Singapore - Companies and employees need to play their part in supplementing the current CPF (Central Provident Fund) contributions even though Singapore is acknowledged to have a reasonably good retirement system globally.
The second Melbourne Mercer Global Pension Index, produced by Mercer and the Australian Centre for Financial Studies, showed that Singapore is ranked seventh out of 14 countries, alongside Chile and Brazil. The index compares retirement systems from around the world and ranks them based on adequacy, sustainability and integrity. Singapore's index value has increased from 57.0 in 2009 to 59.6 in 2010 due to the integral role CPF plays in retirement plans.
Even though Singapore is ahead of the USA, France, Germany and Japan in terms of pension systems, the country fell behind on adequacy because CPF contributions do not have to be retained until retirement. The funds can be used earlier flexibly for a range of needs such as housing and healthcare.
Tim Jenkins, Asia Pacific business leader for Mercer's retirement, risk and finance business, said the CPF is only a part of an ideal retirement system. He added that employers and individuals need to supplement current CPF contributions because "the broader CPF system was not designed to cater fully to individuals' retirement needs".
Jenkins said, "To further improve Singapore's overall retirement system, efforts must be taken by employers to generate greater participation in the supplementary system - both Group Section 5 and the individual Supplemental Retirement Schemes (SRS)."
The report recommended that Singapore's overall retirement system could be further improved by:
* raising the minimum level of support available to the poorest pensioners
* increasing the percentage of contributions required to be saved for retirement
* encouraging additional savings from above average income earners
* increasing the labour force participation rate amongst older workers
* investing a proportion of the contributions in growth assets
For the second year running, the Netherlands obtained top ranking with a score of 78.3 out of a maximum of 100. It was followed by newcomer Switzerland (75.3) in second place, Sweden (74.5), which maintained third position and Australia (72.9) which fell from second to fourth position.
More quality Lighthouse titles
Get your marketing department up to speed with Asia's most read marketing site
Want to get on the right side of the procurement department?
Direct them to Procurement Asia