Logo of Phnom Penh Post newspaper Phnom Penh Post - Singapore keeps top spot for pension systems in Asia



Singapore keeps top spot for pension systems in Asia

Content image - Phnom Penh Post
The ranking comes amid concerns that the pandemic will hit future pensions. THE STRAITS TIMES/FILE

Singapore keeps top spot for pension systems in Asia

A league table assessing retirement income systems has again put Singapore at top spot in Asia and seventh overall.

The ranking comes amid concerns that the pandemic will hit future pensions, with reduced contributions, lower investment returns and higher government debt, said the Mercer CFA Institute Global Pension Index report.

It examined 39 retirement income systems covering almost two-thirds of the world’s population using a combination of responses gathered from May to July and publicly available data. The Netherlands led the way, followed by Denmark and Israel.

The index, now in its 12th edition, assessed each retirement system based on adequacy, integrity and sustainability.

The adequacy category examines a system’s benefits, design, levels of savings and home ownership, among other factors, to determine its ability to provide adequate retirement income.

Integrity considers factors such as regulation, governance, communication and operating costs, while sustainability measures how likely a system will be able to provide benefits in the future.

Singapore ranked seventh for adequacy, 11th for integrity and 12th for sustainability.

The city-state has Asia’s top retirement system, followed by Hong Kong and Malaysia.

Dr David Knox, senior partner at Mercer and the study’s lead author, told a briefing on October 16 that Singapore ranked well as it has an established system – the Central Provident Fund (CPF) – with good governance and wide coverage of all employed Singaporean residents.

“The CPF also has an annuity focus, so you have an income-oriented system with money being set aside for the future,” said Dr Knox in reference to CPF Life, which provides a lifelong monthly payout once a member turns 65.

The report noted that the Singapore government implemented changes to the CPF scheme in 2016, including more flexibility in drawing down retirement pension amounts and increases to certain contribution and interest rates.

Singapore also retained its “B” grade, indicating that it has a pension system with a sound structure and good features, but with some areas for improvement.

Chong Chee Loong, who heads Mercer’s wealth business in Singapore, said the system can be improved by reducing the barriers to established tax-approved group corporate retirement plans and increasing the age at which CPF members can access their retirement savings.

“The system would also be fortified by opening the CPF to non-residents working in Singapore, given that they comprise a significant portion of the workforce,” Chong said.

He noted that the government has focused on safeguarding businesses and Singaporeans amid the pandemic and in doing so, has also looked at maintaining the strength of its pension system, including deferring a planned increase in CPF contribution rates for senior workers by one year to January 1, 2022.

It also announced the CPF Transition Offset scheme, which will cover half of the increase in employer CPF contribution rates for one year, and will be calculated based on employees’ incomes paid up to the CPF salary ceiling of S$6,000 (US$4,400) a month in 2022.

The report said higher government debt due to support measures amid the pandemic is likely to restrict the ability to support older populations through pensions or other services such as health or aged care.

The research project was sponsored by CFA Institute, the global association of investment professionals, in collaboration with the Monash Centre for Financial Studies and global consultancy firm Mercer.

THE STRAITS TIMES/ASIA NEWS NETWORK

MOST VIEWED

  • Cambodia to waive quarantine requirements Nov 15, no PCR test required

    Prime Minister Hun Sen has decided to lift all quarantine requirements for fully vaccinated travellers and visitors – both Cambodians and foreign nationals – effective from November 15 onward. In a special message addressed to officials and relevant authorities on November 14, Hun Sen said this policy will enable

  • PM: No more quarantine for vaccinated travellers

    Cambodia is lifting all quarantine requirements for vaccinated inbound travellers entering Cambodia by air, waterway or land border checkpoints effective from November 15. Travellers will be required to take a rapid antigen test on arrival rather than waiting for the results of the lengthier polymerase chain

  • No payment required for travellers taking rapid Covid tests on arrival

    Ministry of Health officials said there would be no payment required for the rapid Covid-19 tests given to travellers who arrive in Cambodia from November 15 onwards after the quarantine requirement is lifted for fully vaccinated people. Health ministry spokeswoman Or Vandine told The Post on

  • General’s gun smuggling ring busted

    The Military Police sent six military officers to court on November 22 to face prosecution for possession of 105 illegal rifles and arms smuggling, while investigators say they are still hunting down additional accomplices. Sao Sokha, deputy commander of the Royal Cambodian Armed Forces and commander of

  • More Cambodians studying in US

    The number of Cambodian students studying at US colleges and universities in 2020-21 increased by 14.3 per cent over the previous year despite the Covid-19 pandemic, according to a recent US government report. The 2021 Open Doors report on International Educational Exchange showed that 848 Cambodian students studied

  • Cambodia, Thailand to discuss border reopening

    Cambodian authorities from provinces along the Cambodia-Thailand border will meet with Thai counterparts to discuss reopening border checkpoints to facilitate travel, transfer of products and cross-border trade between the two countries. Banteay Meanchey provincial deputy governor Ly Sary said on November 22 that the provincial administration