Compulsory Annuity Scheme Unfair To The Poor, Sick And Those Without Longevity Ggenes

Source : The Straits Times, Sept 29, 2007

AS SINGAPOREANS begin to live longer and as our society begins to age, there is this fear that this would put a great strain on the taxpayers and other resources.
To alleviate this problem, the conventional thinking is that the aged should have enough money to take care of themselves. Hence, the idea of a compulsory annuity scheme has been mooted where a pooled contribution would allow any survivor beyond 85 years of age to draw out a monthly sum of income.

Though the Government does not believe in giving out handouts because this would mean having to tax the people more, a compulsory annuity or compulsory longevity insurance would actually be doing just that. Once we strip off the veneer of fanciful names, we will see that as long as it is compulsory and non-refundable, such a scheme would, in fact, be a kind of taxation to finance a handout that will be given to those who have managed to live beyond 85 years old.

A scheme like this would have been laudable if it is not so inequitable. Statistics have shown that the poor, the people with chronic illnesses and those in the lower social class and without a family tend to die earlier than those in the higher social class.

This means that such a compulsory annuity scheme, which pays out only to those after the age of 85, would be depending on the poor, the sick and those without longevity genes to support the healthier and better off.

Furthermore, many of those who live beyond 85 are likely to be those who really do not need the 'handouts'.

The problem of a bulging population of dependents is not something new. After World War II, a baby boom did give governments such a headache. The pressure on governments then was even greater, given the depleted resources of a post-war economy. There were no reserves to fall back on.

In Singapore then, the rate of unemployment was high. Half the population was illiterate and there were not enough schools for the young. Living conditions were appalling. In other words, the majority of the population lived in poverty and filth and always under threat of disease and crime.

The government then had to build standpipes for people to have free water to bathe, wash their clothes and cook their food. It had to provide free health care, free mass vaccinations, free mobile X-rays and free hospitalisation for the poor. Money was not only spent on building schools, it was also spent on free milk to nourish the children who were suffering from poor nutrition and free textbooks for those who could not afford them. Cheap housing had to be built to provide decent living quarters for a growing population and recreation facilities for youths to keep them off the streets.

The problem then, if not more, was no less severe than what we will be facing in future. Statistics projected to 2030 showing only four people who are able to support one aged person are often quoted to show the gravity of the future problem. Is this figure any worse than the number of dependents that had to be supported by one provider in the period after the war?

These same baby boomers who had given governments problems when they were growing up are now part of the elderly boomers who are growing old.

What are the issues facing the governments then and now? Is the problem going to be greater in future than then?

In the past, the need for employment, housing, education, health care, utilities, transport and social facilities was urgent. They were all major items. Now the only big-ticket item is health care. There is no reason why with sensible health-care policies, the high cost of health care could not be overcome. In the past, the Maternal and Child Health Clinics and the School Health Clinics provided very good health care to both the growing baby boomers and their mothers. There is no reason why a similar basic health-care system could not be developed to care for the elderly. Good health care does not necessarily mean executive-class health care.

One of the reasons why many elderly boomers do not have enough money for their retirement is that a lot of their savings was eaten away by expensive health care, some of which may merely be adding a bit of quantity to life without giving it any quality.

Thus, the approach that was used to tackle the problems of the baby boomers should be transposed to tackle the problems of the elderly boomers. We cannot expect a paltry monthly annuity payout to do this. There is no way to avoid government interventions, the involvement of the state agencies and society to deal with the problem.

We need to rationalise health care, especially for chronic diseases and end-of-life care, so as not to make health care a burden to the patient, the family or the state. We have to develop greater social support for the elderly. As with child care, we now need government-subsidised day-care centres, nursing homes and community hospitals. We need to introduce parent-care leave and no-pay leave for people who want to take time off to look after an ailing parent. Instead of the Baby Bonus scheme, we can have elderly-parent bonus scheme and exemption of maid levy for the totally-dependent elderly. A similar scheme like health education and home visits that nurses used to do for rural Singapore could be used for home-bound elderly.

A compulsory annuity scheme that is non-refundable is not only inequitable. By implicitly telling the very old that they have to take care of themselves, we are giving out the signal that the old aged no longer need the family and the society to take care of them. What kind of society would we be if families and society try to wash their hands off the old elderly?

There is no reason why we cannot overcome that problem of the elderly boomers if families, society and the Government put their shoulders together against the wheel. Even if some money is spent, it is worth every cent if what we get in the end is a more compassionate and enlightened society.

After all, with all the prosperity generated by the elderly boomers during their prime, whatever programme would merely be a gesture of gratitude from a country to the people who have served it well.

Dr Wong Wee Nam