Support for the Co-operative Movement

Response to parliamentary questions on NTUC Enterprise’s social mission and how the Government will continue to support the co-operative movement in Singapore.

Oral PQ 6343: Mr Liang Eng Hwa: To ask the Minister for Culture, Community and Youth (a) whether NTUC Enterprise's sale of its 51 per cent stake in Income Insurance Ltd to a foreign insurance company will impact affordability and availability of essential insurance products to the broad mass consumers and small enterprise segment in the long term; and (b) whether there is social value for NTUC Enterprise to retain its controlling stake in Income Insurance Ltd so that the provision of insurance services remains inclusive and accessible.

Oral PQ 6358: Mr Leong Mun Wai: To ask the Minister for Culture, Community and Youth with the proposed majority stake acquisition of Income Insurance Ltd by Allianz, how will the Government continue to support the cooperative movement in providing Singaporeans with affordable essential goods and services in the future.

Oral PQ 6389: Mr Don Wee: To ask the Minister for Culture, Community and Youth regarding the potential acquisition of a majority stake in Income Insurance Ltd by Allianz, whether the Government will work with the National Trades Union Congress to assess the potential impact on (i) insurance coverage for lower-income groups and workers and (ii) Income Insurance Ltd's original social mission if it is acquired by a foreign-listed profit-driven commercial entity.

Oral PQ 6414: Mr Saktiandi Supaat: To ask the Minister for Culture, Community and Youth (a) whether MAS can provide an update on the sale of Income Insurance Ltd to Allianz, a foreign for-profit insurer; (b) what steps can MAS take to ensure that Income Insurance Ltd continues to provide accessible insurance products to Singapore citizens; and (c) whether companies set up with a social purpose and has performed a critical role in keeping prices affordable for Singaporeans should be designated by legislation as critical entities which require approval from the Government for ownership or control changes.

Mr Speaker Sir,

May I have your permission to take Questions 7 to 10 in today’s Order Paper, as well as PQ No 6442 by Mr Christopher De Souza scheduled for a later sitting, together please? 

