Financial Wellbeing: Are Singapore Employers Doing Enough?

Studies have shown a direct link between financial stress and physical health, emotional wellbeing, and ultimately, productivity—so what are Singapore employers doing about it?

Financial Wellbeing: Are Singapore Employers Doing Enough?

26 Jan 2018 by  Shikha Gaur

Studies have shown a direct link between financial stress and physical health, emotional wellbeing, and ultimately, productivity—which is not only detrimental to employer medical costs, also to business outcomes and employee engagement. What are Singapore employers doing to overcome these challenges? And more importantly, is it enough?

In Aon’s 2017 Hot Topics in Retirement and Financial Wellbeing  report, we found that 59% of employers in Singapore are very likely and 33% are moderately likely to focus on financial wellbeing programmes for their employees in ways that extend beyond retirement decisions. This means that employers are making an effort to educate their workforce on money matters such as saving and investing, and equipping them to effectively utilise their rewards to appropriately make decisions that will benefit their long-term financial requirements.

Singapore workforce not retirement-ready

In Singapore, citizens and permanent residents have access to the Central Provident Fund (CPF) which supports competing needs—current ones such as housing and medical; as well as future ones such as retirement. This system, and a lack of education on how to optimise it, often results in a less-than-ideal outcome for individuals when it comes to having enough for their retirement1.

On the other hand, expatriates and foreigners—who make up 40% of the working population in Singapore—do not have access to CPF and are more than likely to have forgone retirement benefits in their home countries. Diminishing expatriate packages, coupled with the rising cost of living, leaves this employee segment far from being retirement-ready.

The good news is this: 60% of Singapore employers feel that the importance of financial wellbeing education has increased in importance in their organisation over the last 24 months—with 49% in the process of developing a financial wellbeing strategy and 16% in the process of executing on it.

This includes programmes such as financial education sessions, access to tools, and advisory programmes to select groups of employees such as senior executives. As part of the total rewards package, employers are also offering provisions for non-CPF-eligible employees. The top 3 provisions are:

Supplementary Retirement Scheme (SRS)

Where employers facilitate retirement payments via an employee directed option. This means employers will earmark contributions for employees to place within SRS (subject to a cap). The contributions may be used to purchase various investment instruments at the employee’s direction.

International Pension Plan (IPP)

Where employees’ retirement payments are directed towards a formal programme that covers employees in multi-jurisdictions. The IPP mirrors a retirement/savings plan and offers flexibility in design and relevant investment options.

Cash allowance

Where employers provide a simple cash provision to employees in lieu of retirement contributions to a formal plan. This option is easiest to administer; however, it has the least impact on employees and their retirement-readiness.   

As almost half of employers surveyed are still in the process of developing their financial wellbeing strategy, the prevalence of financial wellbeing tools and programmes currently being offered to employees is low. Still, the dial is shifting in 2018 as employers are taking strong steps to educate and empower employees to be proactive in improving their financial position. Employers in Singapore understand the importance of financial wellbeing in relation to employee engagement, productivity, and business results—and as an attractive element of their total rewards strategy in order to strengthen their employer brand.

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1 HSBC’s The Future of Retirement report.

Shikha Gaur

Shikha Gaur is Executive Director for Aon Hewitt’s Retirement and Wealth Management business in Singapore. Shikha specialises in consulting on Financial Wellness and Retirement solutions for organisations, their employees and providing financial advice to individual executives. Shikha was born in Melbourne and has been living in Singapore for 13 years.

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