Retirement and pensions suffer as life gets longer
Retirement: the issue at hand is simply that life is getting longer and the budget is getting shorter. More and more it is becoming apparent that governments on an international scale are struggling to pay out pensions after retirement. The global economic mess of the last decade or so has led governments to increase the age when people can expect their pension payouts, as well as many citizens actually having to work past the age of retirement because they simply have not saved up to supplement the dwindling state allowances. It is become evident that in any corner of the world it is a pretty good idea to start saving at a young age to supplement the state pension, and a very bad idea not to.
The UK government ended fixed retirement in 2011, which allows citizens to work beyond the age of 65 and claim benefits as well. Often times people who did not save or add to their pension fund are forced to carry on working. However, Britain also proposes to raise the age of retirement to 67 by 2028. About 40% of the population have financial plans and save towards their pensions, and approximately 60% find their pension income to be adequate, most of these being a combination of government and corporate savings.
In Malaysia a compulsory retirement age of 60 is enforced for public service employees and an early retirement at 40 is optional. There are two types of retirement schemes, one being a mandatory government savings scheme for all Malaysians working in the private sector and the other a fixed monthly benefit including medical aid. Surveys show that 75% of the population save enough for retirement, however pension schemes consist of a mere 30% of that income. Malaysia’s government pension plans are some the lowest in the world.
In the US about 55% of the population are financially prepared for retirement, while many conclude that they have not taken the proper precautions while saving. Social Security and corporate pensions make up about 40% of the national retirement income.
Australia enforces a mandatory savings system where 9% of people’s income is stashed away. This percentile is due to increase to 12 over the next 10 years.
Singapore is the most comprehensive. The government runs a security savings fund called The Central Provident Fund. Employers and employees contribute the three accounts. An Ordinary account, for things like investment, education or a mortgage. A Special Account for retirement and retirement related investments. And lastly a Medisave Account for medical care. Citizens are then strongly encouraged to add to the CPF account as much as they can spare. Surveys reveal that 88% of the population is satisfied with the government pension plan and Singapore is considered to be the foremost nation in the world when it comes to taking care of the elderly.
With a quick peek at these 5 nations, it is quite clear that taking your pension plan into your own hands is key, because if you don’t live in Singapore, nobody is going to look after you except you!