CPF earns Asia-Pacific’s first A in global ranking of pension systems

[SINGAPORE] Singapore’s Central Provident Fund (CPF) has become the first in the Asia-Pacific to earn an A rating in an annual global ranking of pension systems

CPF climbed from a B+ in 2023 and 2024 to join the Netherlands, Iceland, Denmark and Israel in the A-league of the 2025 Mercer CFA Institute Global Pension Index. This is the first time CPF attained an A in the index’s 17 years.

“First-class” retirement income systems that are robust, sustainable, deliver good benefits and have a high level of integrity get an A from Mercer.

The pension expert, which has been tracking the global pension systems with the CFA Institute since 2009, said on Oct 15 that CPF’s improvement can be attributed to gains in the sustainability and integrity sub-indexes.

These offset a slight drop in the adequacy sub-index, which measures whether a pension system provides a sufficient level of income for retirees to maintain a decent standard of living.

Meanwhile, the sustainability sub-index assesses the pension system’s long-term viability and its ability to meet future pension obligations, while the integrity sub-index indicates the level of trust in the pension system.

A total of 52 retirement income systems were reviewed for the 2025 index, with eight of them, including Singapore, Hong Kong and Malaysia, showing improvement.

Mercer noted that no pension systems were downgraded.

This shows that retirement income provision is improving at a global scale, which is important as people live longer and birth rates continue to decline, it added.

SEE ALSO

In Singapore, all employed citizens and permanent residents (PRs) are covered under CPF. They can use their CPF savings for housing and medical purposes and save up for retirement at the same time.

When Singapore residents – citizens and PRs – turn 65 years old, they join CPF Life, the national longevity insurance annuity scheme.

This gives them a steady stream of monthly income throughout their life, even after the savings in their retirement accounts run out.

Tim Jenkins, lead author of the report and partner at Mercer, said that Singapore residents can boost their monthly CPF Life payouts if they make voluntary contributions under the Retirement Sum Topping Up Scheme.

They can either do a cash top-up or a CPF transfer to their own or their loved ones’ Special (SA) or Retirement accounts (RA).

The money will go into the SA for those below the age of 55, or RA for those aged 55 and above.

Pang Zhe Liang, lead of research and solutions at insurance advisory firm Havend, said that by contributing to the Full Retirement Sum (FRS) in their SA, most Singapore residents will have enough savings to cover basic living needs, including rental expenses.

The FRS is S$213,000 for those who turn 55 in 2025 and S$220,400 for those who are 55 in 2026.

He added that they might also want to consider making a voluntary housing refund if they have used their Ordinary Account savings for their property. The more housing refunds they make, the more CPF savings they have for retirement.

The mandatory amount to refund includes funds used to pay for the property and any interest that would have been earned if the money had remained in the CPF account.

Mercer reiterated its recommendations for CPF to improve the pension scheme.

Among its suggestions, the pension expert said measures could be implemented to reduce the barriers to establish group corporate retirement plans.

Pang, who is the author of The CPF Playbook, which provides a guide to using CPF for retirement, said these corporate plans can supplement CPF for retirement income and help employers retain staff at the same time.

The challenge, he noted, is to design a corporate plan that complements the existing CPF system without undermining it.

He added that one alternative could be for employers to reimburse employees who buy private retirement plans from an insurance company.

Another of Mercer’s recommendation pertains to raising the age at which CPF members can take out their excess savings from 55 to 60 years old.

Currently, if a CPF member has set aside the FRS in his RA, he can withdraw the amount that exceeds the FRS when he turns 55.

Pang said this suggestion is highly sensitive. Nonetheless, he agrees that it may be reasonable, given the ageing population and rising life expectancy here.

Raising the withdrawal age would ensure greater financial security in old age, he added.

Optimising CPF is one layer of a retirement plan. Pang said that CPF members may want to look at ways to complement their CPF Life payouts.

They could consider investing in a portfolio of globally diversified investments or contributing to the supplementary retirement scheme (SRS).

Anyone who is at least 18 years old can sign up for an SRS account with the three local banks, DBS, OCBC and UOB.

The SRS is a voluntary savings scheme that allows individuals to build up their nest eggs and get some tax relief at the same time.

The annual contributions are capped at S$15,300 for Singapore residents and S$35,700 for foreigners.

Funds in the SRS earn the base interest rate of 0.05 per cent a year, so one should invest their SRS funds in various assets like stocks, bonds or unit trusts.

Prudent financial planning includes having adequate protection in the form of insurance coverage, especially for medical expenses and long-term care, Pang noted.

Having a “robust medical safety net ensures that one does not need to dip too deeply into retirement savings in the event of a medical crisis”, he added. THE STRAITS TIMES