Study ranks Singapore’s CPF top in Asia, but suggests it could be improved by raising withdrawal age

Singapore was given a B grade in this year’s Melbourne Mercer Global Pension Index.
Singapore Press Holdings

Singapore has again been ranked top in Asia for providing financial security for retirees that is both adequate for the individual and sustainable for the economy.

For 10 years running, the Melbourne Mercer Global Pension Index ranked Singapore at the top in the region. This year, the republic was given an overall score of 70.4 out of 100, a B grade, ahead of the global average of 60.5.

But there is room for improvement, and some of the suggestions include raising the Central Provident Fund (CPF) withdrawal age.

Garry Hawker, Mercer’s director of strategic research in growth markets said this would be helpful to meet retiree needs as people are living longer.

On Aug 28 this year, the CPF Board released an analysis which found that nearly six in 10 members have withdrawn cash from their CPF savings since turning 55 – the minimum age of CPF withdrawal. The median amount withdrawn was S$9,000, and the average amount was $33,000.

“Having one of the most developed pension schemes in Asia, Singapore has continued to make improvements through the CPF by providing more flexibility to its members,” Hawker said.

Apart from increasing the age at which CPF members can make withdrawals, he also recommended two other solutions – reducing the barriers to establishing tax-approved group corporate retirement plans, and opening CPF to non-permanent residents.

Singapore has seen an upward trend in its overall index performance since 2015. Last year, Singapore achieved a score of 69.4. According to Mercer, the increase was mainly due to improvements in the sustainability sub-index.

The index assessed the pension systems in 34 countries this year based on their adequacy, sustainability and integrity. It awarded A grades to Netherlands and Denmark, with scores of 80.3 and 80.2 respectively.

According to the Ministry of Communications of Information, international pension studies, such as Melbourne Mercer Global Pension index, tend to use a standardised methodology across countries to maintain comparability, and are hence unable to fully take into account some of each country’s unique characteristics.