Over the years, Singapore has prided itself for spearheading one of the oldest and most advanced pension plan in the whole of Asia. While the country stands ranked 4th in the whole of Asia, it takes number 7 in the whole world which is quite impressive. Having been based on the Central Provident Fund (CPF) system, the country provides retirement security for all permanent resident workers and other permanent immigration residents. However, more priority is currently directed to low-income earners with the Singapore government implementing a least top-up money package for such individuals.
Most if not all pension schemes largely depend on the constantly increasing individual contributions.And just like most parts of the world, the mandatory contributions made by civil servants popularly known as PAYE(Pay As You Earn), extends to Singapore’s large civil servants’ group. Through this measure, the government aims at triggering increased pension scheme contributions in this majority group of contributors.
Consequently, as a way of including everyone, the Singapore government supports exclusive savings and employment schemes that are most popular among the armed forces. There is also an additional non-taxable contribution that caters for private contributor needs. Overly, Singapore seems to be well prepared with ready sources of money, from all possible pension contribution plans. This is seen as one of the reasons behind the country’s success in the pension sector.
To improve its service delivery options, the Singapore government recently introduced the Silver Support Scheme aimed at extending a helping hand to retirees within the low-income bracket. With the life expectancy rate of 8.1% individuals above the age of 65, there is need to keep supporting them as one of the precautionary measures into reducing the gap between the rich and the poor. This is because as much as the Singapore government cannot extend retirement years, it is keen to keep its citizens as comfortable as possible for the remaining years of their lives.
The demographic imbalance in Singapore is in such a way that there are older people than the young working class. This is attributed to the increased life expectancy rates with widely spread low fertility rates. Therefore, the government has to set aside enough to deal with this issue, as the country expects to have more retirees in future than an active working class group of individuals.
Singapore’s pension schemes awareness is rapidly on the rise.In the recent years, the country has been experiencing positive reactions of residents over the various pension schemes. However, there is a setback in the proper investment of the money received through pension plans as Singapore’s CPF lacks the authenticity to engage in any form of investment plans on behalf of the world. This seems a little disadvantageous as most countries globally engage in investment plans to better their funding sources and improve service delivery to their citizens.
The pension schemes in Singapore provide different share structures to individuals depending on their payment plans. The money received is then distributed to various accounts such as the ordinary account, special account, and Medisave account. Money collected in the distribution account can be issued to individuals for use in purchasing long-term investments such as residential properties and other forms of non-residential properties. Additionally, contributors to this account are allowed access to cater for educational needs as well as insurance covers. Basically, this is an ideal account for anyone planning to retire in the near future without having to feel the effects of the lose of a monthly pay cheque.
On the other hand, one can choose to make some more contributions to the special account which caters for the inevitable old age. This extends to the most appropriate investment plans for retirees. The Medisave plan is used to save money aimed at settling hospital bills and other medical expenses such as health coverage plans.
While pension scheme contributions in Singapore are split it into the above-mentioned accounts, the ordinary account gets more money allocation. This is more so if the employee is young. So in general terms, Singapore uses age gaps in deciding the most applicable contribution splits. Singapore’s Government Investment Corporation is left with the bigger responsibility of finding beneficial investment plans for a given percentage of pension scheme assets. Consequently, CPF is allocated the sole responsibility of decision making on the most appropriate non-saleable government bonds to invest in as solely allocated.
In Singapore, any CPF member is eligible for pension claims once they hit the least age of 62. This means that one can purchase assets, invest in bank fixed accounts plans or leave them to continue earning interest. In case one does not select the appropriate measure they would like to take, CPF in collaboration with other relevant bodies applies the default option on your contributions. This means that your beneficiary gets to receive your contributions over a period of 20 years.
The many attractive milestones achieved by Singapore in the pension scheme sector can be attributed to its ability to plan way ahead of time and fully including residents in every step of the way. With customized benefits such as tax-free contributions on mandatory CPF contributions exercised on both sides of the employer and the employee, makes it easy for more companies to open up about their employment terms. In the long-run, this works in the goodness of the country as better living conditions create room for improvement and investments. The same tax-free exemptions apply to those individuals who have or are about to retire as they make money withdrawals from their accounts.
With the combination of the fully voluntary contributions and the mandatory contributions to the CPF, Singapore sets itself on top of other Asian countries. It is looked upon as a mature country with a focus on economic advancement for all its citizens. If Singapore continues with the same trend of seeking improvement channels in the pension scheme sector, then you should expect to continue seeing it lead the map in Asia and probably the rest of the world. For there is nothing that beats individual dedication and responsibility in securing their future; something that is fully maximized by Singapore.
Despite monthly CPF contribution from both employee and employers, some retiree do not have enough money to spend for their daily lives. In times of medical emergency, if you need some financial assistance, you may wish to visit Credit Hub Capital Pte Ltd for short term financial loan.