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Singapore's CPF system ranked top in Asia, Denmark's system leads globally: Mercer
SINGAPORE'S Central Provident Fund (CPF) system ranks top among similar social security systems in Asian countries, but it is Denmark's well-funded pension system which has emerged the best globally.
The 2014 Mercer Melbourne Global Pension Index identified Singapore's CPF is a "sound structure, with many good features, but has some areas for improvement that differentiates it from an A-grade system".
The Singapore retirement system continues to score a grade of B, but is expected to be upgraded once shortcomings are addressed, said Neil Narale, Mercer's Asean Retirement Business Leader.
"The lack of tax-approved group corporate retirement plans and retirement savings for non-residents continues to isolate Singapore from other highly-graded countries on the global scale," he said.
The index measured 25 retirement income systems, covering close to 60 per cent of the world's population; more than 50 indicators were used, with sub-indices of adequacy, sustainability and integrity.
Denmark's system has an overall score of 82.4, given its good coverage, high level of assets and contributions and the provision of adequate benefits and a private pension system with developed regulations.
Suggested measures to improve Singapore's system include:
* Raising the minimum level of support available to the poorest aged members of society;
* Reducing the barriers to establishing tax-approved group corporate retirement plans;
* Opening CPF to non-residents (who comprise more than a third of the labour force); and
* Increasing the labour force participation rate among older workers.
Mr Narale said that employers continue to be interested in implementing company-sponsored programmes such as Section 5 plans, Supplemental Retirement Schemes and customized schemes for both Singaporeans and non-residents, but barriers remain in getting these implemented. "Policies that can help employer programmes get implemented will further increase Singapore's grade," he said.