MM Lee advises Singaporeans to work as long as you can : [Link]. Yes, work for as long as you can breathe. Why?....Many Singaporeans won't be able to retire at all. After all the tweaking of the CPF scheme for its use in HDB, Singaporeans are now at the bottom of a ranking of retirement income from pensions.
Jan 9, 2009
Pension & retirement income
S'poreans ranked lowest
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.