Research sheds more light on Singaporeans in chronic debt

   July 13, 2015     2391 views

A significant majority of Singaporeans in chronic debt have $100 or less in savings, a research and service programme by Methodist Welfare Services (MWS) found out.

The Family Development Programme profiled 72 clients from MWS’ three family service centres (FSC), namely Covenant, Daybreak and Tampines.

The findings were shared at the official launch of Social Service Research Centre today.

Other than the low level of savings which covered 90 per cent of the participants, the profiling also revealed that a majority of these arrears – 94 per cent – were current consumption debts dated back for more than a year.

These are “worrying findings”, said Mrs Cindy Ng-Tay, Assistant Director of Covenant FSC, who was part of the core research team. “They won’t have that cushion against crises such as unexpected loss of income or unexpected debts.”

The profiling also revealed that, contrary to popular beliefs, these families in chronic debt are primarily intact families with four or five family members in the household, making up 69 per cent of the programme participants.

They are also employed. The majority of the participants – 61 per cent – have either a full-time or part-time job.

The programme was piloted for a year to help families in chronic debt increase their nett worth by reducing their debts and building their assets.

The amount of money these families pay towards their arrears will be matched by the programme, paid directly towards the creditors. On top of the matching, they are also taught financial skills such as budgeting.

In the year-long pilot, the intervention group – roughly half the programme participants – reduced their arrears by a total of $80,000, including the matching amounts.

Despite the amount reduced, more research needs to be done to determine statistical significance.

“We embarked on this journey to better understand the people we are helping, and to learn exactly what worked, and what did not. The insights we get will help MWS recalibrate and enhance our debt management programme to help people struggling with chronic debt,” said Mrs Jenny Bong, MWS’ Group Executive Director.

“Currently, there is no concrete data available on the profile of poverty and debt. With a complex problem as chronic debt, it is important to understand the triggers and the efficacy of current strategies before we can begin to see significant results from our interventions,” she said.

The Family Development Programme is one component of MWS’ integrated debt management programme to help clients tackle chronic debt.

As part of the Golden Jubilee of Singapore’s Independence, and the 130th anniversary of the Methodist Church in Singapore, MWS has launched the Getting-Out-Of-Debt (GOOD) Programme, which will help 850 low-income families clear an average of $2,000 of chronic debt each. The initiative aims to give these families a fresh start so that they can take concrete steps out of poverty.

To raise funds for the GOOD Programme, MWS is organising a wheels-themed fundraising event ‘Wheels for GOOD’ on 15 August 2015 at Bishan-Ang Mo Kio Park.