The elderly population is growing. Only 31% of retirees receive a pension. Nine in ten have no savings. The primary savings vehicle available to private sector workers — the Employees’ Provident Fund (EPF), a mandatory savings scheme for retirement, pays out as a lump sum, which most recipients spend soon after retirement.
Nearly 4 million retirees over 60 are living with the result, according to a new study by a government think tank, the Institute of Policy Studies (IPS). The think tank also said that the country requires an additional 149,000 old-age care givers.
For most jobs, the retirement age is 60, but the average person now lives to be 75 years, according to Central Bank data cited by the IPS study. Most retirees spend their savings soon after leaving the workforce on buying property or on social obligations, like expenses for a child’s wedding.
According to research cited by the IPS, over 75% of retired persons are net dependants, and 91% receive no income from savings. This leaves some retirees with little choice but to keep working. The IPS found that nearly half of those aged 55 to 64 are already economically inactive, while those who work are pushed into the informal sector — as security guards, drivers, and domestic workers — roles that underutilise their skills.
The IPS study also forecasts a shortage of 149,000 care workers by 2037. IPS forecasts that three-generation households, where a family supports two groups of dependants: children and grandparents, will decline from 19% of all households in 2012 to just 5% by 2060.
Currently, of women outside the paid workforce, 61% are engaged in caring for children or elders — a source of unpaid care that disappears as more women enter formal employment.
The formal care sector, which should absorb that shift of women to the workforce, is polarised between overcrowded state institutions and private facilities that most people cannot afford.
The study notes that reforms have been proposed and repeatedly stalled. By 2030, roughly one in three workers will be supporting an elderly dependant, according to UN Population Division projections cited by the IPS. At that point, the fiscal cost of inaction will be impossible to ignore.