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Asset rich and cash poor: retirement provision and housing policy in Singapore

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Author Info

  • McCARTHY, DAVID
  • MITCHELL, OLIVIA S.
  • PIGGOTT, JOHN

Abstract

National defined contribution pension systems have long been a mainstay of retirement income in Asia. One of the oldest and best known of these systems is the Singaporean Central Provident Fund, a mandatory retirement scheme managed by the central government for almost a half-century. With required contribution rates that have ranged up to 50%, this program has powerfully shaped asset accumulation patterns and housing portfolios. This paper explores how the structure and design of the Singaporean retirement and housing schemes influence wealth levels and asset mix at retirement. Our model indicates that outcomes rest critically on the interlinked national retirement and housing programs. We show that policies to enhance one program may boost retirement replacement rates but can also lower total wealth in unexpected ways. The lessons we draw may serve as guidance for other countries constructing a national defined contribution retirement system.

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Bibliographic Info

Article provided by Cambridge University Press in its journal Journal of Pension Economics and Finance.

Volume (Year): 1 (2002)
Issue (Month): 03 (November)
Pages: 197-222

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Handle: RePEc:cup:jpenef:v:1:y:2002:i:03:p:197-222_00

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Cited by:
  1. Phang, Sock-Yong, 2004. "House prices and aggregate consumption: do they move together? Evidence from Singapore," Journal of Housing Economics, Elsevier, vol. 13(2), pages 101-119, June.
  2. Ngee-Choon Chia & Albert K C Tsui, 2009. "Monetizing Housing Equity to Generate Retirement Incomes," SCAPE Policy Research Working Paper Series 0901, National University of Singapore, Department of Economics, SCAPE.
  3. Mukul Asher & Amarendu Nandy, 2006. "Social Security Policy in an Era of Globalization and Competition: Challenges for Southeast Asia," Working Papers id:368, eSocialSciences.
  4. Stefan Fölster & Robert Gidehag & Mike Orszag & Dennis J. Snower, 2003. "Health Accounts and Other Welfare Accounts," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 1(3), pages 09-14, October.
  5. Michael Davies & Jacob Gyntelberg & Eric Chan, 2007. "Housing finance agencies in Asia," BIS Working Papers 241, Bank for International Settlements.
  6. Ngee-Choon Chia & Albert K C Tsui, 2005. "Reverse Mortgages as Retirement Financing Instrument : An Option for “Asset-rich and Cash-poor†Singaporeans," Finance Working Papers 22566, East Asian Bureau of Economic Research.

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