Public Pension: Singaporeans lack this essential component for retirement

Pensions at a Glance 2013
OECD and G20 Indicators

This report by OECD shows the public and private pensions in many countries. Private pension comes from mandatory employment contribution and other private sources. Public pensions come from the money from the state.

"The OECD average for replacement rates of an average earner from public schemes alone is 41%, compared with 54% with mandatory private pensions included."

For an average earner, the public pension from the state alone is 41% of the salary when working. For example, if a worker earns $3,000 while working, his public pension will be about $1,230.

Here is a small sample from the OECD report, with Singapore added:

	Public pension replacement rates for Earners at 0.5 median wage	Public pension replacement rates for Earners at 1.0 median wage
Australia	52.4	13.6
Austria	76.6	76.6
Israel	44.5	22.2
Japan	49.8	35.6
Switzerland	48.6	32.0
UK	55.2	32.6
USA	49.5	38.3
Singapore	0	0

Singapore does not have a public pension.
It is not a matter of affordability. Singapore is a very resource rich country.

Myth: Singapore's old age support ratio is alarming.

Fast-ageing Singapore, fewer to support aged; Trend worries experts:

"Singaporeans are living longer and not having enough babies to replace themselves, meaning the swiftly ageing population has fewer working citizens supporting the growing pool of elderly."

Some statistics:
Singapore old age support ratio: 6.4, in 2013. (from singstat.gov.sg) If only citizens are considered, the ratio is 5.5 in 2013.

How good or bad is this ratio? One way to decide is to look at international statistics. OECD has a 2011 report on old age support rates, using 2008 data. Most of the countries have ratios below 5. For OECD, the support ratio is 4.2; Japan, 2.8; Germany, 3.0; Sweden 3.3; Finland, 3.7, Denmark, 3.7.

We do not see these countries falling apart because of their very low support ratios. The huge alarm over Singapore's old age support ratio is an over-reaction.

Definition: "The old age support rates relate to the number of those who are capable of providing economic support to the number of older people that may be materially dependent on the support of others. The support rate indicator used here is the population aged 20 to 64 as a ratio of those aged 65 and over."

Constitutional protection of human rights. Japan. Alaska.

Japan Constitution

CHAPTER III
RIGHTS AND DUTIES OF THE PEOPLE

Article 11. The people shall not be prevented from enjoying any of the fundamental human rights. These fundamental human rights guaranteed to the people by this Constitution shall be conferred upon the people of this and future generations as eternal and inviolate rights.

This is good protection by the Constitution. This is quite rare among countries.

We need similar Constitutional protection for citizen ownership and citizen dividend as eternal and inviolate rights.

Even the well protected Alaska Permanent Fund dividend is not fully protected. There have been failed attempts by politicians and others to stop this iconic citizen dividend.

The Alaska Permanent Fund Dividend: A Case Study in Implementation of a Basic Income Guarantee

"Although the Permanent Fund balance, which ultimately determines the size of the PFD, is constitutionally protected, there is no such guarantee for the annual distribution. The legislature has the authority to change the formula at any time and could, by law, eliminate it entirely. Its only guarantee is its political popularity. No legislator would suggest a change in the formula that would reduce its amount or the share of Permanent Fund earnings allocated to the dividend for fear of losing the next and all subsequent elections."

Democrats Push Permanent Fund Dividend Protection In Light Of Oil Giveaway April 3, 2013

"JUNEAU – Today eight Democratic legislators filed legislation to protect the Permanent Fund Dividend by placing the current dividend formula in the Alaska Constitution."

Japan: A Constitutional basis for a citizen dividend?

Japan's Constitution has this rather special citizen right:

Article 25. All people shall have the right to maintain the minimum standards of wholesome and cultured living.
In all spheres of life, the State shall use its endeavors for the promotion and extension of social welfare and security, and of public health.

As a negative right, Article 25 can have a positive effect combating Japan's poverty, by Amelia S. Kegan

"As long as poverty continues to exist, governments have the
responsibility to work towards its eradication. They must act forcefully and follow through on commitments made to alleviate poverty and ensure everyone can maintain a minimum standard of living. The three branches of government must work together and challenge each other to fulfill this obligation. Japan made a commitment to its people in Article 25 in this effort to eliminate poverty. The Article has substantial potential, but in practice, the judiciary refuses to allow the provision to achieve this potential.
Recognition of the concrete, negative right within Article 25 and an unwavering commitment to enforce it provides an interpretation consistent with what the drafters originally intended. Such an interpretation of Article 25 harmonizes the Showa Constitution with international treaties and could provide significant progress for the Japanese people in the crusade to achieve a country in which everyone truly can maintain that minimum standard of wholesome and cultured living."

A citizen dividend, which is currently 100% taxed away, will meet this right. People will be able to "maintain the minimum standards of wholesome and cultured living."

In the publication by Kegan, it is suggested that Article 25 can be used to prevent the government from acts detrimental to it. For example, the minister cannot withdraw welfare payment when such a withdrawal will affect a person's "minimum standards of wholesome and cultured living."

It is not clear whether the courts will agree that the government cannot "confiscate" citizen dividend since such a confiscation is contrary to Article 25. Someone in favor of a citizen dividend or a basic income for Japan can try to make a case for it.

Japanese and EU citizens share the same ideal for a basic income

Japan Constitution

Article 25. 

 All people shall have the right to maintain the minimum standards of wholesome and cultured living.

So far, the Japanese citizens have not been able to get their politicians to fulfill this right in their Constitution. Far away in the European Union, people are asking for an unconditional basic income to allow for dignity living in a society.


European Citizens' Initiative for an Unconditional Basic Income

The emancipatory Unconditional Basic Income is defined by the following four criteria: 

1. universal,
2. individual,
3. unconditional, and
4. high enough to ensure an existence in dignity and participation in society.