As with some other countries in South Asia, while Singapore has the honor of being one of the most advanced countries in the continent, it faces certain grave problems in terms of demographics, most of which are going to become fairly serious as time passes.
One of these is a fast-aging population, propelled in large part by the very dismal fertility rate in the country, currently at an average of even less than one child per woman.
To keep its major industrial sectors functioning and have its economy grow, it will have to become more welcoming to expats, particularly by introducing programs that make it easier for skilled workers and professionals to live and work in the country.
Pension System
The pension Singapore expat – Global Eye Singapore system is overwhelmingly reliant on contributions by the citizens. While the government does regulate and play a role in the system as whole, the general expectation is that workers will have the awareness to save for after their retirement.
The Central Provident Fund
People in employment are supposed to make contributions to their pension accounts within the Central Provident Fund (CPF) as they continue to be compensated. Since this system is based on individual accounts instead of the pay-as-you-go mechanism, it prevents in large part, from the debt on pensions from being incurred.
Up until the age of 55 years, the account is referred to as the Special Account.
Once having attained the age of 55, it becomes the retirement account.
When held with the CPF, the funds are required to be invested to be able to give the savers the 4% profit rate from interest.
In cases where the aggregate account balance is less than SGD 60,000 an added 1% is paid out to savers.
People also have the option to manage and control their investments themselves as far as retirement savings are concerned, in which they can subscribe to the investment scheme option (CPFIS). The limitation here is that people generally have the ability to invest in ETFs only.
Tax Relief And Contributions
Tax relief applies to the mandated CPF contributions, and they can be used to finance several items, including health and accommodation. The overall contribution rates are based on age and compensation.
One of the most notable advantages of CPF accounts is that taxes do not apply to them.
Limitations And Advantages
In general, there are certain limitations that apply to withdrawal amounts, so savers can be encouraged to save significant amounts for after their retirement.
Once having attained the age of 55, and having fulfilled applicable requirements, you can withdraw the amount in a lump-sum, or choose to leave it in the retirement account.