Differentiating between Wealth Held by Households in Public Versus in Private Housing, and Measures to Sustain or Improve Upward Mobility Rates

Ms Mariam Jaafar asked the Prime Minister and Minister for Finance in respect of the Ministry's Occasional Paper on income growth, inequality and social mobility trends which indicated that three in four children born into the bottom 20 percent of households in the late 1970s and 1980s moved to higher income tiers as adults, what measures are in place to sustain or improve these upward mobility rates for today's and future cohorts.

My response will address related oral and written questions on wealth inequality and wealth data filed by Mr Yip Hon Weng, Mr Gerald Giam1,2,3 and Mr Louis Chua scheduled for subsequent Sittings. If Members are satisfied with the response, they may wish to withdraw their questions after this session.

Mr Speaker, Sir, over the past decade, real wages have risen across all income levels, with wage growth highest for lower-income workers. Income inequality has decreased. Social mobility between generations remains strong. These outcomes reflect sustained policies to uplift lower-income workers and foster inclusive growth, supported by a progressive system of taxes and transfers.

Most countries face challenges in measuring wealth inequality accurately. Certain assets such as unlisted businesses, private equity and overseas assets, are inherently difficult to track and value. Financial confidentiality provisions further constrain data collection.

We have made our best effort by combining survey data from the Household Expenditure Survey with administrative records. The survey captures information on assets such as bank deposits and unlisted assets, including overseas assets, and liabilities such as household arrears and bank loans. We augment this with administrative data on properties, Central Provident Fund (CPF) accounts, Singapore Savings Bonds, shares and securities held in Central Depository accounts and the CPF Investment Scheme Special Account, life insurance policies, balances in the Post-Secondary Education Account and Edusave accounts, and Housing and Development Board (HDB)-administered loans. Property values are estimated based on their fair market value.

We have progressively improved the coverage and quality of wealth data captured in the Household Expenditure Survey. We will continue to study how data collection methods can be strengthened. Like many other advanced economies such as the United Kingdom (UK), Japan and Germany, we rely primarily on survey-based approaches. We have no plans at this point to seek additional legislative or administrative powers to require more granular asset disclosures solely for inequality measurement.

This is our first compilation of the wealth Gini coefficient and we do not have a historical series. We intend to track this measure over time. The next cycle of the Household Expenditure Survey is planned for 2028. And we will consider whether additional indicators, which members have suggested, can be provided.

Members asked for further breakdowns of wealth inequality – such as by asset type, housing type or age cohort. The Gini coefficient is measured at the household and not individual level. Hence, we do not break it down by age cohorts. We do not compute Gini coefficients by asset type, as households can and do convert their wealth from one asset type to another. We also do not differentiate between public and private housing, or between owner-occupied and non-owner-occupied housing, in computing the wealth Gini, as this a stock measure of net worth and not a measure of liquidity. We do not have sufficiently granular data at the moment to provide the breakdown between local and overseas holdings.

Mr Gerald Giam asked about wealth concentration at the top. The top 1% hold about 14% of total household wealth, while the top 5% holds about 33%. These levels are broadly comparable to advanced economies with similar wealth Gini coefficients. However, these estimates should be interpreted with caution, due to sample size limitations and potential under-reporting in survey responses at both ends of the distribution.

Wealth inequality is higher than income inequality in all advanced economies, as wealth accumulates over the life-cycle. In Singapore, a significant part of household wealth, especially among lower- and middle-income households, is held in owner-occupied housing and CPF savings. Our housing and CPF policies have enabled many Singaporeans to build their assets over time. This broad-based asset ownership helps to moderate inequality while strengthening long-term security and social stability.

Mr Yip and Mr Giam asked whether we have considered other forms of wealth taxes beyond property tax. Our approach is to tax wealth in ways that are less susceptible to cross-border movement and tax planning, while preserving competitiveness. This is why we focus on less mobile assets like property and motor vehicles. These taxes are progressive, with higher-value assets taxed at higher rates.

We are mindful of inter-generational balance. Younger households who are still accumulating assets should not be unduly burdened. At the same time, higher-value property owners should contribute more. For asset-rich but income-poor seniors, we provide deferral mechanisms for property tax payments to ease cash-flow pressures.

We fully agree with Ms Mariam Jaafar on the need to sustain upward social mobility for current and future cohorts. Our strategy is to intervene early, provide support through life and ensure wage progression.

