Business Times - 21 Mar 2009
The gold among the silver
Lim Boon Heng, Minister in the Prime Minister's Office, is a man who thinks long and hard about population and ageing issues in Singapore. Here, he shares his thoughts with Chuang Peck Ming
THE one thing that Lim Boon Heng doesn't want is for Singapore to start a Ponzi scheme to pay for the long-term care of a fast-swelling pool of old people in the midst of dwindling population growth.
'Somebody told me this - I suppose it was meant to be a joke - that somebody asked (Bernard) Madoff where he got his inspiration for his (multibillion-dollar fraud) scheme. He said it was the American social welfare system,' he recalls.
'Basically, you are ripping off the next generation,' explains Mr Lim who is Minister in the Prime Minister's Office and in charge of population and ageing issues.
Named after Charles Ponzi, a Boston millionaire who cheated some US$15 million from investors in the 1920s, the Ponzi is a fraudulent investment operation that pays returns to investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.
Madoff's US$50 billion Ponzi scheme left many investors, including retirees, high and dry.
Singapore's population is still relatively young but greying quickly. Along with South Korea and China, it is the world's fastest ageing society.
By 2030, it will reach Japan's current ageing level when one in five Singaporeans will exceed 65 years of age.
'Every visitor we have says, 'The clock is ticking but you are more fortunate than us because our population is so aged. So make good use of the lead time you have to put a system in place,' says Mr Lim who will be 62 this November.
But rich as Singapore is, paying out of the state pocket is clearly not the answer to the problem of caring for the aged over the long term.
Having seen so many social welfare plans that have drained government coffers in the West and built up massive debts for later generations, Mr Lim is very mindful of not falling into the same trap.
'The welfare schemes have become unsustainable,' he notes. And they will become more so as people live longer and demand more benefits.
Yet it is a politically tricky issue. Simply shunning welfare plans is not the option. At least some support systems have to be devised - the challenge is how to finance them.
'It's one of the key things we have to do,' Mr Lim says. 'If we're able to sort out the financing problem, then a lot of the problems are actually solved. Because, if people have income, then they can pay for whatever expenditure that's necessary.
'(The most scary thing) if we don't do anything, given the way things are going - when you have a lot of seniors needing money, services - then they would look to the government of the day to provide,' he says. 'But the government of the day may not be able to provide over the long term.'
It's curious how the greying and population issue has evolved. In the 1960s and '70s, Singapore's nightmare was the prospect of over-population - and not having enough to feed and house Singaporeans. The 'Stop at 2 children' move nipped the problem in the bud.
Indeed, so successful was it that one wonders how much the 'Stop at 2' policy - which practically capped the number of kids to two in each family - has contributed to today's slow growing and fast ageing population in Singapore.
'It probably accelerated the decline of our TFR (total fertility rate),' Mr Lim says.
But he was quick to add that even without the policy, Singapore will still be confronted with low births.
'If you look at Taiwan and Hong Kong, their fertility rates are as bad as ours,' Mr Lim says. 'In fact, the Taiwanese want to claim theirs' is worse than ours' - and they never had a 'Stop at 2' policy.'
Also China, which still has a 'One-child' policy. 'In the cities, if they lift this (policy), I think they will still have a low fertility rate,' he says.
Mr Lim says that, along with extended lifespan, low fertility is a product of modernisation. 'There are all kinds of theories as to why fertility rates have gone down. (Francis) Fukuyama (author of The End of History and the Last Man) blames it on the (birth control) pill.'
Scholars have noted the irony of it all. Mankind has been searching for the elixir of life for the longest time. It has yet to discover the secret of prolonging our life indefinitely, but the advances made in health care and income have led us to live longer than ever before.
Yet extended lifespan seems to have brought us more woe than joy. We worry about where to get the extra money to support us and pay the medical bills that are sure to mount with the frailty of age.
Such problems multiply many times over on a nationwide scale, adding to the burden of government. And they are crossing borders to become global issues.
Living longer is not simply populating ourselves with more old people. We also end up with not enough young people to replace the old after they leave this world - and revitalise the labour pool that keeps the economy growing strongly.
But Mr Lim, who was the leader of the labour movement for more than a decade before he took up his present job, says the fear of labour shortage may be exaggerated. 'The developed countries are beginning to see older people as resourceful, (people) you should make use of,' he points out. 'So therefore, labour resource may not be as big as an issue as we think it is. It's a big issue if we assume everybody has to retire when you are 60 or 62. But if we regard people (who are) 65 and 70 as useful, as productive agents, then labour is not necessary an issue.'
Putting a minister in charge of population and ageing issues reflects the need to put a high-powered official to juggle the implementation of policies that cut across ministries; it also shows the government is serious in dealing with the issues.
'We're doing as fast as we can (in tackling them),' says Mr Lim who has been at it for about two years.
One of the 'very important' achievements under his watch is to raise the retirement age. But he concedes that the current economic crisis would set this back by 'at least a couple of years', he says.
'We have to keep on pushing so that we won't slip back too much - and then when the recovery comes, we can push faster,' Mr Lim says.
