Ageing Workforce Singapore Strategies

Ageing WorkforceTM

2006 ReportSingapore

W W W . W A T S O N W Y A T T . C O M

Dear Colleague:

AGEING WORKFORCE™2006 is one of the largest ever pan-Asia Pacific studies focusing on

corporations’ strategic understanding and future outlook on healthcare and retirement benefits

provisions.

This research is conducted against the backdrop of an ageing population in the Asia-Pacific

region. According to the U.S. Census Bureau, in 2000, the population aged 50 and above

accounted for 17.2% of the total population in 12 major Asia-Pacific areas (Australia, China, Hong

Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, and

Thailand). This percentage will increase to 31.4% in 2030 and 38.7% in 2050. For Singapore, the

percentage is 19.1%, 49.6%, and 57.4% in 2000, 2030, and 2050 respectively, well above the

average of the 12 major Asia-Pacific areas.

As the ageing population becomes a serious issue for most Asia-Pacific countries in the next few

decades, employees' healthcare and retirement needs will increase accordingly. Employers have

a vital role in the provision of these benefits through statutory benefits contribution or

supplementary benefits schemes. In the fight for talent, the proper design of healthcare and

retirement benefits taking into account demographic changes will become vital to attracting and

retaining the high-performing employees across all age groups.

It is our pleasure to present to you the detailed summary results of AGEING WORKFORCETM

2006 for Singapore. We look forward to sharing more of Watson Wyatt global perspectives on

healthcare and retirement issues in future. We encourage you to contact Ms. Anne Ariens at

(+65) 6880-5625 (Marketing Associate in Singapore office), if you are interested in being

informed and included in such discussion seminars.

Yours Sincerely,

Doreen Thang, PhD

Director, Asia-Pacific Research & Innovation Centre

Watson Wyatt Worldwide

Email: [email protected]

Tel: (+65) 6880-5603

KWONG Hui Hen

Head of Strategic Benefits

Watson Wyatt Singapore Pte Ltd

Email: [email protected]

Tel: (+65) 6880-5627

Table of Contents

Table of Contents Overview………………………………………………1 Survey Summary…………...………...………………6 About Ageing Workforce

TM 2006.…………………...7

Section 1: Company’s Healthcare Benefits Provision……………………………………………....7 Section 2: Company’s Retirement Benefits Provision……………………………………………..12 Section 3: Impact of Demographic Changes on Company ……………...…………………………….19 Section 4: Company’s Views on Sickness Absence …………………………………………..…25 Section 5: Singapore Country-Specific Questions…………………………………...………..26

Singapore Overview

Ageing WorkforceTM 2006, Singapore 1

Ageing Workforce™ 2006 Singapore Overview

Singapore’s workforce is ageing rapidly. Based on projections by the US Census Bureau, 57.4%

of the Singapore population will be aged 50 and above by 2050. In 2000, the percentage of those

aged 50 and above accounted for only 19.1% of the population. In absolute terms, the number of

people aged 50 and above will increase from 770 thousand in 2000 to more than 2.6 million by

2050. To put that number in perspective, the entire population in Singapore was only 4 million in

the year 2000.

This fundamental change in Singapore’s demographics will have far-reaching consequences for

the economy and companies operating in Singapore. The Ageing WorkforceTM Singapore study

shows that 58% of the employers think that ageing workforce will have a serious impact on the

society and economy over the next 15-20 years, and 51% are fully aware of the impact of ageing

workforce to their business.

An Ageing Workforce and Retirement Benefits Provision Over the past decades, the Central Provident Fund (CPF) has become such a phenomenal

success that it has become a role model for many countries to structure their national savings

schemes.

By allowing the members of the CPF to use their contributions to finance their home mortgage

repayments, CPF has helped Singapore to become one of the world’s highest home ownership

nations. At the same time, recognising that rising medical costs will become a critical issue for

Singaporeans, the Government has allowed CPF balances to be used to pay for medical

Singapore Overview


expenses as well as purchase of approved medical insurance through a sub-account within CPF

called MediSave Account.

Given that the CPF Scheme is funded by contributions from employer and employee, it is viewed

as being financially sound through its prudent governance and investment strategies. This is

reflected in the Ageing WorkforceTM Singapore study showing that only 35% of the employers

think that the statutory retirement system will be unsustainable as the population ages. This is

among the lowest compared to the rest of Ageing WorkforceTM studies in Asia Pacific.

However, facing intense cost competition from the region in recent years, we have witnessed

many changes being made to CPF. We have seen a fall in the employer contribution rate as well

as the wage cap for CPF contribution being lowered. The objectives of CPF have been shifted to

fundamentally focus on meeting “basic needs” on housing, medical and retirement needs.

With these changes, it is not surprising to see the Ageing WorkforceTM Singapore study indicates

that only 13% of the employers think that the income from the statutory retirement benefit scheme

is adequate for employees to retire on, assuming that it is the employees’ only source of income.

