Adopt Fairer Income Criterion For HDB Grant

Source : The Straits Times, Feb 14, 2008

I WOULD like to highlight an inconsistency in the application of the definition of ‘income’ in the HDB housing grant for resale flats and HDB loan eligibility (HLE) guidelines.

I received preliminary approval from HDB for the HLE and housing grant in December - expiring on March 23. Last month, there was a change in my fiance’s monthly salary as his annual fixed bonus was incorporated in his monthly salary. This inadvertently raised his monthly salary, though his annual salary remained the same as when HDB approved our application for the grant and HLE.

As the HLE letter said HDB reserves the right to revoke the grant and loan if there are changes to salaries between approval date and validity date in the letter, we wrote to HDB to seek clarification.

This month, HDB told us it would be revoking our grant and HLE, due to the change in eligible income since application. We appealed as the increase was due to the incorporation of fixed bonus in monthly salary and not a merit increment. Moreover, the HDB website says bonuses are not considered assessable income.

I seek clarification from HDB on the inconsistency between the application of the definition on its website and our situation.

I would also like to highlight to the authorities that monthly income is not a good gauge of total compensation, as there are variations in all organisations. Some with lower monthly salaries may have a larger fixed bonus, some as high as three months. To compare an employee who earns a higher monthly salary but with no fixed bonus to one who earns a lower monthly salary but a high fixed bonus is not equitable or fair.

A more equitable approach is to consider the total fixed cash component, which includes all allowances and fixed bonuses on an annual basis.

For example, if employee A earns $8,500 a month (which exceeds the total family income cap of $8,000) but has no fixed bonus, his annual income is $8,500 x 12 = $102,000.

If employee B earns $8,000 a month (within the family income cap of $8,000) but has a fixed bonus of 2.5 months, his annual income is $8,000 x 14.5 = $116,000, which is 14 per cent higher than employee A who exceeded the income cap imposed by HDB.

Li Shan (Ms)