Singapore drops two spots in retirement security index

Western Europe dominates top-ten rankings

Singapore drops two spots in retirement security index

Retirement security in Singapore has slightly worsened because of a decline in income equality, according to a recent report by Natixis Global Asset Management.

The city-state dropped two places to 27th among 43 countries in the firm’s 2017 Global Retirement Index. Eight of the top 10 countries are from Western Europe, with Australia and New Zealand also in the list. The firm said these countries benefit from a combination of strong social programs, widely accessible healthcare, and low levels of income inequality:

  1. Norway
  2. Switzerland
  3. Iceland
  4. Sweden
  5. New Zealand
  6. Australia
  7. Germany
  8. Denmark
  9. Netherlands
  10. Luxembourg

Results were drawn from 18 “key drivers” of retiree wellbeing across four broad categories: Finances, Health, Material Wellbeing and Quality of Life.

Singapore had the highest scores in both employment and income per capita among the countries studied – but it ranked 30th in in the Material Wellbeing sub-index because of its “very poor” placement in income equality (40th). “It is similar to the United States in this regard, which ranks fifth in income per capita but 38th in income equality.”

“Retirees in the rich but more unequal countries such as the United States, Singapore and Israel run the risk of having retirement systems set up to disproportionally benefit certain citizens who have higher levels of incomes,” the report added.

Nevertheless, Singapore ranked first in Finances, underscoring the “important role that stable and robust government finances play in ensuring retirement security.” The index gauges the strength f a country’s financial system and the ability of the government to provide for its citizens in retirement.

“In the past, life in retirement was 10 to 15 years; now it’s 25 to 35 years. It will be increasingly challenging for countries to balance retirement schemes where the young generations are paying for their elders, because there are too few workers contributing, current productivity growth is too low to generate sufficient income to pay pensions for the number of people living longer, and macroeconomic conditions have changed,” said Philippe Waechter, head of economic research for Natixis Asset Management in Paris.

“Growth, wage inflation and interest rates could remain low for an extended period of time. To create the surplus needed for the transfer of wealth from the present to the future, productivity growth must come back, and we have to think differently about the arbitrage between pension levels, retirement age and worker contributions,” he added.

 

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