The central committee of the National Trades Union Congress (NTUC) was not informed about the capital extraction plan in the proposed deal between Income Insurance and German insurer Allianz until it was publicly announced in Parliament, revealed Desmond Tan, NTUC Deputy Secretary-General, on Wednesday (16 Oct).

On Monday (14 Oct), Edwin Tong, Minister for Culture, Community, and Youth, stated in Parliament that the government had blocked the proposed Income-Allianz deal, citing concerns that the transaction, as structured, would not be in the public interest.

The deal, which was announced on 17 July 2024, faced significant public backlash, with many expressing fears that it might undermine Income’s long-standing social mission of providing affordable insurance, particularly to lower-income individuals.

Speaking during the debate on the Insurance (Amendment) Bill, Tan noted that although NTUC is a significant shareholder of NTUC Enterprise, which holds a 72.8% stake in Income Insurance, it does not interfere in the day-to-day operations of the companies it oversees.

According to Tan, while NTUC’s central committee had been briefed on the broader strategic rationale behind the Income-Allianz transaction, they were not made aware of the specific capital extraction plan.

The plan proposed returning S$1.85 billion in surplus cash to shareholders within three years. Tan added that he and the central committee only became aware of this aspect when it was mentioned in a ministerial statement earlier in the week.

Tan clarified that Income, as a non-listed public company, must adhere to the Singapore Code on Takeovers and Mergers, which limits the disclosure of commercially sensitive information before certain stages of the process are reached. This requirement contributed to the non-disclosure of the capital extraction clause until the parliamentary announcement.

NTUC’s commitment to social mission

Tan reiterated NTUC’s commitment to Income’s social mission, which includes offering affordable insurance and expanding NTUC’s involvement in areas such as eldercare and educational programmes. NTUC has expressed support for the government’s decision to block the deal, noting that it aligns with broader public interest objectives.

However, Tan acknowledged that there may be some differences in the specifics of how Income’s social goals are best achieved, particularly given the company’s corporatisation in 2022.

NTUC had supported Income’s decision to corporatise, recognising the need for the organisation to access more capital to remain competitive. The corporatisation enabled Income to explore new partnerships and investment opportunities, such as the proposed transaction with Allianz.

Tan also emphasised that NTUC and Income will continue working toward their shared social mission, even as they navigate the complexities of corporatisation and competitive market pressures.

While the government has blocked the deal between Allianz and Income, it remains open to reconsidering the transaction or similar partnerships if key concerns about the public interest can be addressed.

Distinguishing earlier support for the deal

It is important to distinguish Tan’s remarks made in Parliament from an earlier statement by NTUC on 5 August 2024, which expressed full support for the Income-Allianz deal. That earlier statement was issued by NTUC without knowledge of the capital extraction clause in the proposed transaction.

In the August statement, NTUC President K Thanaletchimi and Secretary-General Ng Chee Meng pledged NTUC’s support for Income’s social mission and noted Allianz’s commitment to honouring Income’s policies, continuing its charitable initiatives, and investing S$100 million over ten years to promote social mobility.

At the time, NTUC was unaware of the full details of the capital extraction plan, which proposed returning S$1.85 billion in surplus funds to shareholders. This lack of information casts the earlier endorsement in a different light, as NTUC was expressing support based on incomplete knowledge of the transaction’s specifics.

The central committee, including Tan, only learned of the capital extraction plan when it was disclosed in Parliament.

Therefore, the August statement should be viewed as NTUC’s endorsement of the deal without full awareness of the capital extraction clause.

During a parliamentary session on 16 October 2024, Workers’ Party Member of Parliament (MP) for Hougang SMC, Dennis Tan Lip Fong, raised concerns about the cost of hearing aids for seniors.

Citing studies that link uncorrected hearing loss to dementia, Tan asked the Minister for Health whether seniors could be allowed to use their MediSave savings to purchase hearing aids.

In response, Minister of State for Health Rahayu Mahzam explained that the government already provides financial support through the Senior Mobility and Enabling Fund (SMF).

This fund offers means-tested subsidies of up to 90% for eligible seniors, reducing the cost of hearing aids significantly. She also highlighted that the SMF is part of broader support measures that help seniors manage their healthcare costs.

For seniors with severe hearing loss who require more complex devices such as bone conduction or cochlear implants, Rahayu said that further subsidies are available.

In these cases, seniors can tap into both MediSave and MediShield l Life, which are designed to help cover the high costs of such procedures. The Agency for Integrated Care (AIC) is also available to provide additional support for those who face financial difficulties.

Rahayu addressed the possibility of extending MediSave usage to cover hearing aids, stating, “While many Singaporeans wish to use more of their MediSave, we need to ensure that they retain sufficient balances for major health episodes in advanced age.”

She reiterated that MediSave is reserved for more severe and costly health conditions to ensure that individuals can cover unexpected, significant medical expenses later in life.

Tan followed up with a supplementary question, pointing out that the current monthly income eligibility threshold of S$2,000 per person in a household under the SMF excludes many seniors from receiving aid.

He argued that many seniors who are no longer working struggle to afford hearing aids, which can be a significant financial burden. Tan urged the Ministry to reconsider allowing seniors to use part of their MediSave savings for this purpose, particularly given the link between hearing loss and dementia.

Rahayu acknowledged the concerns but noted that since 2019, over 16,000 seniors have applied for and benefited from the SMF, with 99% receiving subsidies.

She emphasised that those who do not meet the SMF eligibility requirements can seek further assistance through the AIC. This ensures that seniors who are in genuine need can still access necessary support even if they do not qualify for the SMF.

Rahayu also explained the Ministry’s approach to managing MediSave usage. “It is a balancing exercise,” she said, stressing that the government must ensure MediSave funds are preserved for future healthcare needs, particularly for more severe medical conditions and costly treatments.

While the Ministry is open to reviewing its policies, Rahayu reiterated that the existing subsidies and support mechanisms provide significant help to seniors. She encouraged those who are facing financial difficulties to reach out to the AIC for further assistance.

The income threshold for SMF eligibility was increased from S$2,000 to S$2,600 from 1 October 2024.