Wednesday 28 January 2015

Pioneer Generation Package 2? Depends on next generation: Chan Chun Sing

By Rachel Chang, Assistant Political Editor, The Straits Times, 27 Jan 2015

TO THE many Singaporeans who have asked if the $8 billion Pioneer Generation Package (PGP) will be expanded in future to benefit more seniors, Social and Family Development Minister Chan Chun Sing's reply is: "Frankly, we hope that we can."

But any introduction of a "PGP 2" will depend on how the next generation answers two questions, he said yesterday at a dialogue during the Institute of Policy Studies' annual Singapore Perspectives conference.

Mr Chan described these as: "Will we have the means? Will society have the same values (as now) to want to honour those who contributed?"

More importantly, the package - which eases the medical costs of the first generation of Singaporeans - cannot be a political promise, added Mr Chan.

Singapore must avoid a situation where subsidies and policies "turn into an auction in the elections", he said in reply to a question posed to him and Deputy Prime Minister Teo Chee Hean.

"We have seen this happen all over the world. To get elected, somebody will stand up and say, 'I promise more,'" said Mr Chan.

The only way to guard against this is to have an enlightened electorate that asks tough questions of political parties making such election promises, he added.

At this, Mr Teo quipped that, at 60 years old, he is among those who just missed the cut-off for the PGP. Looking to Mr Chan, who is 45, he joked: "You know what to do if you want my vote."

MediShield Life, the proposed universal health-care plan that is another major reinforcement of Singapore's social safety nets, was also brought up.

National University of Singapore professor Paul Tambyah welcomed the scheme but noted that an ailing senior would need his children to use their Medisave accounts to pay the deductibles. This could wipe out the children's Medisave savings, and become a problem that snowballs as each generation has fewer children.

Mr Teo replied that all countries have such inter-generational transfers, except some are "anonymous" in that younger people are taxed to pay for the health-care costs of the older generation.

"When you do it within the family, I think that's a much more natural and organic way," he said. "We should not, by socialising (costs) too much, remove that inter-generational responsibility within families."

The session wrapped up the full-day conference at Raffles City Convention Centre, which also featured two panel discussions on history and economics and a debate on pragmatism. About 900 people attended the conference.

Addressing pitfalls of health-care cost transfers

YESTERDAY'S report ("Pioneers package Part 2? 'It'll depend on next generation' ") missed the main thrust of Deputy Prime Minister Teo Chee Hean's comments on the pitfalls of transferring the health-care costs of the elderly to the next generation of younger Singaporeans, and how the new MediShield Life addresses this.

DPM Teo said many countries had "anonymous" inter-generational transfers where the cost of generous health-care benefits for the elderly was paid for by taxing those currently working. Singapore is addressing this through a slate of complementary measures.

First, the Pioneer Generation Package (PGP) helps the pioneers born in 1949 or earlier. Many of them had not saved much in their working lives as salaries were much lower during their working years and our system of Medisave and MediShield had not fully kicked in.

The PGP benefits are being paid for by funds set aside now by the Government to ensure that the benefits promised in the package will be paid for without burdening future generations.

Second, MediShield Life will cover all Singaporeans for life, including those with pre-existing medical conditions.

If premiums were set solely based on the health risks and consumption at each age, they will rise very steeply with age. Hence, we sought to distribute the premiums more evenly over the insured's lifetime and moderate what he has to pay in old age.

When the insured is younger and in his prime working years, he "pre-pays" part of the higher old-age premiums that are payable when he is older and no longer working. With this "pre-payment", the premium he pays when he becomes older will be less than the actual insurance cost for that age group.

Third, DPM Teo said one key reason MediShield insurance is affordable is that there are deductibles and co-payment that help avoid over-consumption of medical services, compared to the "buffet syndrome" in insurance systems that pay for everything.

As part of the shift to MediShield Life, the Government has committed $4 billion over five years to support the bulk of the costs due to universal coverage, and to provide various forms of subsidies for all Singapore citizens, the lower- and middle-income, and all pioneers.

