The hole just gets deeper

The hole just gets deeper

SINGAPORE - GST hike, raised utility bills, HDB flats at unaffordable prices, hefty healthcare bills and raised transport fees - all of which are common gripes regarding the relentless cost of living in Singapore. It doesn’t take a rocket scientist to figure out that Singapore is an expensive place to retire in.

And our government is waking up to the reality, and have proposed measures. One proposed solution is to exhort Singaporeans to retire in overseas destinations where costs of living are lower. Our government has actually sent teams to survey potential sites slated to host retirement villages in Batam and Johor Baru (JB). And Mr Khaw Boon Wan has recently jumped on the bandwagon with his suggestion that aging Singaporeans can retire in JB. However, what the government may not realize is that this is a short-term solution that can snowball into a glut of unwanted scenarios.

The fact is that in reality, Singaporeans do want to retire overseas. The Tsao foundation conducted a survey in which 300 Singaporeans aged between 21 to 55 were queried on their retirement plans. The results? A staggering two-thirds of the respondents cited that they want to retire overseas, with Australia and Malaysia being popular destinations. The reasons? A slower pace of life and lower costs of living.

What the government does not realize is that in encouraging Singaporeans to retire overseas, it is also an indirect, albeit unconsious endorsement of migration to retiree-friendly pastures. And when Singaporeans migrate, this is not a good thing as far as our government is concerned. Why is this so?

For one, the healthcare system may see an oversupply of doctors. Aging Singaporeans form a substantial customer base for our healthcare providers. And a while ago, the list of recognized medical degrees qualifying medical graduates for practising licenses has expanded in a move to expand the supply of doctors. The demand-supply dynamics will obviously be affected should a significant customer base be eroded.

If that is not enough, it may not be a rosy scenario for the government body charged with handling our Central Provident Funds (CPF). The current policies dictate that Singaporeans can withdraw part of their CPF savings save for a certain amount set aside in what is known as the CPF Minimum Sum when they are 55 years old. If the latter stays in Singapore or West Malaysia, a monthly payment will be given from their Minimum Sum to meet their retirement needs. By 2013, the Minimum Sum will be set at $120,000. Unsurprisingly, this leads to the perception that the government is implementing measures that make the withdrawal of CPF even harder.

However, the equation changes when Singaporeans migrate to destinations other than West Malaysia, giving up their citizenship in the process. And why not? After all, citizens in some of these countries benefit from retiree-friendly policies such as pension schemes, access to basic services and others. Combined with the withdrawal of their entire CPF savings, they are enjoying the best of both worlds. However, the government body charged with handling our CPF wouldn’t dare contemplate the scenario of a massive CPF payout to a huge influx of migrated “Singaporeans”.

And this might be a concern to the ones who run Temasek Holdings and Singapore Government Investment Corporation since our CPF was said to be a source of funds for their investments.

If that is not enough, our friends at the Housing Development Board (HDB) will have to deal another headache - the oversupply of HDB flats. It is not unusual for Singaporeans who are retiring overseas to sell their HDB flats. This would simply jack up the supply side of our housing equation, and could pose a potential problem for HDB.

Undoubtedly, the costs of living brought about by inflation has burned a hole in our pockets. However, the hole in our pockets cannot be compared with the deeper hole our government may have dug with its suggested measure in the form of doctor and public housing oversupply, and massive CPF payouts.

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