We have expanded access to affordable and quality preschool education to give children from all backgrounds a good start. Our schools provide a strong foundation with more support for those from disadvantaged households. SkillsFuture provides continuing learning opportunities for adults, including enhanced support for mid-career workers. The Progressive Wage Model and Workfare raise earnings and strengthen career pathways for lower-wage workers. For families facing complex challenges, ComLink+ provides more intensive, coordinated support in partnership with community organisations.

Overall, Singapore remains in a stronger position than many advanced economies. But we do not take this for granted. Tackling inequality and improving mobility requires sustained investment across generations. We will continue to review and update our fiscal measures to ensure they remain effective and sustainable. We remain committed to ensuring every Singaporeans can start well, progress in life and share in our nation's success.

Thank you, Speaker. I thank the Minister for his response. I just have two questions. The first is whether there are more proximal indicators of inequality? I note that the Minister has said that the next survey will be conducted in 2028, but given the importance of wealth inequality and income inequality in our society, whether there are any attempts at capturing some of these more proximal indicators of inequality, both wealth and income?

My second question relates back to the statistic. How is the Ministry looking at using this statistic? Are you looking at the trend or are you looking at the threshold and does that subsequently warrant the kinds of actions that you would take?

Thank you, Mr Speaker. Wealth is notoriously hard to measure, particularly data on overseas assets and unlisted assets. This is not unique to Singapore. The current estimates, both wealth as well as income, are our best efforts, in line with best practices in other countries. We have done so to our best effort, combining both survey data with administrative data, as I have explained in my speech.

This is the first time we are measuring the wealth Gini coefficient and we are open to improving it over time. We will take into account some of the suggestions that are made by Members on what we can do. In terms of household income trends, we already publish that data regularly, annually, in the Key Household Income Trends Report. But for the wealth Gini coefficient and wealth data, it is dependent on the main source, which is the household expenditure survey, which we do every five years. I think the next cycle is in 2028. And so, when that data is obtained, we will try our best to put out something regularly. We intend to track this data, as I have explained.

In terms of what we would do with this data, I think the important part is to look at the trending. The absolute numbers are an indication of where we are, relative to other countries, but the trending is also important, whether or not wealth Gini is going up or going down, in the right direction. The enhanced data and methodology that we have used for both income inequality as well as wealth inequality will improve our understanding of the states of inequality in Singapore, which will better help us develop more evidence-based and targeted policies to improve Singaporeans lives.

Thank you, Speaker. I thank the Minister for his responses. This is an issue very close to my heart. I have three supplementary questions.

First, are there any early indicators for cohorts in the 1990s and the 2000s of the data on where they stand today in terms of upward mobility? And does the Government have any targets; you talked about trends, but do you have targets for what you would like it to be at, in the next time we run this cycle?

Secondly, the in the bottom quartile, which has not actually moved in terms of upward mobility, what are the barriers, what are the persistent barriers that keep them there? And how are we evolving our policies for this?

And then, thirdly, as we think about artificial intelligence (AI) and technological shifts that are reshaping jobs, how are we ensuring that children from lower-income households are not disproportionately affected? I think I raised this point in my Budget speech yesterday and I am very keen to hear what the Ministry is thinking about that.

Thank you, Mr Speaker. The findings of the Occasional Paper indicate that the social outcomes in the past decade have been positive. I think it suggests that our strategy of combining inclusive economic growth with targeted and progressive support has had tangible impact. But we do not take these outcomes for granted. As our society ages and new generations come onboard and the economy matures, structural pressures on inequality will naturally emerge and sustaining mobility will become more challenging.

So, to Ms Mariam's question on younger cohorts, we do not yet have good data on younger Singaporeans because they are still in the early stages of their careers and their earnings have not stabilised. But we are encouraged that the increasing proportion of younger Singaporeans have attained higher levels of education and skills, and that will put them in good stead to be able to do well in life.

On her second question on the bottom quintile, the issues are more complex. The families, in particular in the bottom quintile, have multiple needs and need multiple support. And that is why we have been working on a package of various measures, including the enhancement of ComLink+ which the Prime Minister spoke about in his Budget Speech. We are also working very hard to make sure that children in those households have a good start in life through preschool and that is part of the KidSTART programme, which we have initiated many years ago.

