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Unveiling the Singlife Financial Freedom Index 2023

Singlife’s inaugural Financial Freedom Index for 2023 offers a profound glimpse into Singapore’s financial landscape, revealing that the average consumer scored 60 out of 100 in terms of feeling financially free. However, the path to achieving financial freedom remains distant for many, with the average consumer needing approximately 27 years to amass a median savings of S$566,640, provided they save at least S$1,733 per month.

This comprehensive insight stems from a survey conducted by Singlife between December 2022 and January 2023, encompassing 3,000 Singaporeans and Permanent Residents aged between 18 and 65. The study aimed to gauge attitudes towards financial freedom amidst the challenges of inflation and the rising cost of living.

Singlife’s analysis delineates three distinct consumer groups in Singapore based on their levels of financial freedom: the Financially Free, Everyday Consumer, and Financially Constrained. These groups exhibit varying degrees of financial security, correlated with differences in average monthly personal income and perceived levels of financial freedom.

The survey delved into six key themes of financial freedom, including retirement planning, income management, spending and saving habits, managing recurring expenses, coping with unexpected events, and contributing to society. Notably, the ability to retire at any time and the capacity to give back to society emerged as the top two indicators of financial freedom among consumers.

Despite widespread acknowledgment of the importance of financial freedom, the survey reveals that only 29% of consumers feel they have attained it. Pearlyn Phau, Group Chief Executive Officer of Singlife, underscores the company’s commitment to empowering Singaporeans to take control of their financial well-being through innovative products and services tailored to their evolving needs.

Savings play a pivotal role in the pursuit of financial freedom, with consumers across all groups prioritizing savings as a means to achieve their financial goals. However, significant disparities exist in savings behavior among different consumer segments, with Financially Free individuals saving substantially more than their counterparts in the Everyday Consumer and Financially Constrained groups.

Interestingly, despite income level differences, both the Financially Free and Financially Constrained groups save more than 50% of their monthly personal incomes, emphasizing the importance of prudent financial management regardless of income levels. Additionally, spending habits vary across consumer groups, with a higher proportion of Financially Free individuals demonstrating greater prudence in their spending habits compared to Everyday Consumers.

Overall, the Singlife Financial Freedom Index furnishes valuable insights into the financial aspirations and challenges encountered by consumers in Singapore. It underscores the need for personalized financial products and services to support individuals on their journey towards financial freedom. By addressing the unique goals and needs of consumers, companies like Singlife can play a pivotal role in empowering individuals to achieve greater financial security and well-being at every stage of life.

Retirement Planning amongst Platform Workers

Furthermore, the survey reveals concerning trends regarding retirement planning among Singaporeans, particularly platform workers, with only one in 10 actively taking steps to secure their financial future. The study also indicates a mere 17% of respondents feel financially free, highlighting a broader issue of financial insecurity within this demographic.

Platform workers in Singapore rate their financial freedom lower than the average consumer, with an average score of 50 out of 100. Additionally, less than half of platform workers consider financial freedom highly important, reflecting a lack of awareness or urgency regarding long-term financial planning.

Moreover, the survey underscores challenges faced by platform workers in coping with rising costs and inflation, with only 10% expressing confidence in managing these financial pressures. Despite these challenges, only two in 10 platform workers can consistently meet their monthly savings targets after covering expenses, indicating a significant gap in financial preparedness.

The study, conducted in July 2023 and involving approximately 500 platform workers aged 18 and above, provides insights into the financial realities and concerns of this segment of the workforce. Qualitative interviews with platform owners from prominent companies such as Deliveroo, Foodpanda, Gojek, and Grab further illuminate the unique dynamics of platform-based employment.

These findings are particularly relevant in the context of recommendations for social protection for self-employed individuals working for online platforms, as highlighted by the Advisory Committee on Platform Workers in 2022. Addressing the challenges identified in the study can pave the way for policymakers and industry stakeholders to ensure greater financial security and well-being for platform workers in Singapore.

Pension Competency in Singapore

In a separate development, Mercer’s Global Pension Index 2023 sheds light on retirement income competency across various Asian countries. Singapore emerges as a leader in pension competency, scoring the highest in the index with 76.3, followed by other countries such as Hong Kong, Japan, and Malaysia.

The index evaluates retirement income systems based on adequacy, sustainability, and integrity, providing a comprehensive assessment of each country’s pension landscape. With ageing populations and evolving economic dynamics, ensuring the adequacy and sustainability of pension systems is crucial for long-term financial security.

However, the index also highlights disparities among Asian countries, with the Philippines ranking the lowest in pension competency. These variations underscore the need for tailored policy interventions and reforms to address specific challenges faced by each country in providing adequate retirement income.

Given the global economic uncertainties exacerbated by the COVID-19 pandemic, comparing and benchmarking pension systems becomes even more critical. By learning from best practices and addressing weaknesses, policymakers can strengthen pension systems to better support retirees and promote financial security in the face of evolving challenges.

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