Are Singapore Companies Doing Enough to Help Their Employees Plan for Retirement?

Singapore is experiencing a rapidly ageing population and increasing life expectancy. Are companies doing enough to help their employees plan for their retirement?

Are Singapore Companies Doing Enough to Help Their Employees Plan for Retirement?

15 Sep 2015 by  Shikha Gaur

As Singapore feels the impact of a rapidly ageing population and increasing life expectancy, are companies helping their employees adequately plan for their retirement?

Are they doing enough in this area to drive employee engagement?

Aon Hewitt's 2015 Retirement and Financial Wellness survey for Singapore employers reveals there are still large gaps in their current retirement provisions.

Retirement infographic 1

Inadequate retirement support

In our survey of 53 participants across multiple industries and organisation sizes covering more than 37,000 employees, we found that Singapore employers generally do not offer supplementary retirement plans.

While 71% of the population are eligible under the Central Provident Fund (CPF) scheme – the retirement package made compulsory for Singaporeans – only 5% of the surveyed companies offer supplementary arrangements above the CPF mandatory contribution.

What’s more, foreign nationals and key high earning and executive employees are not adequately supported by the current CPF system. In addition, three out of four companies in the survey fail to offer any substantial retirement benefits, favouring cash allowances instead of more long-term financial readiness for their employees.

Retirement infographic 2

Worries about finances persist

While financial wellness might not be top of mind for employers, it's a critical area to be addressed. Singapore’s increasing cost of living and slowing economic growth mean more employees are concerned they won’t be able to save enough to live comfortably in retirement and to maintain their lifestyles. When worries persist, employees are more stressed, more distracted and less engaged and less productive.

Our survey revealed that around half of the participants consider their companies’ current retirement support to be ineffective in retaining and attracting the right employees. Consequently, non-CPF eligible employees, executives / high earners and those reaching retirement age feel the most impact from the current ineffective retirement support.

Accepting responsibility, needing long-term direction

Most Singapore employers are still playing a passive role in supporting and encouraging employees to save for retirement. They are, however, becoming increasingly aware that the current status quo is not sustainable.

About 25% of employers in the survey are stepping up to the plate to assist their talent by providing avenues for financial wellness. These company-wide programmes and resources typically include encouraging more savings for retirement and financial goal setting, among others.

While the financial cost of these programmes is still a concern, many companies are beginning to realise that financial wellness and retirement provisions should assume a more visible part of their Employer Value Proposition (EVP).

Moving forward, one thing is certain: Financial wellness programmes help employees to be better prepared for retirement and to secure their future. They feel more relaxed about their retirement years, which in turn, leads to a highly engaged and more productive workforce.

By helping employees plan for their retirement, Singapore companies would be differentiating their employer brands and gaining a sustainable business advantage.

Start a conversation with us

If you need help to design your retirement programmes to improve employee engagement and gain competitive advantage, get in touch with us today.

 

Shikha Gaur

Shikha Gaur is Executive Director for Aon Hewitt’s Retirement and Wealth Management business in Singapore. Shikha specialises in consulting on Financial Wellness and Retirement solutions for organisations, their employees and providing financial advice to individual executives. Shikha was born in Melbourne and has been living in Singapore for 11 years.

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Shikha Gaur
Singapore