Managing shocks in Singapore's ageing and retirement arrangements

Chang Yee Kwan and Mukul G. Asher

Policy Studies, 2022, vol. 43, issue 2, 264-278

Abstract: Asia is rapidly ageing and there is a need for governments to adjust social security expenditures accordingly to facilitate better management of socioeconomic shocks by the individual/household and society as a whole. This article examines the ageing and retirement arrangements in Singapore and argues that they provide a very limited ability for the individual/household to mitigate the effects of an adverse socioeconomic shock. A major contributor to this is the limited social risk pooling resulting from a continued focus on mandatory savings to a defined-contribution scheme for ageing and retirement-financing needs, age and gender biases in existing policy designs, and low real rates of return to mandatory savings balances. More fundamental reforms are needed if Singapore is to be able to better manage the impact of adverse socioeconomic shocks. This includes introducing a budget-financed universal social pension, and a realignment of the mandated returns to the contributions and balances under existing retirement financing arrangements. Otherwise, there is potential for socially-destabilizing and -detrimental outcomes to emerge in the medium- to longer-term.

Date: 2022
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DOI: 10.1080/01442872.2019.1634189

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