Management Consulting

In Singapore, employees face significant challenges regarding retirement planning, with a staggering 80% underestimating the amount needed for a secure retirement. The 2021 Trends in Retirement & Financial Wellbeing survey conducted by Aon highlighted that while retirement planning is a top priority for working adults, there is a notable lack of support from employers. This gap is exacerbated by issues such as insufficient transparency in group retirement plans and a tendency for employees to prioritize short-term financial gains over long-term savings. To address these challenges, Aon identified three key themes in financial wellbeing and retirement support. Firstly, there is a growing expectation among employees for financial wellbeing support, prompting nearly 40% of employers to prioritize the development of financial wellbeing strategies. In response, 70% of employers plan to implement financial wellbeing programs throughout 2021, recognizing their importance in enhancing employee engagement and competitiveness in the talent market. Secondly, the survey revealed an increasing trend of employer-led supplementary savings plans. Currently, 22% of surveyed companies offer Central Provident Fund (CPF) top-up contributions, but with around 40% of the workforce being foreign nationals without access to CPF, many miss out on retirement benefits. To bridge this gap, nearly 50% of organizations are now providing supplementary retirement benefits to foreign employees, particularly in the financial services, technology, and healthcare sectors. Lastly, the survey indicated that less than 30% of companies offer investment choices in their retirement plans, and only 15% have a default investment fund. This lack of structured investment options can lead to poor financial decisions by employees, resulting in inadequate retirement savings. Aon emphasized the need for a well-defined default investment strategy to protect employees and enhance their savings, which includes regular performance monitoring and risk management as employees approach retirement. Overall, the findings from Aon's survey underscore the urgent need for organizations in Singapore to reassess their retirement and financial wellbeing offerings to better support their employees' long-term financial health.