September 10, 2018

Singapore maintains its top 30 ranking for retirement security, according to the latest Global Retirement Index (GRI) published by Natixis Investment Managers. The Index incorporates 18 performance indicators that examine the factors that drive retirement security across 43 countries.

The performance indicators are grouped into four thematic sub-indices, which cover key aspects for welfare in retirement: the material means to live comfortably in retirement; access to quality financial services to help preserve savings value and maximize income; access to quality health services; and a clean and safe environment.

Singapore came in 28th on the Index, its fourth consecutive top 30 showing since 2015. It is also only one of three countries in the Asian region in the top 30, with Japan and Korea coming in at the 22nd and 24th spots, respectively.

When looking at the countries’ performances in terms of the soundness of a country’s financial system as well as the level of returns to savings and investment and the preservation of the purchasing power of savings, Singapore maintains its strong showing, coming in second place in its Finances in Retirement performance, just behind New Zealand. While it lost the top spot from last year to New Zealand, which was ranked second, this is the third consecutive year that Singapore has held on to one of the top two positions. Taking a regional perspective, and including Australia and New Zealand, the Asia-Pacific region has improved its performance in this sub-index, moving up from fourth to second place.

Overall, the countries in the top five remained the same as last year, although there was movement in the rankings, with Norway dropping two places, leaving Switzerland to take pole position and Iceland moving up one rank to second place. In Asia, the only countries to retain their rankings from last year were Japan and India, which came in last both in 2017 and 2018. South Korea and China saw their rankings slip slightly, while Singapore slipped a notch from 27th position in 2017.

The majority of the high-scoring countries in this year’s Index are relatively prosperous with advanced economies and institutions people generally trust. Six of the top 10 feature as a result of their income per capita scores, and seven are in the top 10 for governance. The countries in the top 10 also benefit from three strong main factors: their social programs, widely accessible healthcare and low levels of income inequality. That said, none of the countries is entirely immune to the challenges that are associated with an aging population, higher life expectancies, strained government resources and a pension crisis.

“Global retirement security is facing a multi-dimensional problem, as the traditional three-pillar funding model is challenged by 21st Century demographics, fiscal imbalances and monetary policies that are straining the resources of individuals, employers and governments around the world,” said Jean Raby, CEO at Natixis Investment Managers. “We hope this report will serve as a framework for much-needed dialogue among policymakers, pension managers, workers and the financial industry about how to meet the needs of today’s retirees while preserving retirement security for future generations.”

Painting a Picture on Retirement Security in Singapore

Based on results of the Index, there are areas where Singapore’s performance could improve in bettering the retirement security in the country. For example, relative to the other countries surveyed in the Index, a larger portion of healthcare expenditure is not covered for by insurance, although in contrast, Singaporeans have the seventh-highest life expectancy.

Singapore’s performance in the Finances sub-index underscored a strong showing with multiple top 10 indicator finishes, illustrating that among all countries surveyed in the Global Retirement Index, the country has low tax burdens, a low dependency ratio of elderly who rely on the working populace, higher interest rates, as well as good governance.

Madeline Ho, Executive Managing Director, Head of Wholesale Fund Distribution, Asia Pacific at Natixis Investment Managers, said, “The Index points to a generally favourable financial infrastructure that provides long-term financial strength and stability, which is extremely important for the finances of retirees. The relatively stable macro socio-economic environment in Singapore over the years have also made it conducive for Singaporeans to take stronger ownership in planning for their retirement.”

In another recent survey undertaken by Natixis Investment Managers in September 2017, it was found that, over eight in 10 (84%) Singapore investors feel that funding for their silver years is increasingly their responsibility, and the results also showed that investors in the country have better acumen when it comes to saving for retirement compared to globally, in terms of having a general figure in mind for how much they will need to save, as well as how much of their annual income they need to save to fund their desired lifestyle in retirement. The survey also shed light that 95% of the Singaporean investors surveyed planned to rely mostly on their own savings for financial security in retirement.

“We are highly encouraged by the trends which demonstrate that Singaporeans are proactive in taking steps to secure their retirement so that they can enjoy their desired quality of life when they retire. With an increased life expectancy, embracing a mindset of proactive retirement planning becomes more critical in ensuring financial security in their silver years”, added Ms Ho.

Learning from the Nordic Example

The Nordic countries – Denmark, Norway, Finland, Iceland and Sweden – have always been top performers in the Index. All Nordic countries apart from Finland, ranking 12th, feature in the overall top 10. The Nordic countries typically finish near the top for most indicators and therefore provide a best practice template for retirement well- being.

A staple of the Nordic countries’ solid retirement conditions is a good balance of well-to-do citizens whose distribution of income is relatively more equal than other countries in the GRI. Some countries have high income per capita or high income equality but few countries are able to master the balance of having high scores for both. Nordic countries, by contrast, generally do a good job of having relatively high incomes with the wealth still being relatively well-disbursed throughout society. Iceland has the highest score for the income equality indicator and also has the seventh highest score for the income per capita indicator. Norway has the fourth highest score for both indicators.

Nordic countries generally have a generous social security system and good economic performance, and may be considered a model worth emulating.