Older women in Singapore today are more likely to have accumulated less retirement savings. This is because they have not worked in the formal economy or have suffered from a gender wage gap. The latest Labour Force data shows that more than seven in 10 women aged 60 and above who worked here in 2014 earned less than $2,000 per month, compared to only around half of all men. Just five years ago, nearly 65 per cent of older male workers earned less than $2,000, compared to 80 per cent of women.
The recently-announced Silver Support Scheme will become operational from early next year , and will help older women who have not had the opportunity to accumulate retirement savings, and who lack familial support. As the scheme is expected to operate automatically, those who qualify (on criteria which will include low CPF contributions from work during one’s working lifespan, housing type and extent of family support) will receive quarterly payments of $600 on average.
What more can be done? With the Silver Support Scheme, Workfare Income Supplement and Public Assistance, the government is increasingly closing some of the most glaring gaps in Singapore’s social safety net. Nevertheless, there are still challenges to retirement adequacy for women. For one, they tend to outlive men and thus have to plan for a longer life, with possibly higher risks of disability, after their retirement, or that of their spouse. Having a default scheme where working spouses can make regular, automatic contributions to the CPF accounts of non-working spouses would facilitate the more rapid accumulation of CPF savings for women, given the additional 1 per cent interest on balances below $60,000 in the CPF. It would also avoid the situation where even possibly well-intentioned working spouses neglect to top up their spouses CPF due to inertia.
One more additional item that would be a very important enhancement to the retirement adequacy of older married or widowed women is that of adding a spousal survivorship benefit to CPF Life. Currently, CPF Life coverage ceases when the CPF Life annuitant passes away, with the remaining value of the annuity (if any) passed on to the annuitant’s beneficiaries. In a situation where a retiree spouse – who has accumulated the bulk of retirement savings (this would most typically be the husband for the current older generation) and is receiving CPF Life payouts to support the retirement income of the couple – passes away, the wife would only get the bequest value, and lose the regular annuity income from CPF Life for her remaining years. It is highly unlikely, in this situation, that she will be able to purchase a new annuity with the bequest to provide her with coverage for her remaining years.
The creation of a spousal survivorship option in CPF Life would overcome this problem, by allowing the couple to opt for CPF Life payouts to last until the surviving spouse passes, with payouts calculated on the basis of expected longevity of the surviving spouse, which in most cases will be assumed to be the woman. The calculation of this spousal survivorship option would be actuarially easy to compute – any male CPF Life annuitant would receive the payouts expected for the length of time his wife would be expected to live. The offer of this option would allow CPF members to provide their non-working spouses more assurance of financial security for life.
There is also another area that can be looked into – disability insurance coverage and elderly intermediate and long-term care for women, especially those with low or no CPF balances and thus limited medical savings is lacking. This is something that IPS Senior Research Fellow Dr Yap Mui Teng and I pointed out in an article on IPSCommons last year. As mentioned in the article, almost 700,000 persons eligible for Eldershield but not covered because of insufficient savings or because they opted out are likely to be older. Whilst we did not mention it in the article, they are also more likely to be disproportionately women. Amongst the policy prescriptions indicated there, we suggested establishing a programme not unlike the Pioneer Generation Package to pay for the disability insurance coverage for this group. Perhaps more radically, the basic disability insurance risk pool could be consolidated in a similar fashion to how Medishield Life basic cover is provided. This would be via a fund administered by the CPF, with additional cover provided by Integrated Shield plans from private insurers.
Christopher Gee is a Research Fellow with the Demography and Family Cluster at IPS.
Top photo from Flickr