1. Madam Deputy Speaker, MCCY and MAS have received several parliamentary questions on NTUC Enterprise’s social mission and the Income-Allianz deal. Singaporeans have long recognised NTUC Income as a pillar of social support. It is therefore understandable that many Singaporeans are concerned about Allianz’s plan to buy a majority stake in Income Insurance. I thank Members of this House for giving voice to these concerns through your many questions. 
2. So allow me to first address the parliamentary questions relating to the social mission and the support given to co-operative societies (or “co-ops”) in Singapore, in my MCCY capacity.  Minister Chee Hong Tat will then address questions relating to the regulatory aspects of the Income-Allianz deal in his MAS capacity.  So reserve your questions on the social mission to me, and then later on for the regulatory aspects to Minister Chee in his subsequent reply.
3. Madam Deputy Speaker, co-ops remain an important pillar of our society, and their work helps to strengthen our nation’s social fabric. Co-ops are member-owned business entities that operate on the principles of self-help and mutual assistance. They address the common economic or social needs of their members or of the wider community.  Some co-ops seek to provide goods and services at affordable prices for the benefit of their members and the community, while others seek to care for and serve the vulnerable within our community.
4. Madam Deputy Speaker, the Government appreciates and values the role of co-ops and social enterprises in Singapore. We will continue to support the co-operative movement to ensure that Singaporeans’ economic and social needs are met, and that these goods and services remain affordable and of good quality.  And we have done so in a few ways.
5. First, MCCY has amended the Co-operative Societies Act twice within the last 7 years, as part of our efforts to update our regulatory requirements to better support co-ops’ formation, operations, and development. In fact, I took Parliament through the latest amendment in April 2024, where one of the key amendments was to provide co-ops the flexibility to tap their reserves to pay dividends to their members. MCCY will continue to review our policies to ensure that they remain relevant and effective for our co-op sector.
6. Second, MCCY works closely with the industry body, the Singapore National Co-operative Federation (SNCF), to provide resources and training opportunities for our co-ops. MCCY and SNCF will continue to review the relevance of these training programmes and provide additional ones to our co-op sector to address current and emerging needs, when needed.
7. Third, the Central Co-operative Fund (CCF) has provided various grants to assist co-ops in their development.  CCF disbursed about $2.7 million in grants to our co-ops over the last 5 years, including start-up funding for new co-ops, and grants that co-ops can use to address the emerging threats and risks and needs. These grants are reviewed from time to time to ensure they remain relevant and useful to co-ops.
8. Madam Deputy Speaker, the Government values the role played by NTUC and its enterprises. NTUC Income was established in 1970 with the founding premise of providing Singaporeans, especially underserved workers, with essential, affordable insurance. At the time, most of our workers, particularly from our Pioneer Generation, were uninsured. Through NTUC’s affiliated unions, Income provided these workers with much needed insurance protection at an affordable rate.
9. But social enterprises must themselves be sustainable. If a social enterprise cannot sustain itself financially, and government subsidy is needed to prop up the entity, then we will have to consider whether such a service ought to be provided by the Government. Taxpayers must also be prepared to pay their share of taxes to fund the service. 
10. There are areas like pre-school and skills training, where the Government has a framework to provide funding to selected operators to deliver affordable services.  Where such a framework exists, then the Government has appointed social enterprises like the NTUC First Campus and NTUC Learning Hub, given them funding support, and worked through them to provide the services.
11. But insurance is different.  The insurance market is very different now compared to when Income was first established in 1970. It is now a very competitive market, with many options available to Singaporeans. The Government has also significantly strengthened our social support system. Public healthcare is heavily subsidised. We have Medisave for Singaporeans, MediShield Life offering universal protection against large hospital bills, and MediFund as a medical safety net for those with financial difficulties. We also have a universal retirement annuity scheme with CPF Life.
12. So, Income has to operate in this new environment. In fact, the premiums for several of Income schemes are not the cheapest in the market.  Besides competitive pressures, there are also regulators like MAS and MOH who ensure that policyholders’ interests are protected. Minister Chee will cover this in his reply. The point is that Singaporeans, including lower-income workers, are well served by our national insurance programmes, and our competitive and well-regulated insurance industry.  All these provide Singaporeans with wider choices and better value in insurance services and products.
13. NTUC has explained the reasons for the deal with Allianz. Let me briefly reiterate the key points that NTUC has made: the current situation for Income cannot be sustained and Income’s capital buffers have repeatedly come under pressure. NTUC Enterprise has supported Income with capital injections and will continue to do so. But NTUC Enterprise cannot do this on its own.  That is why Income sought to corporatise in 2022, so that it could consider more options to access more capital.
14. Now, questions have been raised about the corporatisation exercise. When this was surfaced to the Registry of Co-operative Societies (RCS), RCS had advised all parties that this was a matter for NTUC Income and its members to collectively determine and resolve.  But what was important was the need to be upfront and transparent about the arrangements, and to allow Income’s members to decide whether or not to proceed with corporatisation.  We note that Income had done so. Eventually, members voted overwhelmingly in favour of corporatisation and from a regulatory perspective, therefore, RCS is satisfied that due process was followed.
15. Madam Deputy Speaker, as NTUC has stated, its preference was to keep a majority stake and also local ownership. But Income was unable to find a willing partner. Hence Income assessed that the deal with Allianz provides the best alignment of interests.
16. Now, I can understand why many Singaporeans are concerned that the partnership with Allianz may impact Income’s social objectives.  As I have explained, we need to first appreciate that Income today operates in a very different competitive and regulatory environment. Allianz has committed to honour Income’s existing policies; participate in national insurance programmes; and continue its charity commitments, including the pledge of S$100 million over 10 years from 2021 to provide social mobility among the low-income and support the well-being of seniors. NTUC and Income have also given their assurance to keep premiums affordable for Income’s low-cost schemes for its members.  In fact, NTUC’s Secretary-General has put out a statement yesterday re-affirming NTUC’s full commitment to its social mission.
17. On Mr. Saktiandi Supaat’s question, the Government has introduced the Significant Investments Review Act (SIRA) safeguards to designate entities that provide a critical function to national security interests.  Companies that provide a ‘social purpose’ will not meet this high bar.
18. In fact, many companies in Singapore will want to do well and do good at the same time. It will not be feasible to legislate and prevent ownership changes in all of these companies. Ultimately, the best way to keep prices affordable is to facilitate competition, ensure options for customers, and put in place a sound regulatory framework.  That is what the government is committed to doing.