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Singapore Stays 10th In Global Pension Index

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A slight drop in the index value of Singapore’s Central Provident Fund (CPF) has seen the country receive a ‘C+’ grade in the 2015 Melbourne Mercer Global Pension Index (MMGPI).

The ‘C+’ acts as a reminder that despite being world-class, the country will need further tweaks to the CPF system in order to improve on our ratings. While Singapore maintained its position as the top country in Asia and 10th among the 25 countries ranked, we’ve dropped one grade from ‘B’ in 2014 to ‘C+’, and in the process receive a score of 64.7 out of 100 as opposed to last year’s 65.9. A grade of ‘B’ would mean having “a sound structure, with many good features”, but in this case for ‘C+’, it equates to having “some good features, but also having major risks and/or shortcomings that should be addressed.”

Other countries ranked together with Singapore in having a “C+” grade are Germany and Ireland, while the five other Asian nations in the index, namely China, India, Indonesia, Japan and South Korea were given a “D” grade. It is also interesting to know that the European and North American economic powerhouses of Germany and the United States also received the “D”. Denmark once again took top spot for the fourth consecutive year with a score of 81.7, earning it an “A” grade,.

The drop in Singapore’s score is due to a change in calculation which reduced the level of pension assets as a percentage of Singapore’s economic output, a decrease in the net household savings rate here, and a continued decline in mortality rates for Singapore. However, it seems we’re on the right track to improve on this year’s score, as improvements to CPF next year are in the works, some of them being the increase of the wage limit, contributions and guaranteed investment returns for older members, and introduction of the Silver Support Scheme to help low-income retirees.

The annual Melbourne Mercer Global Pension Index is produced by the Australian Centre for Financial Studies and consulting firm Mercer, and funded by the Victoria state government. It ranks 25 countries on the adequacy, sustainability, and integrity of their retirement savings systems.




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