Extension of Dependants' Protection Scheme

Mr Patrick Tay Teck Guan asked the Deputy Prime Minister and Minister for Manpower whether the Dependants' Protection Scheme will be extended beyond the current age of 60 years which has remained unchanged since the scheme started in 1989.

The Minister of State for Manpower (BG [NS] Tan Chuan-Jin) (for the Deputy Prime Minister and Minister for Manpower): Mr Speaker, Sir, I would like to thank the hon. Member of Parliament, Mr Patrick Tay for his question.

The Dependants' Protection Scheme (DPS) is an affordable term insurance scheme aimed at providing young dependants with a sum of money to tide over the initial difficult period in the event of an insured member's permanent incapacity or death. DPS is especially needed when a breadwinner has young children and when an untimely death could mean the loss of many years of future income. The need for DPS declines as a breadwinner nears his retirement age as he would have built up his own savings, and his children would probably have begun to fend for themselves. In the event of any untimely death, he would have his own savings (including CPF savings) which could support his remaining dependants.

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Moreover, extending DPS beyond age 60 would also mean substantially higher premiums. It would be better to safeguard this money for their retirement needs instead of allowing the purchase of further cover. Setting the age limit at 60 is to balance the need for insurance protection for his dependants versus his own need for adequate retirement savings. Further, members who wish to purchase life insurance beyond the age of 60 can still do so from private insurers.

Mr Patrick Tay Teck Guan (Nee Soon): Mr Speaker, Sir, if I may thank the Minister of State for his reply. In view of the increasing life expectancy of Singaporeans in general as well as the fact that a lot of their CPF savings, like what he shared earlier, are tied down with housing, inadvertently if there is an occasion where the CPF member passes away, that may well cause severe financial hardships on the dependants and loved ones, further exacerbated by the fact that many of us do have children later in the years and, at the age of 60, some of us may still have children who are school-going. Therefore, my question to the Minister of State is whether, at this juncture, though he said that he is not reviewing it, his Ministry will consider reviewing it in the coming years.

BG [NS] Tan Chuan-Jin: Mr Speaker, Sir, this issue actually has been debated quite extensively in the last Parliament and the concerns raised are not dissimilar to what the hon. Member of Parliament has indicated. As I mentioned, the challenge is really balancing between the insurance needs as well as retirement needs. And importantly, there will be significant increase in premiums after the age of 60. Let me explain why. The premiums have been kept largely affordable. Between the ages of 25 and 60, the total premium paid by an individual for coverage would amount to about $4,000. After that age, premiums go up, and they would have to pay between $800-$900 each year, several times higher than their current premium of $260, which is for the age of 55 to 59. Therefore, the premiums would have gone up and the total premium for the coverage from age 60 to 65 alone would cost another $4,000. In that sense, we do feel that individuals may want to consider perhaps at that stage, where their children are a lot older, place more of the emphasis on retirement needs. However, on his question of whether the Ministry would consider, I think this is something that we are open to consideration. We do note the extensive debate raised previously and if, indeed, this is something that there is a need for that, we would be open to reviewing extending the age beyond 60.