State's role in meaningful retirement

I refer to the respective comments by Dr Patrick Liew Siow Gian and Mr Sum Kam Weng ("Be mindful of differences between Singapore and Scandinavian countries" and "State-sponsored retirement will impose heavy burden"; Forum Online, Oct 21) in response to my letter ("Role models for state-sponsored retirement exist"; Oct 3).

Mr Sum asserted that a state pension programme would impose an onerous tax burden on Singaporeans, citing the Norwegian income tax rate as evidence.

Although Nordic citizens may pay high income tax, they are not subjected to as many indirect taxes or other government surcharges. Their tax model is also progressive, such that low-income citizens pay either zero or marginal tax.

Moreover, funds raised via income tax in Scandinavian countries go not only towards pensions, but also to other state services, such as higher education and healthcare, that Singaporeans still pay out of pocket for.

Thus, the overall effective tax rate and financial burden per citizen are comparable.

Mr Sum also suggested that Singapore, lacking natural resources, would be unable to fully fund a pension programme.

Many other countries with strong pension schemes, such as the Netherlands and Switzerland, are similar to Singapore in that they do not enjoy the benefit of oil or gas reserves.

Hence, the source of government income is irrelevant, so long as the required sum can be raised and then grown in a sustainable fashion through prudent investment.

In the same breath, Mr Sum held up the Central Provident Fund as an exemplar of how revenue collected from citizens should be managed. This is consistent with my proposal. 

Dr Liew reiterated his suggestion that "personal efforts and achievements", enabled by education and "incentives for upgrading", would be sufficient to meet most people's retirement needs.

While this contains attractive rhetoric, its effectiveness is severely compromised by the countless variables at play - global economic upheaval in the face of automation, ramifications for productivity if aged workers are retained for too long, imperfect information on retirement planning, the motivation and well-being of workers, and so on.

I, therefore, still maintain that state institutions can and should play a larger role in enabling citizens to seek a meaningful retirement.

Paul Chan Poh Hoi