Singapore’s Central Provident Fund (CPF) members topped up their retirement savings in January through September by more than one-fifth from the same period last year even though the city state’s jobless rate spiked to a 16-year high from economic fallout of the coronavirus pandemic.
The number of top-ups exceeded 198,000, 34% higher than in the same nine months of 2019, and totaled S$1.81 billion (US$1.33 billion), up 23% year-on-year, the CPF says in a statement on October 21.
The fund says one-third of members added to their savings for the first time, and over 70% of these were 35 years or younger.
The CPF deems it “encouraging” that members are adding to their retirement accounts even through the pandemic, according to Tan Chui Leng, group director of the fund’s retirement income group.
“Such members can look forward to a stream of retirement payouts that they can count on even in uncertain times,” she says in the statement.
Singapore’s pension system retained its spot as the best in Asia in the Mercer CFA Institute Global Pension Index published this week, with its score improving to 71.2 from 70.8 in 2019. Globally, it’s ranked seventh.
Singapore’s economy shrank 7% in the nine months through September, and the government has forecast a decline of between 5% and 7% for 2020. The jobless rate was 3.4% in August, the highest since 2004.
According to David Knox, a senior partner at Mercer, the coronavirus pandemic has affected retirement systems globally, especially in the provision of adequate and sustainable income to retirees in the long term, making pension reform more urgent.
He says pension systems are facing multiple issues, including ageing populations, greater life expectancies, rock-bottom interest rates and rising government debt.
“These issues affect billions of people around the world. Significant pension reform is now more urgent than ever,” Mr. Knox says in a report on October 20.
The CPF is open only to Singaporeans and permanent residents. Employers and employees contribute a combined 37% of employees’ monthly salaries to their retirement accounts.
The fund had over 3.9 million members and a total account balance of S$425.1 billion as of end-2019.