Assess Opportunities in Singapore’s Retirement Market

Getty Images 11880404 3600x1200

Contact Us

Manni Huang

Manni Huang

Associate Director, Account Management, Asia

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)

exhibit 11.03

  • 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

exhibit 11.05

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.

Learn More

Asia Pacific

Subject Matter Experts

Ken Yap, CFA

Ken Yap, CFA

Managing Director, Asia

Bio →

Ken Yap, CFA

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 more than 20 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.

Strategic consulting graphic blue 1640x917

Strategic Consulting

Understand where to allocate resources to achieve your objectives. We can help you determine which initiatives are likely to be successful and those that may not achieve the desired effect. In an increasingly competitive market, our objectivity and experience can help you to advance your firm’s unique strengths.

Learn More

You may also be interested in:

  • Annual report
  • The Cerulli Edge

We use cookies to improve your site experience, distinguish you from other users and support the marketing of our services. These cookies may store your personal information. By continuing to use our website, you agree to the storing of cookies on your device. For more information, please visit our Privacy Notice.