Singapore staff lack retirement support from employers: survey

The research also revealed that financial well-being has become a new priority for employers.

Working adults in Singapore have ranked retirement planning as their top financial priority, but still some 80% underestimate how much they need to retire, according to a report by professional services firm Aon.

The report also found that whilst retirement support from employers is also lacking, challenges remain around transparency in group retirement plans’ investment offering, and employees foregoing long-term perspectives to seek short term gains.

“Employers can have a significant impact on how much their employees save by instilling smart habits and healthy money behaviours. The right long-term savings vehicles, effective communications and financial tools will help Singapore’s workforce be more financially resilient in the wake of the COVID-19 pandemic,” said Ashley Palmer, Aon regional managing partner, retirement & investments, Asia.

Less than 30% of the surveyed companies in Singapore currently offered their employees an investment choice in their retirement plans, and only 15% of retirement plans have a default investment fund.

Aon notes that as employees select their own optimal investment funds, they may lack experience in understanding investments that can lead to misallocating their money, and result in inadequate retirement savings or excessive risk taking.

“The key to protecting employees and adding value to savings in any defined contribution retirement plan is a well-defined default investment strategy. This includes frequent performance monitoring, actively managing investment risks and dynamically reducing investment risk as employees move towards retirement,” said Alicia Brittain, Aon senior consultant & actuary, retirement & investments, Singapore.

Close to 40% of employers also rank an employee financial well-being strategy as their highest priority, with 70% going to formulate or execute financial well-being programmes throughout 2021. The survey noted that offering a financial well-being programme is critical in increasing employee engagement and in remaining competitive in the talent market.

Meanwhile, 22% of the companies offer Central Provident Fund (CPF) top-up contributions to citizens and permanent residents. But, nearly 40% of the working population in Singapore are foreigners who do not have access to CPF and are likely to have foregone their retirement benefits in their home countries.

A third of organisations in Singapore are also prioritising a thorough review of their supplementary retirement arrangements in 2021.

“Forward-looking companies first need to understand the financial worries of their employees and identify the gaps in their benefits offering. The most effective approaches are aimed at changing individual behaviours towards money and savings and providing accessible programmes and vehicles to deliver sustainable change,” Brittain said.