CPF RATING: NEEDS IMPROVEMENT
Singapore’s pension system is the best in Asia, according to the ninth edition of the Melbourne Mercer Global Pension Index released in October. It scored a B rating with an overall index value of 69.4, rising 2.4 points from 2016. The city-state beat out China which had an overall index value of 46.5, India (44.9), Indonesia (49.9), Japan (43.5), and Korea (47.1), which are the five other Asian nations covered by the index.
Despite its stellar rating, the Singapore pension system still needs some improvement, said Garry Hawker, Asia zone wealth business coordinator, director of strategic research, growth markets at Mercer. “As one of the most developed pension schemes in Asia, Singapore has continued to make improvements through CPF in providing more flexibility to its members,” he said. “The overall index value for the Singaporean system could be further increased by reducing the barriers to establishing tax-approved group corporate retirement plans; opening CPF to non-residents who comprise more than one-third of the labour force; and increasing the labour force participation rate at older ages as life expectancies rise,” Hawker noted. Singapore scored highest in the integrity sub-index at 80.7.
Quest for sustainability
Globally, Singapore ranked seventh out of the 30 countries covered by the index. Denmark topped the rankings for the sixth straight year. Jacques Goulet, president of health and wealth at Mercer, stressed that countries should address sustainability when considering pension reform. “increasing life expectancies and low investment returns are having significant long-term impacts on the ability of many systems around the world to deliver adequate retirement benefits both now and into the future,” Goulet said. “These pressures have alerted policymakers to the growing importance of intergenerational equity issues.”