Home > Paying through my house, Singapore Scene > Paying through my house

Paying through my house

I like Tharman. It was the first time, ever, that I sat through any budget report. Many of the figures went a little over my head. I was watching his demeanor and I liked what I saw. He sounded more compassionate than many in his team and I liked that. I liked that he saw the difficulty of the poor, the handicapped, the elderly and the less “meritocratic” amongst us. I like the call for dignity for the blue collared workers, although I sniggered that he was quick to qualify that dignity was achieved by attitudes and not by salary alone. Ah well – may write about that one some other time.

 

Of course, the problem of the elderly and their ability to afford healthcare was discussed at length. Much of the help rendered will be well appreciated. There are a host of different subsidies for instance that will bring welcome relief to many. But what really got me thinking is the housing cash grant.

 

Tharman said, and quite rightly, that the elderly worry about healthcare costs. (Dear minister – not just the elderly, but ok, I take your point). He said that what was fortunate for them was that the house they owned was worth a lot, and was something they could tap into. So, if I understood it correctly, his budget proposal was that if they were to downgrade to a three-room flat or smaller, then they would be entitled to a 20k grant, 15k of which would be in cash. The other condition was that they had to first top up their CPF account to fulfill the minimum sum. This in turn would be converted to CPF Life, and would ensure a life-time income of $1200 pm, using the figures he had as an example.

 

It sounded good – $20k is not to be scoffed at. But is this really a good scheme?

 

First of all, the elderly are very afraid of moving. They like the familiar, and to ask them to move is to load them with terrific stress. Be that as it may, moving costs money. For a start, unless the government has ready apartments for them direct from HDB, there is the COV to consider. Then there is the cost of renovation, no matter how minor. How about legal and stamp fees? Should they use an agent to sell/buy their flat, what about the agency fees? The 15k cash can easily be consumed by all these costs. In fact, it may not even cover the costs. Ideally, the sale of the house, after putting in everything back to cover the minimum sum should give the elderly couple decent cash in hand. But would it really? Who would advice them financially and help them do their sums? And would they be moving away from familiar support? Familiar support often comes in the form of children/ family living nearby, and long-time neighbours.

 

Then there are the other family members to consider. Some of these elderly citizens house their children or grandchildren. For them to downgrade will mean tufting their children out. It is easy to say that for most of us, when the children grow older, they will get married and will live on their own. Realistically though, it is getting increasingly difficult for young people to buy their own homes, and mama and papa’s house is where they will have to stay for a while.

 

I suppose my biggest discomfort is the suggestion that, if all else fails, we must pay through our house. Traditionally, the house is a home. It is also probably the only asset of value that we can leave our children. What this is suggesting is that we have to rethink these values, and think of the house as a retirement cum health plan. I am just uncomfortable with that. If there is a chance of downgrading, it is still well and good. But if you are already in a 3 room flat, is there really much to be gleaned to downgrade to a 2 room flat, in the open market?

 

The other day I was just doing some home administration. I happened to look at the medical insurance that my children have. This is a medishield type of insurance. Glancing at the premiums, it is clear that they increase with age – not unfair, since obviously medical needs will increase with age. Premium at age 71 is roughly 2.4k. So for a couple, the premiums will be roughly 5k. Of course this is not the basic plan – I do not have the figures for anything else. Hopefully there is something much cheaper – though that might mean inadequate coverage. In other words, even if there were no need for other costs in the downgrading exercise, the 15k cash the government gives for downgrading can only cover 3 years of health premiums.

 

Tharman said something else. He said that health insurances would be extended to cover those above 90. He also cautioned that this meant that the premiums would go up. Hence the government would be topping up our CPF to soften this increase. Therein lies another problem. The insurance policy that I was looking at stated clearly that premiums were not guaranteed. In other words, as health care costs increase, it is abundantly clear that premiums will go up. With stagnating wages, and cost of living so high, insurance might just be considered a luxury in time to come.

 

At the end of the day, we can drum up ingenious ways to help pay for healthcare. But there is a limit to what can be done. Something has to be done to bring costs down. I feel that too little is being done here. If the hole gets bigger, it will get impossible to patch. A stitch in time saves nine. Using scotch tape will help till the next wash, when the hole will get even bigger.

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  1. February 28, 2012 at 1:40 am

    Good article! Ok to publish this on TRE?
    🙂

    • SpeakSpokeWriteWrote
      February 28, 2012 at 1:43 am

      ok – stay out of trouble! haha

  2. February 28, 2012 at 1:48 pm

    PAP’s view: beggars can’t be choosers. Work hard to get out of begging level… but they forget, when one gets richer, someone somewhere loses and in the past, they just push it out of sight. just like the ponzi scheme. all’s rosy until cash-out time when the whole pyramid falls apart.

  3. ObserverOne
    March 1, 2012 at 10:40 am

    This year budget has a good intention. But its content is very misleading.

    There are two possibilities:

    1. Those who draft its content are too naive and too inexperience to know what consequences and possible scenarios that may result from their policy. However, this possibility is very slim as most of them are very highly paid and highly skilled, with complete set of data, and complete resources to simulate all outcome possibilities of any policy.

    2. Those who draft its content are heartless. This possibility is more likely.

  4. SpeakSpokeWriteWrote
    March 2, 2012 at 12:55 am

    Sigh…Tharman’s latest declaration that those with $1k income can afford to buy a flat is making me rethink my opinion

  5. ObserverOne
    March 2, 2012 at 4:29 am

    Just FYI, in drafting any speech, statements, or announcement, the script went through thorough check and re-check. There is no case of ‘redundant statements’ (i.e. each statement is calibrated to convey certain points). This process is done not by one person, but several professionals.

    So in reading and listening to such statement as you quoted, I am really shocked. I think something is very wrong with their internal process of vetting scripts, calibrating points and statements.

    I really have no idea what the younger team have become.

    • SpeakSpokeWriteWrote
      March 2, 2012 at 8:42 am

      If you check hdb grants, it is true that one can get 80k grant, eligibility conditions apply. A 2 room flat in choa chu kang costs under 100k. So he is not technically incorrect. But, it is like some electronic shop telling you that you can buy a tv for $10 – for the first 2 customers or something. It is a statement that is not wrong and it’s intention is to throw out legitimate concerns – not becoming at all

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