Preparing your retirement plans? According to a recently published study by the Monash Centre for Financial Studies, Singapore is part of the top 10 countries with the best pension systems in the world for 2019.
The Melbourne Mercer Global Pensions Index considered adequacy, sustainability and integrity in measuring a country’s retirement income system.
Graded A with “a first class and robust retirement income system,” the Netherlands and Denmark topped the list. Australia came at second place.
Singapore is graded B, indicating a “sound structure, with many good features, but has some areas for improvement,” for its Central Provident Fund financial security retirement system.
Singapore shares a rank with Finland, Sweden, Norway, New Zealand, Canada, Chile, Ireland, Switzerland, and Germany.
Malaysia is graded C+ on the index, described as having “a system that has some good features, but also has major risks and/or shortcomings that should be addressed” along with questionable efficacy and sustainability.
Japan and Korea are grouped among the countries with the lowest index value revealing “major weaknesses and/or omissions.”
The study spanned 37 countries and used 40 metrics to assess a retirement system’s projected improved financial outcomes for retirees, the system’s sustainability, and its trustworthiness among the community.
The study then provided suggestions for Singapore to improve its current CPF retirement income system. To increase Singapore’s overall index value, the study suggested to:
- reduce the barriers to establishing tax-approved group corporate retirement plans;
- open CPF to non-residents (who comprise a significant percentage of the labour force); and
- increase the age at which CPF members can access their savings that are set aside for retirement, as life expectancies rise.
The study also considered “wealth effect” or an increase in spending alongside the rise in wealth, citing that more people tended to borrow money as pension assets increased as well./TISG