Successful Ageing in Singapore: The Role of Housing

Dr Mary Ann Tsao,

Distinguished Guests,

Ladies and Gentleman,

Introduction

       Good afternoon. It is my pleasure to be here today at the launch of the Voices of Older People programme. I would like to thank the Tsao Foundation for their kind invitation and the Seniors for the insightful presentation we have just seen.

2     The “ageing population” is an issue that continues to grow in significance for both policy-makers, and for Singapore society as a whole. I am therefore heartened by the Tsao Foundation’s initiative to engage our seniors, and to hear their voices on the issues that concern them most. It is a most timely and relevant exercise as we continue to prepare ourselves for the future. As you know, Singapore will age rapidly over the next 20 years. Today, 1 in 12 Singaporeans is aged 65 and above. By 2030, the ratio is expected to increase to 1 out of every 5 Singaporeans.

3     Before I speak on the specific issue of housing, it is worthwhile to take a broader view on the Government’s overall approach to the issue of the ageing population. What does successful ageing mean, for the individual and for society? Since the 1980s, we have recognised the need for a coordinated national response to address the challenges and maximise the opportunities that an ageing population brings. To this end, several inter-ministerial committees have been formed to study this the issue. In 2006, the Committee on Ageing Issues (CAI) published its ‘Report on the Ageing Population’ which identified four positive outcomes that will lead to successful ageing.

[Elder-friendly Housing]
The first outcome is to ensure that our housing is elder-friendly. Through a range of housing options, we support seniors to continue living either independently or as part of their family, even as they age.

[Barrier-free Society]
It would not be enough for just the home to be elder-friendly. Hence, the CAI’s second proposed outcome is for a barrier-free environment, that allows the elderly to lead an active life and participate meaningfully in the wider community.

[Holistic Affordable Healthcare and Eldercare]
As we age, health issues take on greater significance. Hence, the third outcome identified by the CAI is for a seamless continuum of affordable and quality healthcare and eldercare services to be accessible to older Singaporeans.

[Active Lifestyles and Wellbeing]
The fourth and last outcome is for our seniors to lead healthy and active lifestyles, and enjoy fulfilling relationships within their families and friends. This outcome certainly cannot be attained solely through Government policy or initiative. Ultimately, it is the individual senior’s choice to continue to lead a fulfilling life.

Lifecycle Needs & Aspirations

4     Against this backdrop, public housing has a very significant role to play in successful ageing.

5     Our public housing policies are designed to cater to the changing lifecycle needs and aspirations of Singaporeans at different stages of their lives.

[Help Newlyweds Buy First Flat]
First, the HDB helps Singaporean couples buy their first flat when they get married, with generous housing subsidies. These couples are young and just starting out. They need a flat that is affordable, that they can settle down and call their own.

[Maintain & Build Up Flat Value]
Later as they have children and need more space, HDB will help them to upgrade to a bigger flat with another housing loan if they can afford to do so. HDB also seeks to maintain and build up the value of their flat through regular maintenance and upgrading programmes. Thanks to our extensive housing subsidies under the Home Ownership Programme, it is estimated that HDB households each hold an average of $154,000 in net equity (i.e. asset net of outstanding loans) in their HDB flat¹.

[Help Retirees Monetise their Flats]
The HDB flat is the largest single investment for many HDB flat owners. HDB is therefore putting in place a range of monetization options to help seniors cash out on their flats, so that they can supplement their retirement income and lead a more financially secure life.

Options to Monetise

6     Let me explain what I mean by monetisation options:

[Downgrading to Smaller Flat / SA]
An elderly flat owner can choose to sell his existing flat and move to smaller flats or 30-year lease Studio Apartments. Today, 22% of HDB’s home ownership flats, or 184,000 flats, are owned by elderly lessees². Most of them live in 3-room and 4-room flats. The majority - 80% - have fully paid up their home loans. Based on today’s market, such an elderly household living in a 4-room flat would be able to release up to $220,000 in housing equity if they are to move to a Studio Apartment. This is a significant amount which will go some way to improving their financial security during their retirement years.

To facilitate downgrading, we will continue to build more smaller flats and studio apartments.

[Subletting Room/Flat]
Alternatively, if they do not wish to sell their flats, the elderly household can choose to move in with their family and rent out their entire flat. This not only gives them a steady stream of income, but also brings them closer to family. HDB has been gradually relaxing the subletting policy so that more households can sublet their flats. Currently, about 90% of elderly households are eligible to sublet their whole flats. For those who do not wish to sublet their entire flat, they can sublet one or two rooms to supplement their retirement income.

[Lease Buyback Scheme]
Finally, we have introduced a new scheme targeted at the elderly lessees living in smaller flats. Currently, such lessees may not be able to take full advantage of options like downgrading and subletting. Hence, HDB will be implementing a new scheme called the Lease Buyback Scheme in 2009. Let me elaborate more on this as it is a new scheme which some of you may not be familiar with.

7     The Lease Buyback Scheme is targeted at lessees, aged 62 and above, living in 2-room or 3-room flats. Under the scheme, HDB will purchase the tail end of the flat lease from the elderly household and leave the elderly lessees with a shorter lease of 30 years on the same flat.

[Government Provides Subsidy]
Besides paying for the tail-end of the lease, the government will provide an additional $10,000 subsidy.

[Lessee Gets]
Out of this total amount, $5,000 will be given as an upfront lump sum, while the remainder will be used to purchase a CPF LIFE Annuity Plan to provide the elderly lessee with a monthly stream of income for life. Such an arrangement will allow the elderly lessees to live in the same flat and continue to enjoy the familiarity of their home and community, while receiving a lifelong income. Let me give an illustration.