Taken together, these measures mean that our MediShield Life premiums will remain affordable compared to health insurance, for example, in the United States.

We can also avoid the serious funding problems of health-care systems in Europe, especially in a time of recession or slow economic growth, where a smaller pool of workers in the younger generation now has to bear the cost of providing generous health-care coverage promised to older citizens by previous governments.

Finally, DPM Teo said that within the context of a well-structured system, it would still be "natural and organic" for one's children to want to take care of their parents beyond what is provided for through their medical insurance.

We should not discourage this mutual responsibility between children and parents within a family by over-socialising costs.

Yap Neng Jye
Press Secretary to Deputy Prime Minister, Coordinating Minister for National Security and Minister for Home Affairs
ST Forum, 28 Jan 2015

Wanted: Set of ideals and values to unite Singapore
Ministers give take on how national consensus can be reproduced
By Rachel Chang, Assistant Political Editor, The Straits Times, 27 Jan 2015

DEPUTY Prime Minister Teo Chee Hean recalled that as a young boy, he would correct his grandmother when she used the phrase "We Chinese" in Teochew.

"I would say, 'No, we are Singaporeans,' and she would think I was being rude," he said yesterday of the early days in the development of a national identity in newly independent Singapore.

Speaking to 900 participants at the Institute of Policy Studies' (IPS) annual Singapore Perspectives conference, he said that in those days, the "cauldron of crisis" produced a united Singapore from people of different races, religions and languages.

"There was a consensus that we needed to do things together, that each of us has to invest something to create Singapore and not just fight for our own factional interests," he added.

Nearly 50 years later, how a national consensus can be reproduced was a recurrent theme for much of a two hour-long question-and-answer session that Mr Teo and Social and Family Development Minister Chan Chun Sing had with participants. The issue also featured at the conference.

The dialogue, moderated by IPS director Janadas Devan, was the last session in a day-long programme which featured speakers such as veteran diplomat Bilahari Kausikan and former government chief economist Tan Kong Yam.

Mr Chan said countries defined national identities in one of two ways: an "exclusive, backward- looking" attitude which emphasised shared histories, languages and cultures; and a second that was an "inclusive, forward-looking" attitude centred on shared ideals and values.

At 50 years of nationhood, Singapore's challenge is to find a balance, he said: "We need something from the past to anchor us, but we also need to ask ourselves what is the set of ideals that unite us and allow us to draw in fresh perspectives to go forward?"

Both Mr Chan and Mr Teo recognised the increasing diversity in Singapore, be it of lifestyles or of political views.

There can be an exchange of views, but Mr Teo said there must concurrently also be political maturity to recognise that in the end, "the Government has to decide what to do" and that after the discussions, the country should move on and go ahead.

Mr Chan saw the route to consensus amid diversity as the individual's decision to "put the greater good and future of our society ahead of our preferences and desires". "It's easy to say but not easy to do," he acknowledged.

And his interactions with Singaporeans illustrated this. For instance, those who missed a cut-off point in a government scheme - whether the income ceiling for family subsidies or an age cap for the Pioneer Generation Package - often approached him to seek an expansion of schemes so they could be included.

He also recounted a discussion with a group who urged him to do more for middle-class citizens like themselves.

But when he asked how many among them paid income tax, all of them raised their hands. Only the top one-third of income earners here pay income tax.

Thus, these Singaporeans were at the high end, if at all, of the middle-class range.

"So sometimes I think we need to have a more honest conversation with ourselves," Mr Chan said. "How do we organise our society to really do more for those with less? And we have to be frank with ourselves about whether we are those with less."

Both he and Mr Teo emphasised that even as more and younger Singaporeans hanker for a new national narrative, certain imperatives of Singapore's existence cannot be ignored or compromised.

Mr Chan said these were the need for Singapore to remain economically viable and globally relevant; taking care of the country's security and independence; and keeping society together.

Singapore started out with far less than what it has today, and it was important, going forward, to pull together as a people, have a shared perspective, put aside personal preferences, enlarge the common space and do more for those who have less, he said.

