5.1 As we develop as a global city, we must build up our
resilience as a community and help every Singaporean make
the best of the opportunities that will come. Our big advantage
is that our economy is growing, we are attracting investments,
and more jobs are being created. Our education system provides
opportunities for all to develop their potential. All Singaporeans
therefore have the chance to further their learning, to upgrade
themselves, to earn a good living, and to provide for their
5.2 This desire to learn, work and do well and look after
our families has been, and must remain, the foundation for
our success. We will only have a resilient community if each
of us strives to be self-reliant.
5.3 However, even as our economy grows and does well, we
have to address two key challenges that we face together as
a community. First, we must help our lower-income workers
cope with the continued pressures on their wages in a globalised
world. This is a collective challenge, not just a challenge
for the individuals concerned. Second, we have to help Singaporeans
save more for their retirement and prepare for healthcare
needs that come with aging, so that they can look forward
to the happy prospect of longer lives.
5.4 Last year we made significant moves to address these
challenges. The new Workfare Income Supplement (WIS) scheme
is a major social intervention, using public resources to
boost the incomes of those at the lower end of the wage ladder.
We also reduced both the employer and employee CPF contribution
rates for our lower-income workers, to help them stay employed
and increase their take-home pay.
5.5 We made further changes to the CPF system last year to
enable Singaporeans to save more for retirement. Singaporeans
can now expect to receive higher interest rates on their CPF
savings, especially those with smaller balances. We also committed
to providing the older cohorts of CPF members with bonuses,
the V- and D-bonuses, for deferring the draw-down of their
5.6 I will outline, in the next part of the speech, further
measures that the Government will take to help Singaporeans
prepare for old age as well as measures to help the most needy
and vulnerable in our society. I will also set out measures
by which we will share part of the surpluses from last year
Enhancing Financial Security
5.7 This year, we are moving on four further initiatives
to help ensure adequate savings for retirement.
5.8 Firstly, we will encourage Singaporeans to voluntarily
put aside more savings whenever they can. We will make it
easier for Singaporeans to top up CPF accounts for themselves
and their family members in order to meet the Minimum Sum,
and we will provide more tax incentives for them to do so.
5.9 The Ministry of Manpower will now allow members below
the age of 55 to top up their CPF savings up to the Minimum
Sum. Further, employers will now be allowed to make top-ups
to their employees’ Minimum Sum.
5.10 To encourage this topping-up of CPF accounts, I will
broaden the tax reliefs currently available. Today, there
is a single $7,000 tax relief available for qualifying Minimum
Sum top-ups either for oneself or for one’s family members,
provided the beneficiary is aged 55 and above. I will allow
two separate tax reliefs - up to $7,000 for top-ups by the
member or his employer to his own Minimum Sum, and up to another
$7,000 for top-ups to other family members’ Minimum
Sum. Both reliefs will apply regardless of the age of the
recipient when the top-ups are made. We therefore have a single
$7,000 relief that is now being changed to two $7,000 reliefs,
for top-ups to the member himself and to his family members
respectively. Employers will also enjoy a full tax deduction
for top-ups to their employees’ accounts.
5.11 To encourage savings to meet medical needs, I will also
provide tax relief for voluntary contributions that CPF members
specifically direct to the Medisave Account. This will help
more CPF members meet the Medisave Minimum Sum.
5.12 The Supplementary Retirement Scheme (SRS) provides a
tax incentive for Singaporeans as well as foreigners to save
for retirement outside of the CPF system. Today, only employees
are allowed to contribute to the SRS. To enable employers
to play a part towards the retirement savings of their employees,
we will allow them to directly contribute to the SRS on behalf
of their employees. This will provide an inexpensive method
for employers to provide retirement benefits without the need
to set up company pension funds, which may have high overheads.
With more Singaporeans now working beyond the retirement age,
we will also remove the age limit on contributions to the
5.13 As Minister Ng Eng Hen has recently stated, the Government
has accepted the recommendations of the National Longevity
Insurance Committee on the CPF LIFE scheme. It puts in place
a major new plank to ensure Singaporeans a stream of income
for as long as they live.
