Update on Dependants' Protection Scheme
Ministry of ManpowerSpeakers
Summary
This question concerns the Dependants' Protection Scheme (DPS), where Mr Patrick Tay Teck Guan inquired about claim statistics, member opt-out profiles, and the possibility of extending the coverage age cap beyond 60. Minister for Manpower Lim Swee Say reported that between 2011 and 2015, an average of 2,800 claims were approved annually, totaling $141 million, while less than 1% of members opted out each year. The Minister explained that the current age cap is set at 60 because insurance needs typically decline as members accumulate retirement savings and dependants become financially independent. He highlighted that while the age limit is reviewed periodically, extending it would significantly increase premiums and potentially deplete CPF retirement funds. Minister for Manpower Lim Swee Say concluded that the policy remains focused on balancing essential insurance protection with the preservation of members' long-term retirement needs.
Transcript
3 Mr Patrick Tay Teck Guan asked the Minister for Manpower (a) what has been the claims experience of the Dependants' Protection Scheme in the last five years; (b) how many CPF members have opted out of the scheme since its inception and what are their income profiles; (c) whether there are plans to review the scheme so that lower-income Singaporeans are protected in view of its opt-out nature; and (d) whether the scheme can be extended beyond the current age cap of 60 to 67.
Mr Lim Swee Say: The Dependants' Protection Scheme (DPS) is a term insurance scheme that mitigates the impact of a loss of future income in the event of the member's untimely permanent incapacity or death. It provides his dependants with a sum of money to tide over the initial period.
In the last five years from 2011-2015, the average number of claims approved under DPS was about 2,800 per year. The corresponding claim amount paid was about $141 million per year.
On average, less than 1% of eligible Central Provident Fund (CPF) members opted out of DPS each year since its inception in 1989. About half of those who opted out were younger members aged 30 and below, and they may have done so because they did not have dependants. Of the members who opted out, about 40% were not working, 40% with monthly income of more than $2,000 and the remaining 20% with monthly income of less than $2,000.
Today, DPS coverage stops at age 60. The need for DPS is expected to decline as the member approaches retirement. This is because the member’s children are more likely to have attained financial independence and the member would have accumulated more savings to support his dependants in the event of his untimely demise or incapacitation. Extending DPS coverage beyond age 60 will provide longer insurance protection but will also mean much higher premiums because of higher mortality. We will review the DPS age limit periodically, bearing in mind the need to strike a balance between providing insurance protection for the CPF members' dependants and preserving their CPF savings for their own retirement needs. CPF members who wish to have life insurance coverage beyond age 60 may consider obtaining it from private insurers.