NCMP Leong Mun Wai questions Government’s focus on Income’s capital adequacy over social mission

SINGAPORE: During the Parliamentary session on 6 August, Leong Mun Wai, Non-constituency Member of Parliament (NCMP) from the Progress Singapore Party, expressed concern that focusing on the capital adequacy of NTUC Income Insurance Ltd in the proposed sale of a majority stake to the German insurer Allianz might overshadow the importance of Income’s social mission.

He argued that while the social mission of Income might currently seem less prominent due to market conditions, it still provides Singaporeans with a sense of security.

Leong Mun Wai compared this to how FairPrice offers reassurance during food crises, even if it is no longer the cheapest option.

“My question is, first of all, does the government admit that they are only going to concentrate on the capital adequacy of Income, disregard the social mission?”

In response, Alvin Tan, Minister of State for Culture, Community and Youth (MCCY) quoted Dr. Goh Keng Swee, highlighting that cooperatives must be competitive and financially sustainable without government privileges.

He noted that a cooperative that is bankrupt would not serve its purpose.

Tan reassured that NTUC has consistently upheld its social mission since its founding in 1961. He highlighted NTUC’s efforts to uplift workers’ lives, including raising wages for low-wage workers through the Progressive Wage Model (PWM) and supporting workers during COVID-19 with the Job Security Council.

Alvin Tan emphasizes balancing social mission with financial responsibility

Tan explained that while maintaining the social mission is important, NTUC also needs to be financially responsible and address long-term challenges.

He mentioned that NTUC had thoroughly assessed its situation and explored various funding sources before deciding to proceed with Allianz.

On Tuesday, several MPs, including NCMP Leong, raised concerns in Parliament about the potential deal between NTUC Income and the German insurer.

Mr Leong inquired about the government’s plans to support the cooperative movement in providing affordable essentials, especially with Allianz’s proposed majority stake acquisition of Income.

In response, MOS Tan reaffirmed the government’s commitment to maintaining the affordability and quality of goods and services for Singaporeans.

He cited support measures for co-operatives, such as amendments to the Co-operative Societies Act, resources and training, and grants from the Central Co-operative Fund (CCF), which are regularly reviewed.

NTUC has also promised to keep premiums affordable for Income’s low-cost schemes for union members.

He reiterated NTUC’s commitment to preserving Income’s social mission amid market changes.

NCMP queries whether Allianz has provided written commitment

In a supplementary question, NCMP Leong asked whether Allianz has provided a written commitment and raised confusion from statements by NTUC Enterprise CEO Andrew Yeo and Chairman Lim Boon Heng about Income’s status as a social enterprise or private company.

“Because Singaporeans are confused that NTUC Enterprise CEO Mr Andrew Yeo stated two years ago, that the corporatized income will remain an NTUC social enterprise. ”

“NTUC Enterprise chairman Mr Lim Boon Heng has just implied in a recent interview that Income should be treated as a private enterprise, and thus we should not interfere in this transaction.”

He asked whether, if NTUC Enterprise and Income are considered social enterprises, the government should intervene in the transaction to ensure that Income remains majority-owned by Singaporeans and that its social mission is preserved.

In response, MOS Tan reiterated that Allianz has assured its commitment to upholding Income’s existing policies, charity commitments, and a pledge of S$100 million over ten years.

He noted that this assurance aims to maintain Income’s social mission.

“Income’s social mission has already evolved. It only offers two low-cost options right now and the other products have competitive options and are well regulated.”

He elaborated on the reasons behind the sale, emphasizing that Income faced capital adequacy pressures and competition in both the private and public insurance markets.

“Therefore NTUC Enterprise had to put in capital injections of up to its publicly known S$630 million. but it cannot do so alone and it cannot do in perpetuity, ” he said.

“The financial capital adequacy that is the reality that income faces.”‘

Alvin Tan mentioned that NTUC Enterprise had explored various funding sources, including local and foreign financial and non-financial institutions.

Despite this, Allianz was found to be the best fit in terms of alignment with NTUC Income’s goals.

He emphasized that the sale to Allianz was aimed at ensuring long-term protection for Singaporeans, addressing both immediate and future challenges.

Alvin Tan recognized the emotional attachment and concern Singaporeans have towards Income, a trusted brand for many years.

“Ultimately, time will tell, it’s a judgment call, that’s what leadership is that’s what judgment call is, and that’s what I think is really stated clearly what NTUC enterprise, as Income insurance has already stated very clearly,” MOS Tan concluded.