Finance guru Leong Sze Hian raised an interesting point about the CPF ElderShield program. ElderShield is a national insurance scheme which provides basic monthly cash payouts for those who suffer from severe disability and need long-term care.
According to a Jul 2018 state media article, TODAY reported that ElderShield premiums collected amounted to over S$3.3 billion at the end of 2017. However only an insignificant portion of $133 million was paid out as claims. This would mean that ElderShield premiums continued to have an excess of $3 billion even after these payouts.
Like most insurance schemes, the collected ElderShield premiums will not be sitting idly. The premiums will be invested until the need arise for it to be used as monthly payouts should a claims be made. Leong Sze Hian therefore asked if the $3.3 billion figure included the accumulated interest on the investment returns from the excess premiums to claims? As these figures were not made transparent to the public, Leong Sze Hian guessed if the accumulated surpluses will be about $4 billion?
The interest in ElderShield comes as Singaporeans prepare themselves (and their MediSave money) for the compulsory CareShield Life scheme which will kick in on 1 Oct 2020.
In any case, ElderShield is probably one of the most profitable national long-term care insurance scheme internationally.