5.14 From 2013, CPF members will join CPF LIFE automatically
when they turn 55 as long as they have at least $40,000 in
their Minimum Sum. The first cohort to do this will be those
aged 50 this year, who will turn 55 in 2013. We also want
to encourage those with less than $40,000 in their Minimum
Sum as well as members who are older than 50 this year to
join the scheme when they turn 55.
5.15 We have decided to provide a special bonus to the first
few cohorts of CPF members who will participate in CPF LIFE.
These older cohorts generally earned less over their working
years compared to what younger Singaporeans currently have
and can look forward to. By the time these older cohorts join
CPF LIFE, they would also have had less time to benefit from
the extra 1% interest that CPF members now receive on the
first $60,000 of their CPF balances. Further, younger cohorts
will also be able to benefit from more years under the WIS
scheme, which provides significant top-ups into their CPF
accounts, plus cash payments.
5.16 The Government will provide a sign-on bonus for the
first five cohorts of CPF members who join CPF LIFE,
in other words, those aged 46 to 50 this year. We call this
the LIFE Bonus, or the L-Bonus. It will be given to members
when they enrol in the scheme at age 55.
5.17 The L-Bonus is targeted at the lower and middle-income
CPF members. It will be given to members whose annual income
when they sign on to the LIFE scheme is $54,000 or less, and
whose annual assessed property value is $11,000 or less, which
will include all HDB flats. These make up about 80% of
the cohort aged 50 today, including those whose Minimum
Sums are too low for them to be automatically enrolled in
the LIFE scheme.
5.18 The amount of the L-Bonus will vary such that older
and less well-off members will receive more. For members aged
50 this year, they can expect to receive between $2,200 and
$4,000. A 50-year-old who lives in a five-room flat and earns
between $24,000 and $54,000, in other words, a middle-income
50-year-old, will receive $2,200. However, a 50-year-old who
lives in a three-room flat and earns less than $24,000 annually
will receive $4,000 when he joins the LIFE scheme. If he has
$40,000 in his Minimum Sum, $4,000 amounts to 10% of his retirement
5.19 The youngest eligible cohort, those aged 46 today, will
get around 30% of what the 50-year-olds receive.
Table 2 - Structure of L-Bonus for those 55 and older in
5.20 Professor Lim Pin’s committee had recommended
that the Government provide a one-off incentive to facilitate
greater participation and opt-in by members who are not automatically
included in the scheme. The Government agrees with the committee’s
recommendation and will extend the L-Bonus to this group of
5.21 Therefore, if members have less than $40,000 in their
Minimum Sum, but want to participate in the LIFE scheme,
we will help them to do so and give them the L-Bonus as long
as they are willing to make a reasonable contribution to their
balances and accept lower monthly payouts. This is particularly
important for many of the women, who may have been housewives
or stopped working early and do not have enough in their accounts.
The L-Bonus will encourage their husbands or other family
members to top up their accounts so that they can join the
5.22 We will also extend the L-Bonus to older members above
the age of 50 this year who choose to opt into the scheme.
They can opt in when they reach 55. But if they have already
passed 55 when the scheme is introduced, they will have to
opt in within a year from that time. All these older members
who choose to opt in will receive the same amount of L-Bonuses
as those aged 50 this year.
5.23 The Government will set aside $770 million over three
years for the L-Bonuses, including $260 million out of this
5.24 Details on L-Bonus are at Annex
Helping Singaporeans Meet Healthcare
5.25 We are investing heavily in healthcare. The Government
is spending $900 million over the next five years to upgrade
and expand facilities at NUH, SGH, and the National Heart
Centre, and to build the new Khoo Teck Puat Hospital in Yishun.
We will also spend another $1 billion over the next five years
to recruit and train more healthcare professionals, including
not only doctors, but also pharmacists, physiotherapists and
other allied health professionals in the public sector. This
is on top of the additional 40% more nurses that we had previously
committed to bring into the public sector. It will mean more
well-qualified staff to take care of each patient - more nurses
and more allied health professionals of various specialisations.
