Ranked Asia’s best retirement system, guaranteed interest CPF serves Singapore’s prolonged life expectancy well.
Singapore’s retirement system based on CPF is ranked best in Asia and top 10 globally. The 2019 Mercer Melbourne Global Pension Index identified Singapore’s CPF as a “sound structure, with many good features. Investopedia has also revealed that most elderly have not saved enough to retire even in developing nations like Thailand where a minimum retirement sum of S$260,000 is needed.
Singapore’s current CPF scheme helps its citizen to retire with a huge guaranteed annum interest rate of up to 5% for the next 10 years. The money will just keep compounding. For example, a citizen born in 1965 with a FRS at $181,000 might accumulate up to $294,825 which is about 62.8% increase!
Once a citizen reaches 65 years old, under the enhanced CPF Life Payout and enhanced Silver Support, he will be able to receive monthly handouts up to $1300. The rest of his FRS will continue to generate guaranteed interests.
At the end of the day, all Singapore citizens will know how much they are getting. Eg. For the citizen born in 1965 with a FRS of $181,000, he could be sure that this full sum including interests earned would be returned to him (or to his beneficiaries upon his death) .
Singapore as a forward thinking nation, has long foreseen that the longer years spent in poor health will remain as the main factor for the increase in Singapore’s expenditure.
Singaporeans have the world’s longest life expectancy at 84.8 years and more than one quarter of the population are expected to have an average life expectancy of 85.4 years in the year 2040 according to the Institute for Health Metrics and Evaluation (IHME).
Starting from nothing, Singapore is also well aware that to spend money is easy but to make its money last for an uncertain period of time is a complex problem.
Learning from the pitfalls of other countries which had squandered their pension funds and compensated by taxing their working population more and more heavily, Singapore encourages good moral values such as working hard and saving hard. Thus, it does not impose heavy income taxes on its working citizens.
A prudent nation, it does not wish to breed a culture where its people depend totally on the government system. On the other hand, it has to also make sure that it takes good care of its aging population. CPfFwas improvised for this reason.