Retirement planning is one of the major concerns of every individual from the beginning of a professional career. It obviously matters a lot because once you are retired, your income is stopped but your expenses are never-ending. Food, transport, and health are the basic expenses for meeting which, you need to possess an adequate amount of income. The regular income is enjoyed by a small part of the population especially that is involved in government services. When talking about Singapore, it has one of the best pension systems in Asia, but when compared globally, it seems lagged behind.
Singapore has a pension scheme that is being ranked among one of the top schemes in Asia. The Singapore pension plan is oldest among all the schemes in Asia as well. This is in great variance with the national pension scheme in Japan. The pension scheme in Japan and Singapore started at the same time that is around seventy years ago. Japan’s pension scheme is world’s largest pension system ever in size however it is being regarded as one of the most unsustainable systems without appropriate maintenance.
Whereas, when talking about Singapore, it’s pension scheme usually doesn’t hold any place within top 10 pension schemes on a global podium. Some surveys even reveal that it ranks below the pension schemes of the countries like Chile. It is quite surprising to see that Singapore where the employees are being given highest wages all around the world in certain fields, the level of the pension system is unexpectedly poor. Considering these conditions, can it be something to worry to the Singaporeans, that dream of enjoying a luxury after retirement life?
Singapore has the Unique State of Pension for You
Pension schemes around different countries including Singapore are often complex and difficult to understand. The main reason behind this is that every individual that comes under the government pension scheme is a unique personality having the unique family background, different financial conditions and different job profile. All these kinds of variations impact the individual pension plan to a great extent.
For having a good understanding of the whole system, let us first understand the functioning of Singapore’s national pension system. Initially, it started as just a conventional pension plan. After having sufficient amount of CPF (Central provident fund) maintained, the government also added up housing and health as well. Although, we will be discussing only about the pension system.
In every organization, CPF is essential and is funded by the employees and employers well. Besides this, as-you-go is another non-contributory payment plan that otherwise is regarded as the Government Pension Plan. This government pension plan is limited to certain civil or government servants while armed force employees are facilitated with Savings and Employees plan. There is also a supplementary pension scheme that is a private pension plan initiated voluntarily without the inclusion of the employers that take advantages of tax benefits.
Aviva, a renowned insurance company in Singapore, carried out a study on Singaporeans and found that around 69% of the population that is aged 18 or more and are permanent residents of the country, were planning their retirement through the CPF savings. But the important thing to note is that one-third of the population of Singapore consists of expatriates and all those are not eligible to get benefitted from this scheme.
So, if you fall in this expat population and have not joined hands with any reliable and adequately funded plan of employer pension, it is important for you to consider a good private pension or savings plan for a comfortable retirement planning. There has been a wide range of investment opportunities that can be enjoyed in Singapore. And now in this world of credit, it is also not much difficult to make the adequate amount of funds available for making Investments. There has been a wide range of money lenders and similar services that can back you up on the basis of your income provided you choose the right kind of company or provider.
If you are among permanent residents of Singapore, you can have a clear-cut benefit of the CPF in terms of ability to have access to the funds for retirement planning, medical care, as well as housing. After coming to this point, one of the most important questions that arise in everyone’s mind is, will the savings and pension plan acquired through the CPF be sufficient for a convenient after retirement life?
The guarantees that are in place according to your requirements, cannot be enough
It has been seen that there is a regular change in the rules and regulations of CPF fund for retirement when it comes to the access and contribution of the same. All the different kinds of guarantees in terms of Returns are there; however, these guarantees also keep changing according to the financial and economic requirements as well as the decisions taken by the government.
After considering all such points about the CPF, we come to a conclusion that access and availability of CPF depend directly on the change in the economical environment of the country. It has been a big reason behind why Singaporeans are much concerned about additional types of investments for having a calm and comfortable retirement.
Recently, a licensed moneylender carried out the survey and revealed that around 60% of the Singaporean adults make savings through saving accounts as well as bank deposits, around 37% invest directly in shares as well as bonds, only a quarter of the Singapore population make investments in the property. There has been a continuous discussion and debates about adding additional retirement Savings and tax incentives.
In the end, it is always good for every individual to have a clear idea of the funds that are required for a comfortable and convenient retirement while also deciding the means through which those retirement goals can be achieved. Your wise and good investment decisions will help you enjoy regular passive income once you get retired. This will ultimately help you enjoy a peaceful and independent after retirement life.
However, there are some out there that might still be struggling even at the age of 55.