Singapore ranks ninth globally in retirement income systems, prompting calls for reforms to enhance accessibility.
In a recently published ranking of retirement income systems worldwide, Singapore achieved the highest score in Asia and ranked ninth overall. Meanwhile, Japan and Malaysia demonstrated the most significant improvements in their retirement income systems, according to the 14th annual Mercer CFA Institute Global Pension Index, which assesses 44 retirement income systems globally, covering 65% of the world’s population.
Mercer, an American asset management firm, released its latest rankings on Tuesday (Oct 11). Iceland topped the list, followed by the Netherlands in second place and Denmark in third. Israel and Finland secured the fourth and fifth positions, respectively.
The index examines various retirement income systems around the world, highlighting their weaknesses and suggesting potential changes to provide pensioners with more sustainable retirement benefits. Here are Mercer’s recommendations for Singapore:
Reduce barriers to establishing tax-approved group corporate retirement plans.
Open up CPF to non-residents, who constitute a significant portion of the labor force.
Raise the age at which CPF members can access their retirement savings, reflecting increasing life expectancies.
Enhance communication with CPF members regarding their benefits.
According to Mercer, “While Singapore saw a slight dip in its overall index value in 2021, it rebounded this year primarily due to a revised scoring matrix and an increase in net replacement rates.”
The firm noted that most Asian countries have made improvements, except for China, Indonesia, and the Philippines. Malaysia, ranked 23rd in the index, showed improvement due to increased net replacement rates, while Japan, ranked 35th, enhanced its ranking by modifying its approach to pension plan coverage. Additionally, the retirement income systems in Korea, Hong Kong, India, Taiwan, and Thailand have all shown advancements.
Despite these improvements in Asian retirement systems, the region’s average overall index value stands at 53.8, significantly lower than the global average of 63. However, the economic impact of the pandemic and geopolitical volatility have shifted priorities for markets both in Asia and worldwide, according to Ms. Janet Li, Asia Wealth Business Leader for Mercer.
“While Asia still trails the global average in overall index value, we are witnessing positive year-on-year enhancements in most markets. However, the challenges posed by longevity will persist indefinitely. Therefore, governments must prioritize and act promptly to refine and enhance their retirement systems,” she emphasized.
“There is no market in Asia that does not require urgent pension reforms, and policymakers along with industry stakeholders must collaborate to ensure the adequacy of pension balance sheets and the sustainability of retirement benefits,” stated Nick Pollard, Managing Director for Asia Pacific at CFA Institute.