Government has been adjusting policies because society has changed: DPM Teo
By Imelda Saad, Channel NewsAsia, 26 Jan 2015

Deputy Prime Minister Teo Chee Hean has said that the Government has been adjusting its policies because society has changed. He noted that the population is ageing and the fastest growing segment is probably those who are growing old alone.

He pointed to new initiatives such as the Pioneer Generation Package and MediShield Life. However, he stressed that it is not about how much redistribution is done, but how the money is spent.

He was speaking at the Singapore Perspectives conference organised by the Institute of Policy Studies on Monday (Jan 26). The dialogue also saw Social and Family Development Minister Chan Chun Sing taking questions.


Wide-ranging issues were raised but many participants wanted to know how the Government will deal with challenges in the future. One of them asked how the Government balances pragmatism and the need to expand social welfare.

Mr Teo responded: "It is not how much redistribution you do per se, but what you actually spend the money on. You can spend a lot of money, for example, on providing rental housing for those who have no homes or need homes, but we have decided to spend the money on very large housing subsidies to help people own their homes. That has an entirely different effect on inclusiveness, on a sense of ownership, a sense of belonging to Singapore.

“We have not done unemployment benefits but we have done Workfare and we have done skills training. That has a much more important long-term effect on the earning capability and self-dignity of individuals. So it is not what is the extent of the redistribution but how you do it and whether you can sustain it in the long term, without signing cheques on your children's account."

Meanwhile, Mr Chan said that focusing on social transfers alone is one-dimensional. He cited a series by Channel NewsAsia, called Don't Call Us Poor, which highlights the multifaceted challenges dysfunctional families face.

He said: "It is one thing to just give out some token, cash, or financial assistance. But that may not resolve their problem. Very often, in the next lap of our social services, we have to emphasise on helping people to stand up to be independent.

“We have to mobilise volunteers to contribute their time and talent, not just their treasures. Time and talent to come and hand hold many of these families. Their challenge is not lack of money per se. That is a symptom.

“Their challenges very often arise from the inability to do simple financial planning, investing in their children's education, providing a positive role model, providing a stable home environment, so that the next generation can be uplifted. And that is where I think we need to put our focus on, in the next lap, beyond just the transfers."


Mr Teo added it is important to deliver on promises and avoid "inter-generational transfers" - taxing tomorrow's generation for policies in place today. MediShield Life - a universal national healthcare insurance scheme, which will kick in later this year, was designed with this in mind.

He explained: "With MediShield Life, what has happened now is we have made it compulsory, and this is a very important feature about MediShield Life … When you make it compulsory, then you can do inter-generational transfer yourself, for yourself. By having yourself pay a higher proportion than need be for that age group, when you are young.

“And that makes sense because when you are young, you have the earning capacity, you have access surplus and you can actually pay more than you need to at that age group for your MediShield premiums. And so what you do (is that) … you adjust the slope so that you pay more when you are young and less when you are older. So the inter-generational transfer now takes place within yourself, and I think that is quite fair.

“So that inter-generational feature is a very important feature of the new MediShield Life, and as we transition from MediShield to MediShield Life, the Pioneer Generation Package will be of great help."

A participant pointed out that one key theme that emerged during the dialogue is that Singapore is in transition and naturally, Singaporeans are anxious. To this, both ministers spoke about the need for Singaporeans to remain united even in the face of diversity, and sometimes putting aside individual preferences for the greater good.

Mr Chan said: "Diversity in itself is not a weakness. Diversity in itself can be a strength. The key is not in diversity per se. The key is how do we as a society achieve convergence after the sharing of diverse views?

“And because the world is so uncertain going forward, the more perspectives we have, the more able we can check our blind spots as a society. The question is do we have the mechanism, the maturity to find convergence beyond diversity so we can take our country forward."

The dialogue, which lasted nearly two hours, involved some 900 people including civil servants, academics, professionals from the private sector as well as civil society groups.


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