A CHILD in kindergarten today will shoulder a heavier burden of supporting the elderly when he enters the workforce in 2030, even if Singapore takes in more new citizens than it does now.

 

Only two people like him will support each elderly citizen, instead of the six now, said the agency overseeing the country's population policy.

 

This could mean that tomorrow's workers may have to pay higher taxes to support higher government spending on the aged, while older people will have to work longer, warned experts.

 

'The shrinking working-age population and increasingly aged population will result in a deterioration of the citizen old-age ratio,' warned the National Population and Talent Division (NPTD) in a paper outlining five scenarios of Singapore's citizen population in the next few decades.

 

Its report defines the working-age population as those aged 20 to 64 years old, and the elderly as 65 years old and above.

 

Experts fear that a declining old-age support ratio will mean dropping tax revenues from citizens just as spending for the elderly goes up. Official estimates project health-care spending to rise from 2 per cent of gross domestic product in 2016 to around 3.5 per cent by 2030.

 

All five of the NPTD's scenarios paint a stark future: A sharp plunge from the current ratio of 6.3 working-age citizens for every elderly citizen.

 

At its worst - without immigration - 2.1 working-age citizens will have to support each elderly person in 2030, and 1.4 in 2060. If 25,000 new citizenships are given out a year - 5,000 to 7,000 more than the current immigration rate - the ratio will drop a little less drastically, to 2.4 in 2030 and 1.9 in 2060.

 

But while the NPTD concluded that immigration has a 'mitigating effect' on the old-age support ratio, experts cautioned that it is a short-term solution.

 

They note that higher immigration rates will place a greater burden on housing, transport and other infrastructure, which Singaporeans may not accept.

 

'Immigration alone would not provide a long-term solution to the fiscal burdens, even though it does have an immediate fiscal benefit,' said National University of Singapore economist Chia Ngee Choon.

'The question is whether the current policy of taking in 20,000 new citizens is sustainable.'

 

The declining old-age support ratio is a problem that many other countries also wrestle with.

 

According to an Organisation for Economic Cooperation and Development (OECD) report last year, South Korea's ratio is projected to drop from 6.1 in 2009 to 1.5 by 2050, and China's, from 8 to 2.5 roughly over the same period. Japan's ratio was already at 2.6 in 2010, and Germany's, below 3.

 

Japan is trying to raise its consumption tax, while Germany is proposing a 'demographic reserve' levy on those over the age of 25 to pay for a surge in social security costs.

 

But Singapore cannot raise income or corporate taxes too much if it wants to stay tax-competitive, Associate Professor Chia pointed out, though raising consumption or green taxes is one option.

 

SIM University economist Randolph Tan noted that older people will want to keep working longer to reduce the burden on their children.

 

Still, the future may not be all gloomy for the young. Smaller family sizes mean they are more likely to inherit their parents' property, noted Nanyang Technological University economist Tan Khye Chong.

 

'They may not have to worry about housing. They can use their income to support their parents, who give them a house to stay. People will have to change their mindset that their children have to buy a new house.'