8     An elderly couple owns a 3-room flat worth $200,000 with a 70-year balance lease. If they sign on to the Lease Buyback Scheme, HDB will pay them $87,000 to buy the last 40 years of the lease, leaving them with a lease of 30 years for their flat. In addition, the Government will give them a $10,000 subsidy, bringing the total amount to $97,000.

9     Out of the $97,000, $5,000 will be paid out to the couple in a lump sum. The remaining $92,000 will be used to purchase a CPF LIFE Annuity Plan. This will provide the couple a combined payout for life. If both husband and wife are 62, they will get a combined total of around $490 per month for life. Currently, we estimate that about 25,000 elderly households will be eligible for the Lease Buyback Scheme.

10     I have thus far described to you the trajectory of our public housing policy for Singaporeans – purchase an affordable flat at the beginning of the family life cycle, upgrade to a bigger flat if necessary due to space constraints as children grow older and bigger, and monetize their assets at later stage in their lives, through the various monetization options.

11     I note that one of the points that was raised in your focus group discussions was the difficulty seniors faced in getting a Public Rental Flat. I need to clarify that the Public Rental Scheme is not meant as a monetisation option to cash out of your HDB flat. Public Rental Flats are heavily subsidised housing for the poor and needy who have no other housing options, and not enjoyed previous government subsidies. On the other hand, most Singaporean households already enjoy housing subsidies in their purchase of ownership flats in their younger days.

12     As I have mentioned, elderly flat owners have other monetisation options to unlock the housing equity of their flats. It is important for our elderly make use of various monetisation options such as lease buy-back, downgrading or subletting, so that public rental flats can be available to house the very needy families.

Improving the Physical Environment

13     Let me now move from monetisation and financial security to speak about physical accessibility. We recognise that this is an equally important issue. An elder-friendly environment allows seniors to age in place, and continue to participate in the local community.

14     To this end, we have been actively making improvements to the physical environment both within the flat and in the surrounding areas.

15     Today, the Studio Apartments come equipped with elderly-friendly fittings such as lever taps, non-slip tiles, support hand bars and emergency pull-cords. From 2006 onwards, all HDB units are being built with Universal Design (UD) features. For example, the switches and sockets will be positioned low enough to be accessible from a wheelchair. The toilet will also be wide enough for handrails and wheelchairs.

16     We are also working towards a barrier-free environment in all our public housing estates. More ramps and linkways will be built to facilitate wheelchair bound access. Our target is to make all HDB housing estates barrier-free by 2011.

17     Another significant measure is the Lift Upgrading Programme which aims to retrofit eligible older HDB blocks with lifts to stop at every floor. It is a massive financial commitment by the Government, costing some $5.5bn. But we feel that it is a worthwhile investment for our elderly and wheelchair bound. We target to complete the Lift Upgrading Programme by 2014.

18     As many of you are aware, the programme is heavily subsidized. Singapore Citizen households need only pay 5% to 12.5% of the LUP cost depending on the flat type. We do require a 75% majority support from the block’s residents before we carry out the lift upgrading. This is to encourage community ownership of the upgrading, and is also a form of feedback for the Government to ensure that funds are being invested in upgrading works that are welcomed by the majority of residents.

Supporting an Independent Lifestyle

19     Our policies to ensure financial security and physically accessibility support an independent lifestyle by our seniors. In your focus group discussions, you have indicated that seniors today do want to live more independently.

20     Our public housing programme must continue to ensure that seniors who live on their own remain socially integrated with the larger community. Seniors too recognise the importance of this. In 2006, HDB conducted a survey on elderly households who applied for Studio Apartments. An overwhelming 80% were keen to live in blocks that are mixed with other flat types and not just Studio Apartments. In other words, they were looking for a lively community instead of just a shelter over the head. They would like to live among and interact with neighbours of all ages. This is also beneficial for their social and emotional well-being. It is vital that we continue to facilitate our seniors’ desire to be part of the larger community.

Re-affirming Family Support

21     But even as we facilitate independent living, we need to continue to recognise and affirm the vital role of family support in the well-being of seniors. Today, HDB provides an additional housing subsidy for married couples to buy a HDB flat near their parents. This is to encourage families to live near their elderly parents for mutual care and support. Even in the details of neighbourhood planning, we can help to encourage family interaction across the generations. For example, HDB locates elderly fitness corners close to children’s playgrounds, so that the grandparents and grandchildren can spend quality time together.

22     Why is family support important? Because it adds meaning and fulfillment to elderly living. In addition, not every senior can live and move about independently, even with full lift access and elder-friendly features. Sometimes, the family has to step in to provide the needed care and attention. Similarly, even with our CPF system and monetisation options, some seniors will need more financial support. It is important that the family remains the first line of support for our elderly. If we consider all that parents have done and many continue to do for their children, I do not think this is too much to ask from the children.

Conclusion

23     In summary, our public housing strives to cater to the needs and aspirations of Singaporeans at different stages of their lives. For the seniors, we have put in place a range of monetisation options to unlock their housing equity and enhance their financial security. The important message to Singaporeans is not to unlock their housing equity too early and risk facing lower equity at later stages of their lives. We have also invested resources to ensure that the built environment is barrier-free and allows the seniors to continue to remain an active part of the community.

24     However, it takes more than just Government policies and measures to enable our seniors to lead active and meaningful lives. Ultimately, successful ageing also depends very much on the efforts of the individual, the family and the community.

25     Finally, I would like to take this opportunity to commend the Tsao Foundation on taking the leadership in launching the Voices of Older People initiative. You have shown what an active community organization can do in support of our seniors. I wish the programme every success in engaging our seniors and the various stakeholders so that together, we can better prepare Singapore for successful ageing. Thank you.

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