Some 2,000 people took to the streets this past Saturday to voice displeasure over perceived inadequacies in the nation’s pension system. The protests were held at Hong Lim Park, the only place in Singapore where protests are generally tolerated, and attracted supporters of various ages. The protests were the largest so far this year.
Singapore’s CPF system is rather austere by global standards, though this austerity has allowed the system to avoid the looming budget gaps and questions of financial stability that plague many of the more generous Western systems. Singapore has a retirement age of only 62 years old, though many people continue to work past that age due to inadequate savings.
Singapore’s CPF urges personal responsibility
Both employers and employees are required to contribute to the CPF, with the rates of contributions rising as high as 34.5 percent for younger workers and dropping to as low as 10 percent for employees near retirement. How much citizens receive per month in pay outs after they retire depends on how much they put in.
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Assuming that citizens put in the minimum required, they will currently receive about $900 dollars in payouts over 20 years. A new system was implemented in 2013 to ensure some payouts, though often reduced, for people who use up all of the money in their accounts.
The money in CPF accounts can be used during before retirement for various purposes that align with the government’s goals. For example, part of the country’s compulsory savings can be tapped to pay for medical expenses. Money can also be tapped to buy a primary residence or to pay for a child’s education.
Singapore will be watched closely
Singapore is often considered a sort of economic canary and is watched closely by analysts for signs of change or economic developments. With Singapore also facing increasing wrath from its voters, regional nations such as China are likely also watching the city-state to see shifts in trends in social demand and political pressure.
To be sure, Singapore still remains a highly stable country. Compared to the protests that regularly seize control of Western countries, these protests were small, orderly affairs. Still that there were serious protests at all is a sign of changes. In the past, civilian displeasure rarely registered anything more than some minor grumbling and perhaps a slip dip in the polls.
Now, Singapore’s Peoples’ Action Party finds itself dealing with dropping poll numbers. In the last election the PAP secured just about 60 percent of the vote, a historically low number. If elections were held today, it’s possible that the party would pull even less support, though increased social spending in the last budget was well received by the country’s citizens.
With countries such as China adopting similar policies to the PAP and running a similar style of “tough love” governance, these protests are undoubtedly being watched closely. China in particular is having to deal with the increasing demands of its citizens, many of whom are no longer satisfied with the status quo.
PAP will have to find way forward
For now, the People’s Action Party is taking a cautious approach. So far, the Prime Minister’s department has said little on the pension system. Prime Minister Lee defended the system briefly, however, stating that it was sound and transparent, in his eyes, though the government would go ahead and review it.
With Singapore’s population rapidly aging, the PAP will have to pay close attention to the demands of its older citizens. Current low birth rates also mean that in the future there will simply be fewer younger people to shoulder the burdens of the cost of an older population. As such, the government will have to carefully balance financial and social demands.