As at 31 March 2022, S$3.04 billion and S$0.72 billion have been disbursed out of Pioneer Generation Package (PGP) and Merdeka Generation Package (MGP), respectively.
These figures were revealed by Mr Chee Hong Tat, Senior Minister of State for Finance and Transport, in Parliament on Thursday (20 Oct). He was responding to questions filed by Dr Lim Wee Kiak and Mr Liang Eng Hwa.
The PGP and MGP were introduced in 2014 and 2019 respectively, to honour PG and MG seniors for their contributions in the early years of Singapore’s nation-building.
The PGP had S$8 billion set aside to cover approximately 450,000 pioneer Singaporeans while MGP had S$6.1 billion set aside to cover approximately 500,000 Merdeka generation Singaporeans.
The PG Package applies to any Singaporean born on or before 31 December 1949 and who obtained citizenship before 31 December 1986 while the MG Package is extended to those who missed out on the PG Package, and were born in 1949 or earlier and who obtained Singaporean citizenship by 1996.
Mr Chee noted that as at 31 March 2022, there is a balance of S$6.16 billion in the PG Fund and S$5.72 billion in the MG Fund.
He said that about 450,000 PG seniors and 500,000 MG seniors have benefited since the inception of the respective PG and MG packages.
As of 30 September 2022, there are about 340,000 PG seniors and 480,000 MG seniors.
“We established the PG Fund and MG Fund to set aside monies upfront for these packages. This ensured the Government honours our commitment to PG and MG seniors regardless of future economic or fiscal circumstances,” said Mr Chee.
“We sized the funds based on the projected lifetime cost of the benefits in the PG and MG packages, after accounting for inflation and interest accrued.”
Now if we do a “simple” computation – does it mean that the average benefits per year, for each PG senior, was about $1,118 (S$3.04b divided by 8 years divided by 340,000 PG seniors)?
And what proportion of the average benefits estimated at S$1,118, were Medisave top-ups? Benefits which arguably do not make the lives of the seniors better but to pay off increasing medical premiums and expenses.
As some PG seniors may have died since its inception — does it mean that the average benefits that the seniors received may be less than S$1,118, as there were 110,000 more PG seniors now compared to the 340,000 PG seniors eight years ago?
Noting that the PG fund has a balance of S$6.16 billion, S$3.04 billion has been spent over the past 8 years and the number of PG seniors will only decrease over the years.
Would the $8 billion PGP be fully utilised by the end of 20 years? The same question comes to mind in regard to the MGP.
Also what is the “assumed interest” used to determine the initial one-time transfer of S$8b to the PG fund? The S$8b was charged as a 1-time expenditure in the Budget when PGP was approved.
However, in this regard – since there is $6.16b left of the original $8b – does it mean that the “assumed %” was much lower than 4%? If so, what was the “assumed %” used in the computations?
Where was the initial PG Fund of $8b invested? Was it given to one of our sovereign wealth funds, like the GIC to invest?
Regardless of the case, given that the initial S$8 billion was meant to finance a projected cost of S$9 billion for an estimated 20 years*, and that we have just spent S$3.04 billion since PGP’s launch in 2014, does it mean that the Government overestimated the expenses or under-utilised the fund to assist the Pioneer Generation?
*Average lifespan of individuals in Singapore at 83.5(2019), Age to qualify for PGP at 65 years old.
