2econdsight

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BASIC IDEA #2: Enact a Basic Subsiste­nce Allowance For Above 65

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Basic Idea #1 takes care of our youth by suggesting to give them back their right to conceive the kind of future they think, dream possible.

Turn we must now to what we can do for our seniors. They represent a place and a time that most of us will find ourselves someday.
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But raised as we have been under the incessant propaganda of the merits of ‘self-reliance’ the last 50 years– to almost all exclusion of the merits of doing common good or at least to do no evil through indifference or inaction – we first need to choose with great care the words we use to discuss this idea. With leaders and 60.1% of supporters only too happy to prematurely kill any new ideas by attaching terms like ‘raiding the reserves’, ‘burden to/balanced budget’ and most recently, ‘an auction in the elections’ etc without analysing each idea on its own merits, we cannot be too careful.

Therefore, I shall neither use the ‘p’ nor ‘w’ nor ‘e’ words (pension, welfare, entitlement) words. All are anathema to any sensible consideration with the PAP in power. Hence, I suggest ‘Basic Subsistence Allowance’ (BSA). It is what it is and should be; a basic allowance to help recipients subsist. One that cannot be construed to demotivate hard work, savings – or even self-reliance.
But one that is a critical welcome for the relief to those truly struggling day-in, day-out.

Enough has been said about our CPF inadequacies and some commentators have already put forward a basic state pension plan. But next to nothing have been taken up by the powers there be. This is typical of the state-controlled environment we live in. With the 24/7 news cycle, there’ll always be another new news to occupy the short attention span of citizens. Hence, the best move to avoid a topic is to deny it air and eyeball time.

So, any Basic Idea that hope to find traction will have to first overcome the 2 basic obstacles in its way, namely; the default psychological distaste for any talk of pension/welfare and the (reasonable/valid) concern of a large number of citizens whether an idea’s viable or affordable.

Many Western countries with state pension systems face chronic deficits. Looking East, Japan and S Korea are also going through reforms. Taiwan’s route from 1950 towards a pension system can serve to inform us in our quest as well. The lesson appears to be that projected payouts will overburden Taiwan’s treasury even with a monthly amount of just NT$3000 (S$130/-). Therefore, whilst legitimate, the concerns of viability cannot and must not be an excuse NOT to even consider a state-funded allowance.

As such, the overriding consideration, to my mind, is to first get over the very idea of enacting a state-funded subsistence allowance. Let’s first cross the bridge, start conservatively, take the next decade or so to study all the effects that arise from its implementation. With sufficient empirical data of how BSA has worked we can analyse and make the needed adjustments to serve its intended aim.

 

I therefore propose a BSA of S$200/month for every Singaporean reaching 65 years of age. Applying Occam’s Razor to keep it simple, the only condition being every BSA beneficiary must have been a Singapore Citizen for at least 20 or 25 years, regardless of current income or asset status. This is to eliminate freeloading new citizens.

2014 population figures show 11.2% (431,601) of local residents are 65 and above. Assuming 14% PRs, the cost to the treasury will be,

371200 x S$2400/yr = S$891mil/yr

or 11% of the NIRC’s S$8.1bil set aside for the PGP in 2014. Or it’s only a small 7.4% change curved from Mindef’s 2014 monstrous S$12.18bil budget. I mean, where’s the logic to over-secure our land for Singaporeans when a chunk of our own flesh & blood have to live with less?

On current projections, by 2025, the 65+ cohort will net increase to about 500,000 persons. With a non inflation-adjusted S$2400/yr, then BSA will cost S$1.2bil/year, 1/10th what’s spent on fancy planes etc. By then we’ll have a decade of data to analyse for the idea’s viability, effects and how we can improve on it.

Readers will have plenty to suggest or modify the amount, its qualifying terms etc. That’s great; we maximise our combined wisdom. For e.g. how about supplementing the meagre S$200/month with a variable component that leaves the government to decide on with each annual budget, depending on how the country has performed economically. Or to celebrate SG’s milestone (hugely important in solidifying a country’s sense of belongingness.)

Remember, our overriding consideration of the S$200/month Basic Subsistence Allowance, arrived at it with limited info and data analysis, is to find a small enough but budgetary-viable allowance amount to get better-off Singaporeans and the stingy-with-our-elders government used to the idea and learn that any society worth its name and any moral government worth its salt must do some transferring of national wealth to the old and needy amongst us. Such a basic responsibility cannot and must not be used by the government of the day as a vote-buying instrument – ever!

2cents

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One thought on “BASIC IDEA #2: Enact a Basic Subsiste­nce Allowance For Above 65

  1. My question is, for those who retired at 55, what are they going to live on between the ages of 55 to 65? The annuity only kicks in at age 65. In the meantime, are the retirees surviving on love and fresh air?

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