the Public Trustee for administration.
- Collectively, these amendments will ensure that the State’s resources are deployed to administer cases only where there is sufficient public interest for the Public Trustee to do so.
- Miscellaneous Amendments
- There are also miscellaneous amendments to be made to enhance the Public Trustee’s administrative efficiency. The amendments in clause 3 allow the Minister to appoint Deputy Public Trustees, while the amendments in clause 4 allow the Public Trustee to authorise persons to carry out his functions. The amendments to clause 4 will allow the Public Trustee to outsource the fund management function to a professional fund manager.
- To summarise, the Bill brings about a number of operational changes to enhance the performance of the Public Trustee’s duties and functions, and the management of the Common Fund.
- Madam Speaker, I beg to move.
Last updated on 03 Nov 2014