Mr Lee will also announce improvements to two major parts of the social safety net: the Central Provident Fund and housing.

The changes are among a raft of strategies the Government has in store to tackle the major, long-term challenge of a growing income divide.

Another key plank in its response lies in education, where the aim will be to make sure every child receives a quality education, the Prime Minister's press secretary, Mr Chen Hwai Liang, said. On the cards are plans to further upgrade the education system.

The Rally speech, which traditionally lays out the Government's priorities for the year, will also deal with the challenges posed by Singapore's ageing population.

Mr Lee will discuss ways to help Singaporeans work for longer so they have enough savings for old age.

By 2030, one in five Singaporeans will be aged 65 and above. This is up from one in 12 last year. Singaporeans are also living longer. There are currently 25,000 people aged over 85.

To help older workers stay employed for longer, a new law on the re-employment of those past the retirement age of 62, is expected to be passed by 2012.

Another concern of Singaporeans is financial security in their golden years. A recent Straits Times Insight survey found that seven in 10 of those polled did not think their CPF savings would be enough to see them through old age.

Former public relations consultant Tony Chandra, 65, is eager to hear what PM Lee has to say about helping older Singaporeans work longer.

Mr Chandra spoke of the 'frustration of elderly Singaporeans' forced to leave their jobs when they hit their 60s. But he added that any job offered to an older person 'must also be compatible with the person's education and qualifications'.

As for education issues, Unity Primary School principal Teoh Tiong San said that while the Government has done a lot for neighbourhood schools, he hopes that the way in which resources are disbursed can be refined.

'I think we have to look at the holistic needs of a child - social, emotional, financial, even nutritional; what are the deficiencies that they have, so that we can level them up.

'It will be good if resources distributed to us are pro-rated based on our students' various needs.'

xueying@sph.com.sg