We refer to The Straits Times report (S'pore ranked top in retirement finances, Sept 21).
The Global Retirement Index (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 inter-governmental organisation.
Many indices provide useful comparisons. Some, however, have serious flaws that make their findings unreliable.
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.
The 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.
The 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 per cent of households by income, 85 per cent own their homes.
This means they do not pay rent in retirement. In fact, they may boost their retirement incomes through housing monetisation.
In addition, the GRI's health indicator gives a higher score to countries that spend a higher proportion of their gross domestic product (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 per cent of GDP, as compared with an average of 8.8 per cent for Organisation for Economic Cooperation and Development countries - and 16.9 per cent for the United States.
Yet, we have one of the highest health-adjusted life expectancies in the world.
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.
Studies that are based on sound methodologies and use robust data sources can help improve policymaking. We welcome those analyses.
Sim Feng-ji
Divisional Director
Income Security Policy Division
Ministry of Manpower
Correction note: The Ministry of Manpower has clarified that Singapore's national spending on healthcare is about 4.8 per cent of GDP, and not 2.5 per cent.
