It was recently reported that Singaporeans have the lowest retirement income from pension savings in the Asia-Pacific region. And yet, through the CPF scheme, we are the biggest savers in the world. What gives?
This issue is discussed in Dr Chee Soon Juan’s latest book A Nation Cheated which Singaporeans continue to buy the publication in numbers as Kinokuniya Bookstore makes yet another order of the book (its ninth).
The economic deterioration and the recent revelations of the financial scandals in the US are heightening the fears of Singaporeans that they are not being told the truth, the whole truth and nothing but the truth about their savings. Hence, one suspects, the enhanced sales of the book.
Obviously the book’s title is also making Singaporeans wonder if they have indeed been short-changed. All these years the PAP has been telling the people that the brightness of their future can be guaranteed only if they forfeit their civil and political rights.
But the rhetoric has not been matched by reality. Despite the political sacrifice, our economic well-being has plummeted: We were the first economy to tumble into recession in Asia, our downturn has been the sharpest, and the GDP forecasts in the region puts our economy the gloomiest if the lot.
In the meantime, our leaders are by far the highest paid in the world — and this is after taking a 19 percent pay cut! With top civil servants living the high-life and traveling to Paris for cooking lessons, the decadence is clear for all to see.
And Singaporeans came to know of this matter only because the Government employee was stupid enough to brag about his escapade. Imagine what the ministers can do and are doing with their opulence even as Singaporeans face a bleak future.
Then the Government announces that it is increasing the official retirement age to 65. It tells Singaporeans that it is doing the people a favour, never mind that a majority of people don’t want to work till the day they expire.
Of course we have the model of Mr Lee Kuan Yew who at the age of 85 still goes to the office. But then if we paid our senior citizens the way the MM pays himself, no one would want to retire.
The truth is that the raising of the retirement age will mean that the CPF withdrawal age will also be delayed. The truth is also that more and more of our CPF savings will be withheld.
So how do we rectify the problem? By waiting for the next general election to check on this Government? Think again…
Read how this is impossible to do under the present elections system. Get a copy of A Nation Cheated.
Pension & retirement income: S’poreans ranked lowest
The Straits Times
9 Jan 09
Singaporeans are at the bottom of a ranking of retirement income from pensions in the Asia-Pacific region, says the Organisation for Economic Cooperation and Development (OECD).And this is true at all income levels, according to the study, which covered 19 locations including Hong Kong, Taipei and Japan, The Business Times reported on Friday.
The Pensions at a Glance study, which also involved the World Bank, found that Singapore’s average gross replacement rate – the value of the pension as a percentage of earnings when working – is just 13.1 per cent.
Taipei has the highest gross replacement rate of 70 per cent, the report said.
“This means that the gross pension income for average earners in Taipei is over two-thirds of their previous earnings level, whereas pensioners in Singapore receive less than one-seventh the amount of their earnings,” says the study.
Singapore’s pension is provided by the Central Provident Fund (CPF).
“The relatively low replacement rate for Singapore is because the calculations only consider the earmarked retirement account,” says the study. “If an individual were to put the general account towards retirement-income provision as well, then the replacement rate would be 82 per cent.”
It points out that it would be foolish to say that one Singaporean who withdrew from the CPF to buy a house is worse off than another who built up a retirement income and then had to use some of it to pay for housing.
“Nonetheless, there is a risk that older people find themselves asset-rich and income-poor in retirement and facing difficulty in unlocking the value of their housing assets to pay for essentials,” the study says.
Replacement rates – the most familiar indicator for pension analysts – are not the only factor governments are concerned with. They also need to measure the value of the overall pension promise.
“This is measured by the indicator of pension wealth which takes life expectancy into account,” the study says.
Again, Singapore has the lowest measurement – a retiree’s pension here is worth just an average 2.2 times their earnings at retirement. The figure for China is 21.2 times – the highest in the region.
Asian economic outlook: From grim to grimmer
The Malaysia Insider
11 Jan 09
Poor Performer: Singapore
Singapore’s open economy is being battered by the global crisis. We are now expecting the city-state’s GDP to contract by 2.9 per cent in 2009, following estimated growth of just 1.9 per cent in 2008. Exports are set to contract as demand in the US and most of Singapore’s other important markets stagnates.
The prospects for Singapore’s crucial technology sector – which depends on electronics exports – are looking particularly poor. But it is not only the external economy that will be troubled in 2009.
We also expect growth in private consumption, which accounts for about two-fifths of economic activity, to weaken sharply, primarily because of the deteriorating labour market and tight credit conditions.
To be sure, the government will spend vigorously to prop up domestic demand. A spike in government consumption should help to offset a drop in private-sector investment growth.
But policy makers in Singapore, as elsewhere in Asia, face a severe test of their capacity to avert a deep and prolonged recession.