By mid-century, nearly a third of
Singaporeans will be aged over 65, the highest proportion among ASEAN
countries, a new study has found.
A
report published by Manulife Asset Management said that by 2050, 32 percent of
the population here will be above 65. In 2010, the figure was 9 percent.
But it
said that the problem will affect the entire region. The percentage of retirees
in ASEAN countries will almost double in less than 20 years, and treble over 40
years.
This
makes the question of long-term social security provision more important for
the Asia-Pacific region, it said.
“With
fewer workers and longer-living non-workers, the social security systems of
these countries will come under increasing strain.”
The
report noted that pensions in Singapore mainly come from the Central Provident
Fund, but said the coverage rate is less than 50 percent. It said that lump sum
payments are common in various countries in the region, but the individual
faces “an increased risk of exhausting the savings accumulated over time in the
pension system”.
But
some countries, like Singapore, allow withdrawals before retirement, such as
for the payment of homes.
Looking
ahead, the Economist Intelligence Unit – which carried out the study for
Manulife – expects strong growth for the combined life insurance assets of
households in the six largest ASEAN markets.
Life
insurance reserves in Singapore are expected to increase from US$12.3 billion
in 2010 to $18.8 billion in 2016. Households' equity assets are also expected
to grow from $542.8 billion in 2010 to $861.7 billion in 2016.
“The
prospects for organized savings... look robust for the next five years or so.”
Still,
formal pensions in ASEAN nations are “unlikely to remain the dominant component
in the retirement savings landscape as [the] population ages”.
“Instead,
it is likely that governments and institutions will continue to work together
to drive forward reform in pension systems while developing other investment
vehicles designed to support retirement planning,” the report said.
Amanda
Tan
The
Straits Times
Business & Investment Opportunities
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