National Bonus targets for political appointment holders tightened, including unemployment, income growth

SINGAPORE — Several performance targets used to determine the National Bonus component of ministers’ pay will be tightened, as part of changes to the political salary framework.

Coordinating Minister for Public Services Chan Chun Sing on Sept 8 set out the Government’s response to the recommendations made by a committee reviewing the salaries of political appointment holders and MPs.

Besides making the changes to the National Bonus, he said the salary range will be widened to cater to people joining political service at different stages of their careers. The grade structure will also be streamlined for simplicity.

The National Bonus, which ranges from zero to six months of salary, is part of the variable component of ministers’ pay and is linked to four national indicators.

The four are unemployment rate, real income growth for the 20th-percentile Singaporean earner and for the median Singapore citizen, as well as real GDP growth.

The Government will tighten the targets for the three socioeconomic indicators, Chan said.

For unemployment rate, the target band will be tightened from the current 4 per cent to below 4.5 per cent, to 3 per cent to below 3.5 per cent – a tightening of one percentage point.

The target for real income growth of the median Singapore citizen will be raised from 2 per cent to below 3 per cent, to 2.5 per cent to below 3.5 per cent.

For the 20th-percentile Singaporean earner, the target will be raised from 2 per cent to below 3 per cent, to 3 per cent to below 4 per cent.

The target band for real GDP growth will be updated, from 3 per cent to 5 per cent, to 2 per cent to 4 per cent.

Chan said the GDP target is calibrated to Singapore’s longer-term growth potential rather than the unusually strong performance of recent years.

Over the past decade, Singapore’s average real GDP growth was about 2.6 per cent, he said. The Ministry of Trade and Industry has upgraded its growth forecast for 2026 to 4.5 per cent to 5.5 per cent, reflecting the strong performance of the economy.

But looking ahead, MTI expects real GDP growth to be around 2 per cent to 3 per cent a year over the next decade as Singapore’s economy matures, with an ageing population and slower workforce growth.

“Our responsibility is to set targets that are ambitious, credible and sustainable,” Chan said.

The Government has also agreed to explore including a robust Quality of Life measure in the National Bonus framework once such a measure becomes available, he said, in line with the committee’s recommendation.

Salary benchmark

Separately, the Government has accepted the committee’s proposal to raise the norm annual salary for the base MR4 ministerial grade, including bonuses, from $1.1 million to $1.8 million.

While the increase seems significant, this is because the level has not been updated for 15 years, Chan said.

Averaged across the period from 2011 to 2025, the adjustment works out to about 3.6 per cent per year, which is lower than the wage growth over the same period experienced by Singaporeans, he said.

Wage growth among Singaporeans over the period is about 4.3 per cent annually for the median earner, and 4.6 per cent for the lower‑income earner at the 20th percentile.

The new reference norm annual salary continues to incorporate a 40 per cent discount off the median income of the top 1,000 earners who are Singapore citizens.

Chan said this was a “deliberate reduction” that reflects the ethos and sacrifice expected of political service.

“Without that discount, the reference for the median 1,000 Singaporean earner would be slightly above $3 million,” he added.

Chan noted that over the same period, the Civil Service pay has been adjusted thrice – in 2014, 2022, and August this year – in quantums ranging from 2 per cent to 14 per cent to close market gaps.

He also dispelled the notion that the benchmark is a statement that only the top 1,000 earners can become leaders.

Instead, it is “a practical recognition that we must be able to recruit capable people who have other options”, he said.

“Our objective is simple – to allow Singaporeans from every background to step forward and serve, while recognising that political service involves sacrifices,” he added.

Chan also acknowledged that no formula will be perfect or able to satisfy everyone.

Noting that there is no universally ideal benchmark, he said: “The key question is this: what is a workable framework and range of figures that allow the prime minister, any prime minister, to reasonably assemble a team that Singapore deserves?”

In the 27-page report disseminated in Parliament on Sept 8, the salary review’s committee laid out that benchmarking to the top 1,000 earners across all professions serves to “reflect the calibre of the people Singapore needs for good government”.

The report also stated the median income rate is picked over the average income rate so the benchmark is more stable and not skewed upwards by outliers.

Wider salary ranges and merged grades

Chan also announced that the Government will simplify the grade structure by merging grades with fewer appointment holders, while using wider salary ranges to give greater flexibility in remuneration.

Currently, a new minister is appointed at the MR4 grade, and could be promoted to the more senior grades of MR3, MR2 or MR1 down the road.

Under the changes, the MR2 and MR3 grades will be combined into a single grade pegged at 1.3 times the MR4 reference salary, which is the midpoint between the current 1.2 and 1.4 times.

The grades for Mayors, Senior Parliamentary Secretaries and Parliamentary Secretaries will also be merged, with the new grade pegged at 0.45 times that of MR4. This is towards the lower end of the current range of 0.38 to 0.6 times the MR4 rate.

The merged grade will have a wider salary range of 70 per cent to 130 per cent of its reference salary, allowing greater flexibility to account for the diversity among junior appointment holders.

Chan said the Government will also widen salary ranges for political appointment holders, from the current 75 per cent to 125 per cent of the reference benchmark.

The wider range will give the Prime Minister greater flexibility to account for the different backgrounds and career stages of people entering political service, such as putting candidates who are already highly established in their careers at a higher point within the range, Chan said.

“The individual is still likely to have to take a pay cut to enter political service, but the wider range will help make the pay cut less steep,” Chan said.

Portions of the framework that would stay unchanged include the salary pegs for the statutory appointment holders, such as the President, Speaker and Deputy Speakers.

This means the President’s monthly salary will continue to be pegged to the Prime Minister’s monthly salary. The Speaker’s salary remains pegged at 50 per cent of the MR4 reference salary, while the Deputy Speaker’s is pegged at 15 per cent of the Speaker’s salary.

The current practice of paying all political appointment holders one salary package, even if they hold multiple appointments or portfolios, would also remain.

“The principle is simple – one person, one salary,” Chan said. “Holding more portfolios does not mean receiving more pay.