Still, at least, attitudes among Singaporeans have already changed for the better.
'Today, most people want to work longer,' Mr Lim says. 'Which is quite different from the 1980s.'
Work longer - and save more - this is what he wants more Singaporeans to do to cope with living longer. And they are the key pieces in the government's broad strategy to tackle the problems a greying population.
CPF Life, a compulsory annuity plan which kicks in in 2013, will take care of the daily expense of the aged for life. But it doesn't take care of their long-term care, such as nursing homes or home care for those bed-ridden and who are infirm.
'We need to look at the long-term financing (of such care) - it's something relatively undeveloped for us,' Mr Lim says.
Health care for the aged is already taken care of by Medicare and MediShield, he says. ElderShield and Medifund Silver do cater to long-term care, but the monthly payout of $400 capped at six years may not be enough.
Mr Lim says the well-off can afford long-term care and the very poor will be looked after by the voluntary welfare orgnisations.
'But for the broad middle income, this is something which we should have to put in place, so that they can afford long-term care if they need it,' he says.
Mr Lim is looking at how others are doing it, including Japan, the Netherlands and Finland. Japan has introduced long-term care insurance in 2000 to ease the strain on its public healthcare insurance system. The Netherlands has a compulsory national social insurance for long-term care, financed by a 12 per cent contribution from wages. In Finland, the government is the main provider of care for the elderly, based on the principle of universality.
But he is ruling out adopting any of these. He thinks the Japanese system encourages an entitlement mentality and over consumption of care services. The payout is in services without a cap - and it is run by by private-sector operators who want to push for more services and higher premiums.
The contribution for the Dutch system is pretty hefty, while the money for Finns' scheme comes from the state which Mr Lim thinks is unwise.
Singapore's ElderShield, in the end, seems more appealing to him.
'The ElderShield principle is sounder,' Mr Lim says. 'Although it is an insurance, there's a limit to it (the payout). We clearly specify how much you can get out of it. Individuals have to decide what type of services you will buy.'
He thinks Singapore has taken the right track with ElderShield and, with refinements, it can provide the basis for long-term care financing. 'Maybe we need the equivalents of the 3Ms (Medisave, MediShield and Medifund) - ElderShield, Eldersave and Elderfund,' says Mr Lim who had set up NTUC ElderCare to learn about taking care of the elderly when he was in the labour movement. 'Or maybe it is possible to enhance the 3Ms.'
He says he is still toying with these ideas but, until the current economic crisis is over, 'I don't think we can implement the 3Es.'
Another key concern occupying Mr Lim at the moment is how to make life easy and fun for Singaporeans in their golden years. Among such 'ageing-in place' improvements made are lift upgrading in public housing estates, providing barrier-free accessibility; and building smaller studio apartments.
A pilot 'Wellness Programme' has also been launched to encourage active engagement among neighbours and promote healthy lifestyles and social bonds.
'While we set about to deal with the challenges arising from an ageing population, we must not forget that the extra years we have is also a blessing,' he says. 'How can we help seniors add life to years?'
In fact, Mr Lim's Ministerial Committee on Ageing, which was set up in early 2007, will soon release a report called Adding Life to Years which update on what the government has done to prepare for an ageing population. 'It contains practical and comprehensive information on how Singaporeans can prepare for ageing,' he says.
The committee, chaired by Mr Lim and made up of several key ministers, meets every quarter to discuss a range of issues grouped under four 'strategic thrusts' - boost employability and financial security of older Singaporeans; enable ageing in place; provide holistic and affordable health care and elder care; and promoting active ageing.
Mr Lim says he has been fascinated by 'the changing demographic structure and its implications' since the 1980s. 'As a backbencher, I spoke on the subject,' he recalls. 'Working in trade unions, I had to understand workers' needs, not just when they are working, but when they retire.'
When he stepped down as secretary-general of the National Trades Union Congress (NTUC) after 13 years, he was asked what he wanted to do?
'I said my interest is in setting up services for the elderly,' Mr Lim says. 'I would have been happy doing whatever I can with NTUC ElderCare.'
And that's how the man came to be picked for the job of handling Singapore's population and ageing problems.
LIM BOON HENG
Minister in the Prime Minister's Office
Born: Nov 18, 1947, Singapore
Marital Status: Married with 2 children
Education: Montfort Primary and Secondary School, University of Newcastle-upon-Tyne, UK, Naval Architecture
Career: 1970-80 Neptune Orient Lines
Trade union career (NTUC)
1981: Deputy director
1983: Assistant secretary-general
1987: Deputy secretary-general
1980: MP for Kebun Baru
1991: MP for Ulu Pandan
1997: MP for Bukit Timah GRC
2001: MP for Jurong GRC
1989-91: Deputy Speaker of Parliament
1991: Senior Minister of State (Trade and Industry), Chairman, National Productivity Board
1993: 2nd Minister (Trade and Industry), Minister, PMO, Minister without Portfolio
1995: Chairman, Productivity and Standards Board
2002-2003: Chairman, Standards Productivity and Innovation Board
2004: Chairman, PAP Executive Committee
2006: Minister, PMO