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GE2020: PAP's Tharman warns of ‘nice sounding promises’ on seniors, urges S'poreans to understand rationale for CPF, other schemes

SINGAPORE — The People’s Action Party’s Tharman Shanmugaratnam on Tuesday (July 7) stressed the importance of both the Government and society taking responsibility for the retirement needs of seniors and other Singaporeans, noting that leaving individuals to do so could lead to greater inequality over time.

The People's Action Party's Mr Tharman Shanmugaratnam.

The People's Action Party's Mr Tharman Shanmugaratnam.

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  • Mr Tharman said every election “very nice sounding promises” are made on helping seniors
  • Calls for Singaporeans to be able to withdraw CPF monies earlier was an example, he said
  • He urged people to understand the rationale of the CPF system and schemes such as Medishield Life

 

SINGAPORE — Mr Tharman Shanmugaratnam of the People’s Action Party on Tuesday (July 7) stressed the importance of both the Government and society taking responsibility for the retirement needs of seniors and other Singaporeans, noting that leaving individuals to do so could lead to greater inequality over time.

Speaking during an episode of the Straight Talk with PAP series streamed via Facebook Live, Mr Tharman noted that every election, “very nice sounding promises” are made by the opposition on what should be done to help seniors.

He cited calls for Singaporeans to be able to withdraw their Central Provident Fund (CPF) monies earlier, or for the Government to meet healthcare costs such as by paying for MediShield premiums.

“It is not surprising that this comes up in elections...(but) many of these measures will end up hurting the people,” he said.

He noted that “country after country” has tried to do away with a social security system in which the Government takes responsibility and ensures that people have enough retirement savings. Invariably, this has led to greater societal divisions, he said.

“If you just leave it to individuals, what you'll find is that society becomes more divided. And it becomes more unequal in the years when people are the most vulnerable, which is the older years,” he said.

“It happens in society after society. If you leave it to individuals to make decisions on their own and each individual deciding how to invest their funds or spend their money, you just end up with more inequality.”

He cited the example of the United States, which has implemented a more liberal market-based system for retirement savings.

“If you look at people in the bottom 20 to 30 per cent of their population, they now enter retirement with negative net worth, which means their debts exceed their savings,” said Mr Tharman, who described it as a “very serious situation”.

This is the same scenario faced by other countries which liberalised their systems after facing political pressures, he added.

Countries such as Denmark and Finland, which have moved towards providing earlier payouts from their pension system, have also tried to reverse course, he noted.

“We must do what is in the interests of those who need help most, the lower income and the middle income, provide flexibility, and we’ve evolved the CPF system to provide a lot more flexibility.”

Mr Tharman also urged Singaporeans to understand the basic rationale of the CPF system and schemes such as Medishield Life.

“The basic rationale is that you’ve got to take collective responsibility for each other. You cannot leave each other to fend for ourselves, we cannot say that everyone decides for themselves, and somehow things are going to end up rosy.”

A FAIRER, MORE JUST SOCIETY

During the 45-minute session titled “Our strategies for an inclusive society”, Mr Tharman said that the PAP’s strategies are aimed at building a “more fair and just society” for all Singaporeans from all walks of life and age groups.

Mr Tharman also spoke about how Singapore’s productivity and wages have grown, giving the analogy of a moving escalator that Singaporeans need to be on.

He elaborated on how providing seniors with a sense of security and the ability to “live life to the fullest”, even in their silver years, is firmly on the PAP’s agenda.

One example is the CPF system, which allows Singaporeans to “take collective responsibility for one another” and share risks.

He added: “We don't know who's going to live longer than the others. We don't know who's going to have the misfortune of having a serious illness, and we don't know who’s going to get the wrong end of life’s vicissitudes, but we’ve got to share the risks together.”

In Singapore, the Government chips in to provide additional support, on top of Singaporeans making their own payments and contributions, said Mr Tharman.

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SILVER SUPPORT SCHEME

He pointed to the enhancements made to the Silver Support Scheme, recently announced by then Deputy Prime Minister Heng Swee Keat, which will provide payouts to seniors of up to S$900 every quarter, from January next year.

“So when you think of that system, it involves us taking collective responsibility, sharing risks of not saying every individual on their own. It also involves the Government providing additional support for the poor and the middle income,” he said.

Mr Tharman also acknowledged that a system where the Government pays for each individual has “great appeal of simplicity” but it leads to greater inequality as individuals who are better off will get the same benefits as the poor.

This also means that the middle income group will end up paying higher taxes, he added.

“Yes, the rich can pay somewhat more taxes but there's no way in which the sums will add up, without also raising taxes significantly for the middle income group, which is the way it is in all the advanced countries... that people sometimes think of as some sort of dream society,” he said.

He calculated that if Singapore adopted that model, the average person in the middle of the income ladder would have to pay about 17 per cent in income tax and another 19 per cent in Goods and Services Tax, which could add up to more than one-third of their income going to the Government in taxes every month.

This is in comparison to the average 2 per cent income tax and the 7 per cent GST rate Singaporeans are paying currently.

“So, nothing is for free. When you talk about the Government paying for everyone in healthcare, or the Government having to subsidise all manner of other social schemes… think about who is really paying?” said Mr Tharman, reiterating that Singaporeans have to think about the fairer system of taxes and payments.

He noted that as society gets older, taxes would have to rise because expenditures will go up but it would be better to try to keep taxes as low as possible on the middle class and use government revenue to help those who need it most, which is the poor, the lower income group and, to some extent, the middle income group.

"Don’t just raise taxes across the board because the Government needs to pay for everything,” he said.

“Some promises look appealing but they actually lead to greater inequality over time. Think hard about the need for a fair system, a progressive system and a sustainable system and that is what we are trying to achieve.”

Related topics

Tharman Shanmugaratnam SGVotes2020 Singapore General Election PAP

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