Ageing is a global phenomenon, but we are better prepared

Ageing is a global phenomenon, but we are better prepared

In fact, the UN has described population ageing as one of the defining features of our times.

Countries are seeing populations age at an unprecedented rate. The level of ageing will differ.

In Japan, the sales of adult diapers has surpassed diapers for babies at Japan’s largest diaper maker, Unicharm since 2011. Singapore will hit Europe’s current levels of ageing around 2020, and Japan’s current levels by around 2040.

But we are also ageing more rapidly than most countries.

For example, it took France over 100 years to transit from an “ageing” society, with 7% of the population aged 65 and over, to an “aged” society, with 14% of the population aged 65 and over.

It has taken us only 19 years – we crossed that mark last year.

However, we are much better prepared than others.

The need to prepare for an ageing population could already be seen then by the mid-1980s – life expectancy was increasing and the baby boomers had already all been born.

However, in the mid-1980s many people might not have been ready to think that far ahead and contemplate the measures that were needed to deal with this situation.

Nevertheless, we were able to take several measures early to set in place resilient institutions that are built upon strong foundations and principles.

These have now put us in a better position to look after ourselves, and as a society, as we age. 

CPF: A PILLAR

One such pillar is the Central Provident Fund (CPF) which helps Singaporeans to save for their old age, helps cover medical expenses and to purchase basic health insurance.

This is a fully-funded system, and will be sustainable for generations to come. This is the fundamental difference and strength.

In many other countries, pension promises are not fully funded, and pension payments have to be met from current government budgets, placing a great strain on the current working generation.

The CPF system was improved significantly in 2009 with the introduction of CPF LIFE.

CPF LIFE provides lifelong payouts for future cohorts of seniors, by pooling together our longevity risk.

In this way, our seniors are assured of monthly payments for as long as we live, compared to the previous CPF system, where seniors got a fixed amount but risked living beyond the time when their own CPF retirement accounts ran out.

For those unable to save enough by themselves, we have targeted assistance such as through housing grants, Workfare and Silver Support.

For healthcare, we now have MediShield Life, which provides life-long universal health insurance coverage for all.

Introduced in 2015, MediShield Life made a significant improvement over the earlier MediShield, which only provided health insurance coverage up to the age of 92, on an opt-out basis, and did not cover pre-existing conditions.

MediShield Life deal with these shortcomings of the old MediShield plan.

MediShield Life also means that seniors need not worry about not qualifying for health insurance due to pre-existing conditions or living beyond the age when they can get health insurance.

The improved benefits such as increased coverage and removal of the lifetime limit, provides additional protection and peace of mind for Singaporeans for life.

The introduction of CPF LIFE and MediShield Life are game-changers.

These national social risk-pooling schemes mean that, to a larger extent than before, we are all helping one another to cope better together with the uncertainties associated with ageing.

With this national risk-polling, we are facing the challenge together.

Healthcare Expenditure

Our healthcare expenditure to look after our seniors therefore comes from: (1) sharing risk collectively through MediShield Life, (2) our own Medisave accounts, and also (3) significant subsidies from Government to hospitals and polyclinics for subsidised healthcare, such as in our B2 and C wards.

The doubling of our population of seniors by 2030 means that the subsidies that we provide from our government budget for healthcare will grow very substantially, even if we assume that there are no pay rises for doctors or nurses in the coming years, and we use the same drugs at the same cost as today.

We expect that health expenditure may overtake education in our government budget in the coming years. And we will have to make sure that our budget remains on a sound footing so that we have the resources to take care of our seniors as they age.

These measures – CPF LIFE, MediShield Life, and a sound government budget sufficient to fund our current healthcare needs, have put us on a firmer footing than many other countries.

But we need to be careful to ensure government finances remain sustainable, and can provide for our future needs. What our past generations have done for us, to place all of us as a nation on a firmer footing to age with confidence and vigour, we must also continue to build on for our future generations.