5.26 But as we spend more on healthcare, we must ensure that
our commitment can be sustained not just for a few years,
but over the long term. Means-testing has had a thorough debate
over the past several weeks. It is the only realistic way
to ensure that high quality healthcare can be delivered to
all, including lower-income patients, without placing an unsustainable
burden on taxpayers as a whole. Minister Khaw Boon Wan has
assured Singaporeans that he is sensitive to the concerns
of the middle-income group, who will continue to be subsidised
at Class C and B2 wards, though at a reduced rate compared
to the low-income patients.
5.27 To protect retirement savings from being depleted by
heavy expenses due to catastrophic illnesses, we must also
ensure that our people are adequately covered by medical insurance.
MOH will be enhancing MediShield to
provide better coverage for patients with large hospital
bills, with some adjustment to MediShield premiums in
tandem with this. To help older Singaporeans pay for their
medical bills and their increased MediShield premiums,
we will top up the Medisave accounts of all those aged
51 and above by up to $450** this year. This will cost
the Government $220 million.
Table 3 -Structure of Medisave Top-ups
: As announced by the Minister for Health
on 17 April 2008, the top-up for those above the age of
80 will be raised to $550. This will raise the cost of the
Medisave Top-ups to $226 million.
To encourage employers to provide
portable medical benefits through Medisave and MediShield,
we will also relax the criteria for them to enjoy tax
deductions up to the higher cap of 2% of their wage bill.
Beyond regular Medisave contributions, employers will
now be allowed tax deductions up to the higher cap if
they make ad hoc contributions to their employees’
Medisave accounts, or if they purchase MediShield or Medisave-approved
private integrated plans for their employees. Details
of this are in Annex
5.28 We are also setting aside more funds to help the elderly
and needy. The ElderCare Fund is already being fully utilised
to support older Singaporeans who need long-term care in nursing
homes and other step-down care facilities. We will top up
the ElderCare Fund by $400 million this year, bringing its
size to $1.5 billion. Medifund, which supports the needy,
is also being well utilised. We will top it up by $200 million
this year, bringing the fund size to $1.6 billion.
Taking Care of the Vulnerable
5.29 We will continue to refine the safety nets to help the
most vulnerable in the community. We have to do this in a
calibrated fashion because the last thing we should do is
to weaken the incentive for the individual to find a job and
stay in one, or undermine the responsibility that family members
have towards each other. These twin values have underpinned
our programmes for social assistance and will continue to
5.30 The Public Assistance (PA) Scheme applies to needy Singaporeans
who are unable to work and have no other means of support.
In addition to their PA allowance, they are given a PA card
which makes them eligible for free healthcare and many other
subsidies, as well as extensive community support. Last year,
we raised the monthly PA rates to $290.
5.31 Many, including our MPs, have asked that the PA rates
be reviewed again. MCYS has done so. Following this review,
the Government has decided to increase the monthly PA rate
for a single-person household further to $330. This will give
households on Public Assistance more assurance that they can
meet their basic needs. Minister Vivian Balakrishnan will
provide more details in the MCYS COS, including other changes
to the Public Assistance Scheme.
5.32 I will also top up the ComCare Fund by $200 million
this year, bringing it to $800 million. This will support
our efforts to help the needy to obtain jobs, look after their
children’s needs and integrate into the community.
5.33 2007 was a good year for Singapore. Our fiscal position
is strong. We can therefore afford to share some of the budget
surplus with Singaporeans. I will distribute the surplus to
all Singaporeans, but with particular focus on the lower and
middle-income groups and older Singaporeans. Their needs are
greater, and they are more affected than better-off Singaporeans
in the current climate of rising prices.
5.34 I had earlier in the speech announced top-ups to the
Post-Secondary Education Accounts (PSEA) and Medisave accounts,
as well as Personal Income Tax rebates, as part of this surplus
5.35 I have also decided to give Growth Dividends to all
adult Singaporeans, to be paid out in two instalments in April
and October this year. Those who have already signed up for
their GST Credits will automatically receive their Growth
5.36 We will give the needy more, using the same framework
that has been used for GST Credits. A lower-income Singaporean
living in a three-room HDB flat or smaller, will receive a
Growth Dividend of $400. This is on top of the $250 in GST
Credits that he will be getting this year. The majority of
Singaporeans, who live in other HDB flats and do not have
high incomes, will receive a Growth Dividend of $300, which
will be on top of $200 in GST Credits that he will get this
year. This is the same framework that we used for the GST
Credits - looking at the Annual Value of the home and Annual
Income of the individual to determine how much credits he
5.37 I will give older Singaporeans, those aged 60 and above,
more. Most older Singaporeans will receive one and a half
times what other Singaporeans will receive.
