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Global Retirement Index has serious flaws

  • The Straits Times (21 September 2019): S'pore ranked top in retirement finances

Global Retirement Index has serious flaws
- The Straits Times, 2 October 2019

  1. We refer to your article on the 2019 Natixis Global Retirement Index (GRI) (S’pore ranked top in retirement finances, 21 Sep, pC1).
  2. The GRI is a ranking of 44 countries published by a private asset management firm, Natixis Investment Managers, which is neither an academic institution nor an intergovernmental organisation.
  3. Many indices provide useful comparisons. Some however, have serious flaws that make their findings unreliable.
  4. Users of the GRI in particular, should note that it does not adequately take into account the unique circumstances of each country. Here are three examples.
  5. GRI includes a ranking for biodiversity which countries with smaller land sizes are assumed to be lacking in. It is hard to see the link between retirement adequacy and biodiversity. In the Singapore context, it clearly makes no sense.
  6. GRI’s inequality indicator also does not take into account the full range of policies in Singapore to support lower-income households. These include Workfare, Silver Support and generous housing subsidies. Among the bottom 20% of households by income, 85% own their homes. This means they do not pay rent in retirement. In fact, they may boost their retirement incomes through housing monetisation.
  7. In addition, GRI’s health indicator gives a higher score to countries that spend a higher proportion of their GDP on healthcare, and penalises those that manage to keep costs low while maintaining good healthcare outcomes. Singapore’s national spending on healthcare is about 4.8% of GDP, as compared to an average of 8.8% for OECD countries – and 16.9% for the United States. Yet, we have one of the highest health-adjusted life expectancies in the world.
  8. Even in the sub-index on retirement finances, which Singapore tops in the GRI, the indicators do not tell much about retirees’ retirement adequacy but instead reflect the soundness of a country’s financial system.
  9. Studies that are based on sound methodologies and use robust data sources can help improve policy-making. We welcome such analyses.

Sim Feng-ji
Divisional Director
Income Security Policy Division
Ministry of Manpower