Assess Opportunities in Singapore’s Retirement Market
Are Singaporeans Ready for Retirement?
According to a retirement study released by Manulife Investments in early 2021, about 38% of pre-retirees ages 40 to 59 are of the opinion that they have sufficient savings to retire comfortably and nearly 50% of the surveyed pool wish they had begun financial planning earlier. While younger Singaporeans are positive about their golden years and about two-thirds of them are considering their future financial security, most of them supplement their Central Provident Fund (CPF) savings through standard saving accounts.
Singapore’s Pension System
Singapore’s pension system predominantly consists of the CPF, which has seen steady growth in its net contributions. In 2020, CPF assets rose 8.7% year-on-year to S$462.1 billion, and CPF Investment Scheme (CPFIS) assets grew 3.8%.
Central Provident Fund Benefits and Withdrawals, 2015-2019 (S$ billions)
- The CPF saw relatively stable contributions and withdrawals over the five years to 2020. In 2020, total contributions received rose by 4.2% to S$57.8 billion.
- In 2020, the CPF saw total withdrawals of S$21.6 billion. Members are allowed to make some lump-sum withdrawals from their CPF from age 55, while the rest of their savings will be paid out as monthly retirement payouts under the CPF LIFE scheme or the RSS. In 2020, a total of S$1.8 billion was paid out under the CPF LIFE scheme and the RSS.
Assessing Options Beyond the CPF
Singapore is expected to continue reviewing its policies to improve retirement adequacy, including the feasibility of introducing the much-anticipated CPF Lifetime Retirement Investment Scheme (LRIS), which will be designed for members who wish to invest their CPF monies but do not have the knowledge or time to do so.
While it is uncertain at this stage whether the government plans to outsource funds under the LRIS to the private sector or manage these in-house, the LRIS’s goal to offer a simpler investment option to CPF members through a few well-diversified funds that are low cost and passively managed could mean there would only be a handful of opportunities for managers even if it does outsource.
Opportunities for Managers
Insurance products will continue to dominate CPFIS assets. 63.5% of CPFIS assets continued to be invested in insurance products, such as investment-linked products (ILPs). Insurers typically outsource a portion of their CPF-ILP assets to their affiliated or external managers. Although insurance companies tend to prefer their affiliates, performance matters and there are opportunities for other fund houses to replace their affiliated managers if they underperform. In selecting managers, outstanding track records and performance, as well as client service, are important.
Central Provident Fund Investment Scheme Assets, 2015-2019
Asset managers compete directly with insurance companies in terms of positioning of retirement solutions. More asset managers, such as Schroders and Fullerton Fund Management, have been packaging their new multi-asset income payout products as retirement solutions.
Stocks and direct investments into mutual funds are viewed as the most important retirement products for retail investors ages 21 to 60, while annuities, fixed deposits, and bonds are likely to attract those age 61 and above.
Capture Retirement Assets in Singapore
To learn more about the retirement landscape in Singapore and to position your products for expansion, contact us.
Subject Matter Experts
Ken Yap, CFA
Managing Director, Asia
Ken Yap is managing director of Cerulli’s Asia Pacific office. He oversees Cerulli’s business development strategy and research initiatives in the region. For 19 years, Ken has worked with asset managers, distributors, and financial institutions, identifying expansion opportunities with his deep knowledge of the market. He specializes in product development and market entry strategies into Asia’s established and emerging markets.
Prior to leading the Singapore office, Ken covered local and global asset management and distribution trends in Cerulli’s London and Boston offices. Before joining Cerulli, Ken was a consultant at Analysys’ Cambridge office in the U.K.
Full biography here.
Della Lin, CFA
As a senior analyst out of the Singapore office, Della leads the Asian retirement research and contributes both quantitative and qualitative analysis to various Cerulli reports and Edge editions. Della also specializes in building the retail and institutional analysis for the Taiwanese, Korean, and Australasia markets.
Prior to joining Cerulli, she was a research analyst in a market intelligence firm, where she was responsible for building the Australian market data with a focus on alternative assets.
Full biography here.
Jaslyn leads the research for two of Cerulli’s annual reports: The Cerulli Report—Asset Management in Southeast Asia and The Cerulli Report—Institutional Asset Management in Asia. She also contributes to The Cerulli Edge—Asian Monthly Product Trends and generates quantitative analysis to support strategic consulting engagements. Specifically, Jaslyn covers the asset management markets of Hong Kong, Malaysia, Singapore, and Thailand.
Prior to Cerulli, Jaslyn was with the Asia Pacific asset management research team at PwC. Prior to that, she worked briefly with Prudential as a financial consultant during her penultimate years of university.
Full biography here.
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