5.38 As with the GST Credits, we will include everyone. Those
with Annual Incomes more than $100,000 will receive a Growth
Dividend of $100 (Table 4).
5.39 Table 4 - Growth Dividends*
*Afternote: As announced
by the Prime Minister on 17 August 2008, Singaporeans will
receive a one-off 50% enhancement to the second installment
of Growth Dividends (GD). Figures in brackets show the increment
announced at National Day Rally 2008. This will raise the
cost of the Growth Dividends to $1.06 billion.
5.40 As before, we will provide the option for Singaporeans
to donate their Growth Dividends to charity, so that those
who wish to can conveniently contribute to a cause of their
5.41 We will give an additional dividend to those who have
served and are currently serving national service. NSmen,
ex-NSmen and NSFs, including those below 21, will get an additional
$100 of Growth Dividends, to recognise their contributions
to our nation.
5.42 The Growth Dividends will cost the Government $865*
million this year.
5.43 For government pensioners, the Government has decided
to increase the Singapore Allowance further by $20 per month,
and raise the gross pension ceiling from $1,150 to $1,170.
This will give an additional $3 million a year to pensioners
residing in Singapore.
5.44 There are some families who may need additional support,
in meeting rising costs, beyond the significant sums they
would receive in the GST Offset Package and the Growth Dividends
that we are providing this year, as well as beyond the existing
Government assistance schemes. Last year, as part of the GST
Offset Package, we provided CCCs, Self-Help Groups (SHGs)
and VWOs with extra funds to help needy families. We gave
these groups $10 million over five years. This year, we will
give these groups an additional $10 million. This would give
them an extra $20 million on top of regular funding over the
five-year period. They are best placed to decide on which
families need additional assistance. Over the last year alone,
about 8,000 low-income families have been helped by the CCC
5.45 Taking together all the measures in this year’s
surplus sharing package a retiree household in a two-room
flat will receive $2,100, comprising their Growth Dividends
and Medisave Top-ups. This is on top of the $1,300
that they will also be receiving this year as part of the
GST Offset Package introduced last year (Chart 4).
Chart 4 – Benefits that a retiree household in a two-room
flat will receive
5.46 Take a middle-income family living in a five-room
flat, which is also typically a larger family, comprising
two working parents with two children, one in primary school
and one in secondary school, and one grandparent. They will
receive a total of $2,500 - $1,150 in Growth Dividends, $900
in PSEA top-ups, $450 Medisave top-up. This $2,500 is on
top of the $1,900 that they will also be receiving this
year as part of last year’s GST Offset Package (Chart
Chart 5 – Benefits that a middle-income family living
in a five-room flat will receive
5.47 Overall, the rebates and dividends are weighted towards
middle and lower-income households. Higher-income households
will receive more in absolute dollars, because of the rebate
on the higher personal income taxes that they are paying.
However, lower and middle-income households will get more
as a percentage of their incomes from the 2008 surplus sharing
exercise. This is even more so if we include what they will
receive this year as part of the GST Offset Package that was
introduced last year and the WIS. When you put the two together
- what they will receive this year in benefits from
last year’s package plus this year’s package -
will be a very substantial proportion of incomes at the lower
end. The distribution is also highly progressive (Chart
Chart 6 – Benefits that will be received in 2008 as
a percentage of annual income
5.48 In total, we will be giving out $1.8 billion worth of
benefits to Singaporeans as part of this surplus sharing package.
This is our approach. When we have higher than expected economic
growth and strong surpluses, we will share the benefits with
Singaporeans while setting aside sufficient resources to meet
future needs and challenges.