28 May 2014

Home-Makers — Who Should Provide For Them?

Association of Women for Action and Research ("AWARE") opined that the State should give adequate social assistance that meets the needs of all Singaporeans throughout their lives, not just when they are employed[1].
 
Meeting the needs of economically vulnerable groups should be the prime objective of a retirement scheme such as the Central Provident Fund ("CPF") Minimum Sum Scheme.
 
In particular, AWARE says that the State should address the needs of full-time home-makers, who are mostly women, who do not have much in their CPF accounts because CPF moneys are mostly derived from their employment. More elderly females than men need to use their family members' Medisave accounts to pay their hospital bills.
 
AWARE says that, as women generally out-live men, it is crucial that the financial needs of female home-makers are met after the breadwinners who may have been supporting them die.
 
AWARE cites a 2005 World Bank paper on pension systems that recommended that state-funded minimal pension payments for low-income groups which are unable to finance their own retirement savings.
 
There is no question whatsoever in my mind that the State should provide financial assistance to the poor.

However, the State has no obligation to provide financial assistance to home-makers by virtue of the fact that they are home-makers.
 
The financial arrangement in every family is, and must be, a joint responsibility of the spouses.
 
In families where one spouse works and the other is a home-maker, the responsibility of providing for home-makers and all other dependants, if any, falls on the bread-winners. That is their financial arrangement.
 
Spouses within a family are not separate or independent financial entities. Rather, the entire family is an integral financial unit, as can be seen by the provisions in The Women's Charter. If the bread-winner does not adequately provide for the home-maker or other dependants, whether before or after his death, he has failed one of his primary responsibilities to them.
 
It is not necessary for a bread-winner to provide for his spouse by ensuring that she meet her CPF Minimum Sum. Many people, if given the choice, would not use the CPF scheme to save for their and their spouses' retirement in the light of its restrictions; thus we see the unhappiness when they are unable to withdraw their CPF moneys at age 55 or when the CPF Minimum Sum is raised. The inability of a home-maker, or the self-employed, to meet the CPF Minimum Sum or Medisave Minimum Sum is NOT an reliable indicator that the person does not have sufficient moneys for her retirement, because she may have substantial savings elsewhere.
 
If and only if a person is genuinely poor should the State provide financial assistance. But not otherwise.
 
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Notes
 
1. CPF Must Meet Needs Of The Economically Vulnerable The Straits Times 26 May 2014.

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