ADDING A BASIC PILLAR TO THE CENTRAL PROVIDENT FUND SYSTEM: AN ACTUARIAL ANALYSIS

The Central Provident Fund (CPF) system has worked well for majority of Singaporeans who are able to work consistently over their life cycle and have made prudent housing choices. However, the inherent structure of CPF, which is based purely on contributions, is unable to address retirement adequacy...

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Bibliographic Details
Published in:Singapore economic review 2015-08, Vol.60 (3), p.1
Main Author: Chia, Ngee-Choon
Format: Article
Language:English
Subjects:
Cost of living adjustments
Economic growth
Economic theory
Growth models
Older people
Pension costs
Retirement planning
Studies
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Summary:The Central Provident Fund (CPF) system has worked well for majority of Singaporeans who are able to work consistently over their life cycle and have made prudent housing choices. However, the inherent structure of CPF, which is based purely on contributions, is unable to address retirement adequacy for its vulnerable members. Adding a means-tested non-contributory basic pillar to the system will make the system more inclusive. This paper studies the pension cost of a targeted old-age income support system for needy elderly to help meet their basic living expenses. A Lee-Carter stochastic model is used to forecast the elderly population. Pension costs depend on coverage and benefit levels and the cost of living adjustments. The viability of a basic retirement support scheme would also depend on the speed of ageing and the rate of economic growth.
ISSN:0217-5908
1793-6837