Singapore in danger of becoming a super-aged nation by 2050

Demographic projections a cause for worry.

By the middle of this century nearly half of Singaporeans will be aged 65+, making the country a super-aged country with a pile of problems related to retirement and pensions, according to Allianz Global Investors.

"While Singapore is younger than Japan, it is also aging quickly and will soon face the same kind of challenges: With a fertility rate of 1.28, Singapore is also far below the replacement rate of roughly 2.1 children per woman. Singapore has approximately 14.5 people aged 65+ for every 100 of working age. By 2050 this is expected to reach 49 per 100 -- nearly exactly the mark which Japan will have reached 27 years earlier," based on the investment management firm's estimates.

"By then, Singapore will not be able to avoid the problems super-aged Japan is already facing. The difference will only be in terms of the timeframe," it added.

Allianz Global Investors said the rapid aging of Japan’s society serves as a warning for Singapore and other Asian countries who are treading down the same path.

Japan became the first super-aged country in 2006 when more than 20% of its citizens became aged 65+, and since then the country has posted a deteriorating performance in terms of the Allianz Pension Sustainability Index (PSI).

Allianze Global Investors said Japan's decline in the PSI is closely linked to its rapid aging. Preliminary results on an update of the PSI (due later this year) shows Japan has declined further in terms of the sustainability of its pension system and is likely to continue to do so in
the future -- and countries like Singapore are susceptible to following Japan down this same road.