I asked a question. Here is the answer. Thank you for your reply, Mr Ong Hui Guan (Secretariat of the National Longevity Insurance Committee).
Here is the unedited letter with references:
As I reflect upon the recent proposal of the compulsory annuity scheme, it becomes apparent that there might be a probable deficiency in its policy. Will a significant portion of octogenarians from the lower socioeconomic groups benefit from such a scheme?
I would like to point out in this letter that there is indeed good statistical evidence to support a strong correlation between socioeconomic status and life expectancy within developed countries. As such, the compulsory annuity scheme should take this fact into consideration.
We can begin by looking at epidemiological data from the United States. From the paper by Gopal K Singh and Mohammad Siahpush in the International Journal of Epidemiology (2006 35(4):969-979), entitled “Widening socioeconomic inequalities in US life expectancy, 1980–2000,” it is clear that the life expectancy of the less-deprived groups is notably higher than that of the more-deprived groups.
An abstract of this paper writes, “Those in less-deprived groups experienced a longer life expectancy at each age than their counterparts in more-deprived groups. In 1980–82, the overall life expectancy at birth was 2.8 years longer for the least-deprived group than for the most-deprived group (75.8 vs 73.0 years). By 1998–2000, the absolute difference in life expectancy at birth had increased to 4.5 years (79.2 vs 74.7 years). The inequality indices also showed a substantial widening of the deprivation gradient in life expectancy during the study period for both males and females.
Singh and Siahpush subsequently concluded that, “Between 1980 and 2000, those in higher socioeconomic groups experienced larger gains in life expectancy than those in more-deprived groups, contributing to the widening gap.” Thus, there is not only a greater life expectancy for those in the higher socioeconomic status, but the gap in life expectancy between the higher and lower socioeconomic groups is progressively widening.
Not surprisingly, we see a similar trend in the United Kingdom. The Office for National Statistics (ONS) is the UK-based government department responsible for collecting and publishing official statistics about the UK's society and economy. The ONS published a paper providing figures on trends in life expectancy by social class in England and Wales over the period of 1972 to 2001.
According to the data from ONS, life expectancy at birth for those from social class I has improved from 71.9 in year 1972 to 1976 to 79.4 in year 1997 to 2001. Comparatively, life expectancy at birth for those from social class V has also improved from 66.4 in year 1972 to 1976 to 71.0 in year 1997 to 2001. Nevertheless, it is evident that life expectancy at birth for those from a higher social class is significantly better than those from the lower social classes. There is likewise an increasing gap in life expectancy between the higher and lower social classes.
It is well-known amongst sociologists and epidemiologists that social class or socioeconomic status is a prominent life expectancy indicator, and is assessed through occupation, income, housing or educational level. Besides data from the United States and the UK, a 1999 study by Tapani Valkonen also showed strong correlation between socioeconomic status and life expectancy in Finland. (Kunst, Anton E. et al, “Occupational class and ischemic heart disease mortality in the United States and 11 European countries,” American Journal of Public Health 89 (1999): 47-53.)
As Kinsella and Velkoff conclude, “the weight of existing studies clearly supports a strong relationship between social and economic factors on the one hand and health and mortality outcomes on the other.” (Kevin Kinsella and Victoria A. Velkoff, “Life Expectancy and Changing Mortality,” An Aging World (2001): 46.)
Apart from life expectancy, it is interesting to note that socioeconomic status is an important determinant of disability among older Asians. The effect of socioeconomic characteristics is also strongest when predicting perceived health. In fact, sociologists have discovered that the perception of income adequacy proves to be the most important predictor of health. (Information acquired from the Department of Sociology and the Asia Research Institute, National University of Singapore.)
Although socioeconomic differences in adult life expectancy are growing in Western populations, more research is probably needed to confirm a similar trend in Singapore.
Closer to home, “The Old-Old in Singapore,” a paper published by Ang Seow Long and Edmond Lee from the Singapore Department of Statistics, might suggest a similar association between socioeconomic status and life expectancy in Singapore.
The old-old are defined as those aged 85 years and over. If the housing of an old-old Singaporean has any indication of his current socioeconomic status, then it is significant that in 1999, 43.5% of those who are considered old-old live in HDB 4 room or larger flats. In comparison, 29.1% of the old-old Singaporeans live in HDB 3 room flats, and the remaining 11% stay in HDB 1 and 2 room flats. In other words, a large proportion of those who survive till 85 years and beyond are not living in HDB 1 and 2 room flats. Close to half of them, in fact, lives in HDB 4 room or larger flats.
If it is indeed true that a majority of those who are old-old are from the higher socioeconomic groups in Singapore, then there might be a probable weakness in the compulsory annuity scheme. As this scheme works on the principle of risk pooling, CPF members who die early may not live to see the benefits of this scheme. In fact, their premiums may go towards paying the annuity pay-outs of other CPF members. It is also highly probable that CPF members who survive till 85 years and beyond are those from the higher socioeconomic groups.
In conclusion, we must ensure that those from the lower socioeconomic groups are not unduly burdened with the care of the old-old belonging to higher socioeconomic sectors. Only then can this annuity scheme be of greater aid to the old-old Singaporeans who are truly in need of such pay-outs.