The savings approach to financing long-term care in Singapore

Singapore is grappling with provision of services for the current generation of older people at the same time as building the foundation for the coming generations of elderly. In this article, I analyze four sets of factors that are shaping long-term care policy and financing in ways that are almost unique to Singapore. First, current developments can only be understood in the context of the Central Provident Fund (CPF) that was established by the Government of Singapore in the 1950s to ensure that the working population saved for retirement; the Medisave and related schemes for financing health care were subsequently developed alongside the CPF. Most recently, the existing funding arrangements have been extended to some long-term care services, and options for further extensions are under consideration. Second, the government's philosophy of maintaining the primacy of family support for the elderly has been expressed through a number of initiatives that provide financial and other incentives to families, combined with an emphasis on community care. The third factor is the relationship between government and the voluntary welfare organizations that are the major providers of institutional and community services. Finally, a series of government-sponsored reviews and advisory councils have provided for widespread consultation on policy options. These developments are directed to achieving a multi-pillar approach in which intergenerational transfers through taxation will be limited, and the role of individual savings and insurance will be increased.