This is surely something Singapore is not
Number One, not even Top Ten: Global Retirement Index put together by Natixis
Global Asset Management (link to full report in Bloomberg HERE)
Singapore is ranked 25th, behind every 1st
World peer and even behind Korea. Northern Europe dominates the top of the
ranking.
In my view, there is a glitch in the report
which even overstate Singapore’s rank No.2 in the sub-index for Finance In
Retirement Category. This seems odd at first sight given what we already know
about retirement inadequacy. On closer examination, the sub-index does not
measure retirement adequacy but such things as inflation, government
indebtedness, governance, tax pressure. We know Singapore do very well on these
measurements hence our high ranking. But if retirement adequacy is factored in,
then I am certain Singapore’s No.2 ranking in the sub-index would have fallen
which would cause Singapore to fall out of the top 25.
The report has a useful advice: follow the
leaders. What did leader Norway do so well? Strengthen the 3 pillars of
retirement – government benefits, employment pension and personal savings.
Australia came in for special mention for the excellence of its superannuation
program – a workplace pension that is the main vehicle for retirement income,
supplementing a means-tested basic state pension.
Notice the absence in Singapore of the things
that Norway and Australia did so well – government benefits and employment or
workplace pensions. It is especially poignant in the Norwegian example because
its is publicly funded unlike Australia which is mostly privately funded. In
Norway funding is supplemented by tapping up 100% of the inflation adjusted
returns from GPF. It can be said that Norwegians have a direct benefit from
GPF’s investments.
We in Singapore have GIC and Temasek, nearly
comparable to GPF. Therefore there is no reason for retirement inadequacy
except that our government only tapped 50% of the inflation-adjusted returns of
GIC and Temasek (plus MAS). Furthermore the funds are not used directly for
funding retirement and healthcare but spent at the entire discretion of the
government.
In order to improve our retirement
proposition, the government should follow the leaders. First re-design the
pension system to allow the flexibility of private workplace pensions like in
Australia. Second link the Net Investment Return Contribution, i.e. the
constitutional rule permitting spending of the earnings from reserves, directly
to the provision of state pensions and healthcare. Make those reserves work
directly for the benefit of the people.
Then Singapore can climb the ranking. As it
is now, the Number 25 ranking is poor in relation GDP per capita – like the old
saying “Nice from far, but far from nice”.
Did someone mention something about Swiss
standard? Well, Switzerland just so happens to be Number 2.
Chris Kuan
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