Should The State Support Our Retirement?

by Patrick Liew on September 14, 2016

While having the state to support retirement
has upsides and can be appealing, it may also expose us to untold risks and unintended consequences.

On a micro level, adopting such a policy will mean that the state has endorsed an assumption that retirement is an imperative and a part of public goods.

Such an assumption has no credible evidence and once the policy is implemented, it’ll be hard to withdraw the benefits that are part of the policy.

When that happened, what assurance do we have that it will not erode our work ethos and fighting spirit in the long term?

Will it promote a culture of helplessness, and weaken our resolve for self-reliance and continuous improvements?

Will it place unnecessary bias and pressure on those who find meaning in work and believe that they should continue to be a nett contributor to the community, economy and society?

Will it add to our labour crunch problems and affect our economy and growth on a long-term basis?

There are many countries, especially in the Western Hemisphere that have adopted a similar policy but there are no distinctive success stories to crow about and be put up as models for the rest of the world.

Instead, we have observed how such a policy could have overly-weighed on the state and on future generations to finance execution of the policy.

Introducing such a policy may also compel political opportunists to increase welfare offerings and turn political elections into an auction for the best offerings, which is the case in many democratic countries.

These factors may have contributed to the slowing down of their economies and countries and further increase financial burdens of supporting the policy.

On a macro level, we need to ask ourselves: how can we finance implementation of such a policy, considering that spendings will only increase over the years because we are a fast-aging population?

How are future generations going to support these spendings, considering that many adults are marrying later in life and forming smaller nucleus families and therefore the overall revenue base will likely shrink in future?

Financing such a policy will inevitably cause an increase in the overall tax structure.

It will increase the cost of running businesses, especially for small and medium enterprises and it will erode their competitive edges. It may also lead to an increase in prices and financial burdens on consumers.

These businesses will find it harder to compete with their counterparts in other similar economies, including countries around the region that are competing for the same businesses, markets and investments.

This may cause an increase in retrenchments and lower tax revenue.

The additional expenses to help retrenched workers and support retirement may start a vicious cycle that will have negative effects on our peace, prosperity and progress.

Having a state-supported retirement plan can only resolve symptoms but not causes of a negative retirement lifestyle.

The human spirit needs a helping hand and not handouts to strengthen their income, savings, investments and other factors that contribute to their choices of a retirement lifestyle.

The more important focus is to improve our people’s attitude, knowledge, skill and contribution.

By helping them improve their financial literacy, competence, and productivity, it will ensure that they have a more stable, secure and sustainable career and retirement. They’ll enjoy greater dignity and fulfillment in the evening of their lives.


I hope this message will find a place in your heart.

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