There was an interesting article that caught my attention last Saturday. The article reported on the plight of some elderly who lived in landed properties but were cash-strapped. They had hoped to be able to land low-wage jobs and also receive Workfare for their subsistence needs. However, under current Workfare criteria, they would not qualify since they are staying in a property with a high Annual Value (AV). So there appears to be a little problem.
Actually, the solution to their problems seems pretty obvious:
“Why don’t they just sell their homes and downgrade to a resale HDB flat or even a condo?”
Apparently, sentimental value, the desire to leave behind a bigger bequest to their children and the fear and resistance to change are some reasons why these elderly refuse to cash out on their landed properties. The house could have been bought by their parents or ancestors and they want to leave it behind for their children. Moreover, as most of them are already in their 70s and 80s, a move could cause significant stress for them to adapt to a new house and environment.
Therefore, this group of elderly is hoping for some institutional or government support in their old age. This is probably an extreme case of the asset-rich and cash-poor phenomenon currently playing out in Singapore.
However, if this article was supposed to tug at my heart strings and encourage me to lend support to this group’s cause, then it was an epic fail. In fact, if part of my taxes are channelled directly to these elderly, I would probably be less than thrilled.
Here’s my argument why this group of elderly deserve little additional help that comes from our taxpayers’ money.
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1. Sending a wrong signal
Large-scale special transfers like GST vouchers, CPF top-ups and Workfare take into account the property values of the person’s residence and his income. This is hardly a fool-proof method to exclude the affluent from getting large amounts of transfers since there are actually wealthy people who are retired and live in small flats. However, excluding the property values would only exacerbate the situation.
My view is that this group is getting heard because these people tend to be educated and hence, vocal. But appeasing them is like rewarding that naughty kid in kindergarten with a lollipop hoping he would keep quiet and behave. Besides being an inequitable distribution of taxes, giving more to these landed property owners is likely to send a wrong signal to the masses. It will just encourage more people to park their wealth in property since they would not be “disadvantaged” in government transfer schemes.
2. Resources are finite
The government’s budget has to be prioritised and distributed among other competing needs like defence and education. There’s only so much left to be redistributed to the poor.
And if we classify this group as poor, we are just denying less help to the really needy. I am talking about people who are down to the bare minimum and living in rental flats, those with chronic illness and left with no assets to monetise.
3. Fairness
These elderly like to compare themselves with some HDB dweller who drives a Mercedes and receives large transfers.
My rebuttal? They actually have the option to do that too and there’s no need to envy.
Instead, I prefer to compare these elderly with their less well-off counterparts who are also pioneers of Singapore. Instead of a landed property, they own flats and have stayed in it for more than 30-40 years.
The government has introduced studio apartments and monetisation schemes like the Lease Buyback Scheme and the Silver Housing Bonus to entice older folks to downgrade and transform their assets into cash for their daily needs. I am also pretty sure that fears of change and the desire to leave a bequest applies equally to these flat owners. But if they can move to HDB studio apartments, I don’t see why elderly landed property owners can’t downsize to a small condominium.
4. People who are receiving the bequest should do their part
Imagine this scenario:
This elderly landed property owner does not want to sell his home and receives some aid from government. As a result, his wealthy children do not need to provide much or even any allowance to the parents. After he passes away, the inheritance goes to the children who promptly sells the property and pocket the full proceeds. Who’s the loser/fool? *Drum roll*….Taxpayers.
If there’s somebody who’s going to inherit the property, they have the responsibility to take care and help supplement the present owner’s daily needs. If they can’t even provide an additional $500 a month, “the passing down of property down the family line” reasoning is just hollow. Chances are, the property is just going to be sold when the owner passes away.
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I know I might appear very unsympathetic here. But to raise their hands and to say that they have not benefited from Singapore’s progress is nothing short of baloney? In fact, the best testimony to their good fortune is the massive appreciation of their property.
It is nothing short of unreasonable to ask for more help, especially if it is at the expense of their less well-off counterparts.
Hi,
I’m fully in agreement to what you’ve mentioned. But let’s present another point of view. In the future, there’ll be more and more people who are asset rich and cash poor. The reason is because a lot of people who bought HDB these days do so at a huge expense of their possible retirement funding. A huge part of a person’s networth is also tied up in their property. I predict that in the future, there’ll be a big group of people who are also in their golden years and having little income with their majority of their networth locked up in their property, just like this estranged group now. Perhaps the only difference lies in the category of property – instead of private housing, it’ll be HDB.
I fully agree with what you’ve posted here with the knowledge that I might very well fall into this group of people in the future. But that’s the responsibility that I have to bear – it’s just not in me to ask someone to bear the responsibilities of my retirement to others. In fact, I bought a bigger 5 rm flat just so that in the future, should I have problems in cashflow in my golden years, I can either downgrade and pocket the differences for day to day living, or rent a few rooms to subsidize my living expenses.
I do not know what sort of help these estranged group of people wants the government to provide. Lesser property tax? Okay. More GST credits? Okay. Giving them handouts every month?
NO, I DON’T THINK SO.
Oh, I fully agree with you. Not a single argument in your post I wish to rebut.
Personally, if he property is paid off, I would actually have the parent live with the kids and rent it out if they don’t wish to sell and downgrade. The rental can cover their living costs while preserving the property for passing down to the next generstion. Then nobody is out of pocket.
That the government needs to step in for those with millions of dollars in assets is just ludicrous.
Hi LP and Miss JJ,
Glad to find support from both of you.
Agree that with more people committing larger sums to their homes, this asset-rich cash-poor trend is likely to happen. Actually, it’s inevitable since we are a nation of home owners. With most HDB flats, there’s the option of downgrading to a smaller flat. Otherwise, there’s other monetisation options like renting out a room or LBS/SHB.
In a country that advocates self-reliance, there should not be significant intervention from the government for those elderly who owns significant assets.
But no doubt that something is in the works for this group of people too with the imminent announcement of the Pioneer Generation Package. I am just hoping that there’s some differentiation to benefit those with less means more.
AGREE! I totally don’t understand their plight. Now if they are not staying in a landed property or 3 room HDB then there’s some plight. But these folks have CHOICES. And I don’t think it’s fair that they get other support as their choices aren’t sacrificing very much!
I’m really very pro-choice/options. If someone has have options/choices which you can make then they don’t need help. If they are stuck in a runt with no acceptable options and need help to get out of it. Then that’s fine. Else… this isn’t even a problem.