According to one study, there are about 900,000 elderly (age 65 and over) in SG now.
Let's assume that 50% of them are in good financial state - i.e. they can self support. Why 50%? This is just for this thought experiment. IIRC, there is some study that found that about 50% of CPF members have the required minimum sum at 55. And lets say CPF Life is sufficient to care for these 50%.
So about 450,000 don't have CPF Life.
But CPF Life is NOT the only possible source of income in one's retirement. Of these 450,000 who do not have CPF Life (or sufficient CPF Life) payouts, let's assume about 50% of them have other sources of income - say they can rent out a room in their flat, or their children give them money every month. Again, why 50%? Just a figure to work with. Feel free to project higher or lower numbers.
So about 225,000 elderly has no CPF life, and no other sources of income. They need help from the govt.
So, how much does one require to subsist in SG in one's retirement years assuming that one has a roof over one's head (owns HDB flat)? $500? $1000? $1500? $2000?
Full CPF Life is about $1200. Let's use that.
So for 225,000 people, they will need $1200. A month. Or $14,400 a year. Each. How much is that in total?
$3.24 billion. BILLION.
And increasing every year as the number of elderly increases each year.
How much is $3.24 billion? That's as much as the budget of a medium size or small ministry.
Which Ministries? MND is at $3.8b (in 2016, all figures are from MOF 2016 budget estimates). MTI is $3.9b. Home Affairs is at $5.3b. And Social and Family Development is at $2.5b.
So to provide the poor elderly with no retirement income with the CPF Life equivalent in full, would gut the budget of either MTI, MND, or MHA. And wipe out the entire budget and more of MSF.
And that's based on CPF Life full payout of $1200. Some would argue that that is insufficient.
Others might argue that that is too generous, and we could make do with the Basic CPF Life - $700.
Half the payouts and we would still need about $1.6b. Which is the budget of MCI, MOM, MCCY, and MEWR.
What are you willing to give up?
Based on the above assumptions and projections, we already need about $1.5 billion just to provide a $700 a month allowance.
Try living on $700 a month. For half a year. Or better yet, one whole year.
Living on $700 a month for a month is no real test. If you have long-term medication to buy, just delay for a month. If you can't get enough to eat, never mind, just imagine that you are on a diet. For a month.
Can you live on $700 a month on an on-going basis?
But that's me.
Maybe you can.
But some people might object to providing $700 a month to the poor elderly. I heard one MP argue that some CPF members saved their whole life in order to just get Basic CPF Life that pays them $700 a month.
And someone who does not have the Minimum Sum for even Basic CPF Life, gets $700? Without working for it? That would strike most Singaporeans as patently unfair.
To address this unfairness, the government would either have to
a) provide supplementary allowance to those with basic CPF Life - your CPF Life would get you $700, the govt should give you say $300 more, and then if the poor elderly gets $700, it is fair (or at least fairer).
b) provide less allowance so those who worked to save for basic CPF Life wouldn't feel cheated. So maybe just $500 allowance for the poor elderly who did not even managed to save Basic Retirement Sum (BRS).
The problem with (a) is that just increased the budget. It was about $1.5 billion. It would now be more, depending on how many CPF members just meet BRS. Also will this mean that those who COULD HAVE gone with the Full Retirement Sum (FRS), might have chosen to go with BRS so that they can get supplementary allowance from the government?
The problem with (b) is, if you found it difficult to live on $700, now you have to try to live on $500 a month. Sure, $500 a month for a poor elderly is better than nothing, but this isn't solving the problem for the poor.
Maybe, those with Basic CPF Life should also be considered living below subsistence and be eligible for financial assistance?
But if we decide to help the poor with $1000 allowance, then we need to help those with Basic CPF Life above $1000 - say $500 + the $700 from CPF Life so they have $1200 - a little better off than the absolute destitute.
And then those with FRS and Full CPF Life getting about $1300 will wonder why they worked so hard and they are not much better than those with just BRS but are helped by the govt.
So we need to give them something also?