[ad_1]
SINGAPORE – A leaderboard evaluating retirement income systems has put Singapore back in first place in Asia and seventh overall.
The ranking comes amid concerns that the pandemic will affect future pensions, with reduced contributions, lower investment returns and higher public debt, the Mercer CFA Institute’s Global Pension Index report said.
It examined 39 retirement income systems covering nearly two-thirds of the world’s population using a combination of responses collected 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, evaluated each retirement system based on its suitability, integrity and sustainability.
The adequacy category examines the benefits, design, savings levels, and home ownership of a system, among other factors, to determine its ability to provide adequate retirement income.
Integrity considers factors such as regulation, governance, communication, and operational costs, while sustainability measures the likelihood that a system can deliver benefits in the future.
Singapore ranked seventh in adequacy, eleventh in integrity, and twelfth in sustainability.
The Republic has the largest retirement system in Asia, followed by Hong Kong and Malaysia.
Dr. David Knox, Mercer’s senior partner and lead author of the study, said in a briefing on Friday (October 16) that Singapore ranked well as it has an established system, the Central Provident Fund (CPF), with good governance and broad coverage of all. Singapore resident employees.
“The CPF also has an annuity approach, so it has an income-oriented system with money that is set aside for the future,” said Dr. Knox in reference to CPF Life, which provides a monthly payment for a lifetime. time the member turns 65.
The report noted that the Singapore government implemented changes to the CPF scheme in 2016, including greater flexibility in reducing the amounts of retirement pensions and increases in certain contributions and interest rates.
Singapore also maintained its “B” rating, indicating that it has a pension system with a solid structure and good features, but with some areas for improvement.
Chong Chee Loong, who runs Mercer’s wealth business in Singapore, said the system can be improved by lowering barriers to tax-approved group corporate retirement plans and increasing the age at which CPF members can access their retirement savings.
“The system would also be strengthened by opening the CPF to non-residents working in Singapore, as they comprise a significant part of the workforce,” he added.
Chong noted that the government has focused on safeguarding Singaporeans and businesses amid the pandemic and, in doing so, has also considered keeping its pension system robust, including postponing a planned increase in rates. CPF contribution for older workers in a year until January 1 February 2022
He also announced the CPF transition compensation scheme, which will cover half of the increase in employer CPF contribution rates for one year, and will be calculated based on employee earnings paid up to the $ CPF salary cap. 6,000 per month in 2022.
The report said that increased 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 care for the elderly.
Professor Deep Kapur, Director of the Monash Center for Financial Studies in Melbourne, said: “The outlook for investment returns is subdued, while volatility can be high, adding to the normal challenges of managing risk in a pension portfolio.
“In addition, some governments have allowed temporary access to saved pensions or have lowered the level of mandatory contribution rates to improve the liquidity situation of households.”
He said these developments will likely affect pension systems and influence the index for years to come.
The research project was sponsored by the CFA Institute, the global association of investment professionals, in collaboration with the Monash Center for Financial Studies and the global consulting firm Mercer.
[ad_2]