Given these statistics, an alternative income source supplementing CPF savings is clearly

required in order to ensure that the employees have adequate savings for their retirement needs.

The question is who should be responsible to fund these supplementary retirement savings. 68%

of the employers in the Ageing WorkforceTM Singapore study suggests that they have little

obligation to help their employees to save enough for retirement. As such, the responsibility

seems to fall on the shoulders of the employees.

In assisting the employees to become more prepared, the government has over the past years

introduced a number of measures. This include reviewing the statutory retirement age to make

sure that the employees stay employable as they get older, introducing Supplementary

Retirement Scheme (SRS) to encourage supplementary savings by employees and more recently,

exploring the concept of Privately-managed Pension Plan (PPP), which aims to stretch the CPF

savings.

However, there had been limited success to the measures introduced to date. While these

measures are introduced on the basis that each individual should be responsible to manage their

own retirement savings, the issues are that the individual savings cannot be managed as

efficiently and cost effectively as a large pooled fund. Without an efficient retirement savings

Singapore Overview


structure in place, the individual employees will find little incentive to put their moneys away for

the future.

In summary, the original issue of adequacy of retirement savings would remain unsolved if we

continue to leave it to the individual initiatives.

An Ageing Workforce and Healthcare Benefits Provision The ageing workforce in Singapore will also bring to light another growing problem – that of

chronic health conditions. Chronic health conditions are health problems that require costly

treatment over an extended period of time, and as such, seriously test the efficiency of any

healthcare system. Moreover, chronic health conditions often gravely curtail the economic and

productive activities of the sufferers. HIV/AIDS, cancer, cardiovascular disease, and diabetes, all

fall within this category.

According to the World Health Organization, cancer and cardiovascular diseases are now the

leading causes of death in Singapore. This high incidence of chronic conditions in Singapore is

attributed to a change in lifestyle habits and ageing.

Although the current state of Singapore’s quality healthcare system offers much comfort, the

sustainability of the healthcare system in the face of rapidly growing healthcare expenditure must

be addressed.

Currently, Singapore devotes approximately 4% of its Gross Domestic Product (GDP) to Total

Health Expenditure (THE). This figure, however, is still below the 6 percent recommended by the

World Health Organization (WHO), and significantly lower than the 7 to 10 percent of more

developed economies. Therefore, healthcare spending in Singapore is anticipated to increase in

the future to cope with rising demands for better healthcare.

Indeed, per capita Total Health Expenditure witnessed a 14 percent increase between 1998 and

2004 (WHO). Even though the Singapore government enjoys fiscal surpluses for most years,

some aspects of healthcare provisions will invariably suffer if healthcare expenditure continues to

escalate.

Singapore Overview


Traditionally, healthcare benefits are generally provided for by companies in Singapore, in

addition to Medisave. As the workforce ages, employees’ demand for additional healthcare

benefits is anticipated to increase.

Recognising this, the Singapore government has initiated reforms of MediSave and the

MediShield schemes. Among the measures introduced to date, the Government has allowed

withdrawal of MediSave for chronic illnesses. The MediShield schemes have also been

privatised to avoid duplication of covers between the statutory benefits and the private insured

benefits. In addition, the concept of portable medical benefits and transferable medical insurance

has been re-enforced.

The Ageing WorkforceTM Singapore study is indicating very similar issues for healthcare

provisions as compared with the retirement benefit provisions. Namely, while only 10% of the

employers think that the statutory benefits will become unsustainable, yet only 19% of the

employers think that the statutory benefit is adequate for the employee’s healthcare expenditures.

While 94% of the employers do not think that the employees should bear the full healthcare cost

increase, it is also clear that the employers will not be prepared to bear the full cost either.

In summary, the issue is whether the individual employees will be able to find a healthcare

structure which is as efficient and cost effective as a pooled arrangement?

The Solution - A Rebalancing Act

The restructuring so far has been on the premise that employees will be capable of looking after

their retirement and medical needs. The reality is that most employees are at a loss in managing

these needs on their own. Few would disagree that it requires collective effort from the

employees, employers as well as the government. However, the extent of the responsibilities for

each party will need to be fine-tuned.

For employees, given the longer life expectancy and increasing healthcare costs, they should be

prepared to work longer in order to accumulate sufficient savings upon retirement. To play its

part in managing healthcare cost, they should be prepared to co-pay the medical expenses. They

should be open to more flexible pay structure, whereby the cash and benefits components could

be rebalanced to meet their needs.

Singapore Overview


For employers, they should recognise that they are in a better position to offer a platform where

economies of scales can be achieved. They should also adopt a total remuneration concept to

balance between benefit provisions and cash compensation.

For the Singapore government, they should be open to encouraging companies to introduce

measures which are ageing workforce friendly. Based on the Ageing WorkforceTM Singapore

study, providing more tax incentives and a legislative landscape conducive to implementing

supplementary benefits provisions are cited as the preferred employer choices.

