In a written letter to state media Straits Times, the Ministry of Health (MOH) defended against criticisms of overcharging premiums by making a half-truth, claiming that the extra premiums collected are not “surpluses”:
“These funds are collected and invested, so that they are available in future years, when policyholders are no longer paying premiums and are more likely to suffer from severe disability. Premiums collected under ElderShield currently exceed the claims paid out because the age profile of ElderShield policyholders is relatively young, with a median age of 52. The premiums collected are not surpluses. They are meant to support future claims, when ElderShield policyholders become older and more of them become severely disabled and start to make claims…The Government will be administering CareShield Life on a not-for-profit basis. Any surpluses generated will stay within the fund and go towards benefiting policyholders through higher payouts or premium rebates.”
However, this is not true because the “surpluses” actually go to the Prime Minister and his wife. Like CPF, MediShield Life funds, the CareShield funds are invested by GIC and Temasek Holdings, managed by Lee Hsien Loong and his wife Ho Ching where the two sit as Chairman and CEO respectively. The two sovereign wealth fund companies earn the excess off the funds by paying only the interest of the special securities bond issued by the government. The Singapore government refuse to declare the obligatory interest rates of these government bonds issued to GIC and Temasek Holdings, but it is likely to be below 3%. Last year, the 20-year-annualised returns of the GIC fund was revealed to be 3.7%. This would mean GIC have profited off S$700 million, or 0.7% of an estimated S$1 trillion funds comprising of MediShield Life, CPF funds, CareShield Life and other funds managed by the government ministries.
In 2017, it was revealed that CareShield Life’s former form, the ElderShield, was found to be hugely profitable and it had only disbursed S$133 million out of S$3.3 billion in total premiums collected.
CareShield Life is also expected to be more profitable now considering that, the entry age is now lowered to 30 years old, it’s premiums are 80% higher than the former ElderShield and that it has been made mandatory for all Singaporeans.