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$8b fund to pay tribute to pioneers

Budget gives major boost to older S’poreans, 1% rise in CPF rate for all

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LEE SU SHYAN on 22 Feb 2014

Singapore Press Holdings Ltd

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IT WAS a Budget that delivered on the promise of thanking and honouring the pioneers of Singapore, whose grit and determination helped build today’s flourishing nation.


Details of the much-awaited Pioneer Generation Package were unveiled by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam yesterday.


The unprecedented $8 billion pioneer fund is the cornerstone of the Budget and consists of health-care benefits for some 450,000 pioneers for the rest of their lives.


These pioneers – at least 16 years of age in 1965, the year Singapore became independent, and who were citizens before 1987 – will enjoy benefits involving outpatient care, Medisave top-ups and MediShield Life subsidies as signalled by Prime Minister Lee Hsien Loong in a speech earlier this month.


Aside from the landmark pioneer package, the Budget had a range of measures to help older workers and elderly Singaporeans as well as address the healthcare-cost concerns of tomorrow’s seniors. There were also moves to help today’s youngsters, with assistance for pre-school and tertiary education for lower and middle-income families.


The Budget continued the themes outlined in 2010 by Mr Tharman when Singapore started on an ambitious restructuring journey to transform the economy and raise average wages.


Yesterday, he talked about focusing on quality growth and building a fair and equitable society as well as continuing on Singapore’s productivity journey. He even made a rallying call for social norms to be changed, “in order to raise productivity and pay”.


But the Budget speech’s centrepiece was Singapore’s pioneers, with Mr Tharman declaring the purpose of the package for them is “to honour the contributions of this whole generation”.


At a projected cost of $9 billion in nominal terms, this will be the largest single measure seen in a single year, but the Government has taken the prudent step of setting up an $8 billion fund. The fund, with accumulated interest over time, is expected to be enough to pay for the package.


Not only does that mean the pioneer generation can be assured the Government will honour its commitment to them, but “the Budget in subsequent years can focus on the needs and challenges of the future, for all Singaporeans”, Mr Tharman said. The cost of the package, together with the other measures announced yesterday, can be fully covered in this year’s Budget without drawing on past reserves. A deficit of only about $1.2 billion will be incurred, which is close to a balanced Budget, Mr Tharman added.


This was also a Budget where older Singaporeans – but not from the pioneer generation – were not forgotten. Singaporeans aged 55 and above this year will enjoy a Medisave top-up of between $100 and $200 annually over the next five years. Older workers also benefit from an increased Central Provident Fund (CPF) contribution rate from next January.


While it was a Budget where the Pioneer Generation Package took the spotlight, the fact that rising health-care costs is a concern among many was not overlooked.


Yesterday’s Budget saw the move to give all workers more in their Medisave Account. Mr Tharman announced the CPF employer contribution rate will go up by one percentage point for all workers, with the increase channelled to the Medisave Account.


Lower and middle-income individuals who are not part of the pioneer generation also received additional help on the health-care front. For example, they will get higher subsidies when they visit specialist outpatient clinics.


Mr Tharman said that achieving quality growth and an inclusive society go hand in hand as we “ensure a caring hand is always there to help those who run into life’s inevitable difficulties”.


Singapore is also going for “quality growth”. Mr Tharman said that “raising productivity is at the centre of the economic agenda. It is the only way we can raise our living standards”.


Businesses will be cheered by an extension of the Productivity and Innovation Credit scheme – which gives tax breaks for firms who improve their processes – among other measures.


Tax partner Gan Kwee Lian from Big Four firm KPMG said that “this is very much a people’s Budget. Almost every Singaporean stands to gain something from this Budget”.


Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission.

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