Sustaining social mobility will indeed be a challenge. We will have to work extensively on families in the bottom quintile, knowing that the challenges to overcome are more complex and more difficult.

As for AI, the current crop of Singaporeans and the concerns about how they will need to adapt, I think the key is really through ensuring our Singaporeans are skilled, are able to adapt quickly, take on the new jobs that will be created in this new economy. This will generate wage growth and hopefully then, in that way, they will be able to maintain a strong standard of living and continue to progress in life.

It is a basket of pressures. I think we have to work hard to lean against the structural pressures that will happen as our economy matures and develops, so that Singaporeans can succeed regardless of background. We have to remain vigilant and to refine our policies when needed so that we can remain socially mobile over the long term.

I thank the Minister for his reply. The focus of my supplementary question is on seniors. For older Singaporeans who may own valuable property but have limited or no income, how does the Ministry assess the impact of the higher property taxes on the cost-of-living pressures? I note the Minister had earlier mentioned that there are current initiatives. But will there be additional safeguards to ensure that the measures aimed at reducing wealth inequality do not unintentionally strain retirees?

We recognise the concerns of the group that Mr Yip spoke about – the asset rich and cash poor retirees.

Our property tax system currently is progressive. Investment properties and higher-value properties are taxed higher and homeowners with only one property are taxed lower, and they receive property tax rebates when necessary.

But we nevertheless understand the concerns that individual property owners may face different financial circumstances, particularly on cash flow. So, for asset rich but income poor seniors, we have deferral mechanisms for property tax payments to ease their cash flow pressures. For instance, eligible seniors and retirees can apply to pay via extended interest-free instalments.

Thank you, Mr Speaker. Sir, I appreciate that the Ministry of Finance has published the wealth Gini coefficient. I hope that more data on wealth inequality will be published as this could help us to craft policy solutions to reduce inequality in our country. I have two supplementary questions.

Has the Ministry conducted a simulation on how much wealth Gini coefficient would be reduced if investment property equity were excluded, to isolate the impact of this type of equity on inequality?

Secondly, given that wealth inequality is significantly higher than income inequality, is the Government looking into ways to shift the tax burden away from work and income towards wealth, to better support social mobility? I understand the Senior Minister of State's point just now that this can be tax planned away, but I would like to know the Government is trying and it sees this as a priority.

Mr Speaker, for property, in terms of methodology, we have treated them the same, through property values. Because property value captures a broad range of different property characteristics, whether owner-occupied or not, as a store of value. The wealth Gini coefficient is not a measure of liquidity. It is a measure of the stock of wealth. So, that is the first point I would like to make.

Second is that for property, the way we have implemented it in Singapore is that we have taken a broad-based approach to ensure that Singaporeans have broad asset ownership, through HDB flats. And as a result, we should not necessarily compare what we do in Singapore, in terms of including housing, with other countries. So, it is a different metric.

On whether or not we have done simulations on separating investment of property from owner-occupied property, we have not done so. As I have explained, it is because we treat property as a store of wealth. There is no real need for us to do so and that is something at the moment that we will not do.

On tax burden, whether or not we will shift from work to wealth taxation, I think, we remain open. Today, we have an approach that works on the whole. The outcomes of the past decade, in terms of our policies, have been positive. We have been able to achieve real income growth. We have been able to achieve a decline in inequality and we have been able to achieve a balance using both wealth taxation, as we explained, as well as income taxation.

As our society ages and we move towards an older society where there is more asset owning, that is something we can consider, whether or not we need a shift. But we have to do this carefully so that we know that the outcomes that we want to achieve can be done so without too much social perturbation.

Let me just go back to the issue on investment property, so that I can explain that a little bit more clearly because I have not done so very well. What we do is that for household wealth, we do include both liquid and illiquid assets, because this is in line with international guidelines. All property owners, including those who own HDB flats, can rent out their property for income, and to sell it and keep the proceeds. So, it is a store of wealth.

And so, it is up to how people manage it, how they activate this store of wealth that they can use. And so, there is no real need for us, and it is not in international best practice for us to separate out investment versus non-investment properties or owner-occupied versus non-owner-occupied properties. This is in line with international best practices and we will try to continue to do that, particularly since in Singapore, our approach is to encourage owner-occupation, and to encourage and make sure that Singapore has broad-based ownership, particularly through the ownership of their HDB flats.