Recommended Strategies for Employers

Ageing WorkforceTM Singapore study shows that supplementary healthcare benefits are the most

highly valued benefit by the employees. Supplementary retirement benefits are ranked third after

the financial protection benefits, such as life insurance. In other words, the employers who are

able to manage these benefit provisions will be well placed to manage their workforce, as the

population ages and the labour workforce shrinks.

Traditionally, there had been a general perception that older employees add little value to their

company. Contrary to that, a separate Watson Wyatt research, WorkSingaporeTM, shows that the

older employees express more satisfaction with all human resource practices and working in their

companies. They also value meaningful work and communication; these turn out to be very

important drivers of their commitment to the companies.

Besides adopting a Total Remuneration approach, other measures include introducing co-

payment arrangements and facilitating better communication sessions.

Finally, although the Ageing WorkforceTM Singapore study seems to indicate that retirement

benefits and healthcare benefits are currently not effective attraction and retention measures in

Singapore, the rest of Asia Pacific studies show much higher results. What this means is that, as

global competition intensifies, the fight for top talents will intensify correspondingly. In order to

attract good regional talents to be based in Singapore, the employers in Singapore will have to

make sure the employees’ needs are met on a regional level. Hence, well-designed healthcare

and retirement benefits schemes that take into account demographic changes will be more

effective in attracting and retaining top-performing employees and ensuring long-term corporate

profitability.

Survey Summary for Singapore


Survey Summary for Singapore With 86% of the employers recognizing “Ageing Population” as the most significant demographic change for Singapore over the next 15-20 years, the increasing need for healthcare and retirement benefits will become a serious problem faced by Singapore society. However, less than half of them think that the statutory healthcare and retirement benefits systems will be unsustainable as ageing population becomes more serious.

A: Impact of Demographic Changes 1) About half of the employers think that they

are fully aware of the impact of demographic changes on their business. 51% of the employers feel that the employees’ appreciation of healthcare benefits will increase over the next 15-20 years and 40% of them similarly think so for employees’ appreciation of retirement benefits.

2) To address the needs of an ageing

workforce, more than half of the employers think the company needs to introduce new benefits/increase existing benefits for healthcare (60%) and retirement (50%).

3) “Providing tax incentives for supplementary

benefits provision” (57%) and “passing legislation to encourage supplementary benefits provision” (35%) are the two most important actions that employers think the government needs to take in meeting the increased healthcare and retirement needs.

4) 51% of employers think there will be a

reduction in supply of labor due to the demographic changes. “Training/development of the labour force to increase productivity” (56%) is chosen by most of the employers to respond to the reduction of labour supply.

B: Healthcare Benefits Issues 1) “Compliance with statutory healthcare

benefits regulation” is cited by 66% of the companies as the most significant factor to shape the company’s healthcare benefit strategy, while “compliance with company’s global benefits practice” is cited by the least number of companies (14%) as a factor.

2) Only 19% of the companies think that

statutory healthcare benefits are sufficient for employees’ basic healthcare expenditures.

63% of the companies provide supplementary healthcare benefits to their employees. As low as 6% of the employers think that the employees should bear the full cost of future healthcare cost increases, but 66% advocate cost sharing.

3) However, a low percent of these employers

believe that their supplementary healthcare benefits help to attract (13%) and retain (18%) high-performing employees. Companies may need a more effective healthcare benefits communication system as only 30% of the employers claim they have one in place.

4) To control healthcare costs, the 3 most cited

actions likely to be taken by companies are: a) Co-insurance & cost sharing with employees (35%); b) Claimant paid excess over and above a certain prescribed level (27%); and c) Reduced or capped benefits (24%).

C: Retirement Benefits Issues

1) Only 13% of the employers think that the

income from the statutory retirement benefits scheme is adequate for employees to maintain the basic standard of living for retirement, if it is the only source of income. As low as 5% of the employers are of the view that the company has an obligation to help their employees save enough in their retirement accounts. 55% of them think that the employees should bear all the investment return risk in their retirement funds.

2) Only 7% of the employers provide

supplementary retirement benefits to their employees. 64% of these schemes are Defined Benefits (DB) and 14% are Defined Contribution (DC), with the rest being Hybrid retirement benefits. Only 8% of the employers with supplementary retirement benefits scheme are taking active actions to change current scheme to a DC scheme.

3) Although 66% of the employers understand

the impact of decrease of company’s CPF contribution rate and contribution ceiling on employees’ retirement welfare, as high as 77% of employers have no intention to take any measure to address the impact.

4) “Cost control” (54%) and “legislative

requirements” (42%) are the factors cited by most employers in taking actions to address the impact of CPF policy changes.

Company’s Healthcare Benefits Provision


Note: For the results of some questions in this report, the sum of percentages for all choices is not equal to 100% because of rounding. Section 1: Company’s Healthcare Benefits Provision 1. To what extent do you think that healthcare costs affect your business earnings more significantly now than 3 years ago?

38%

47%

15%

To A Very Little Extent /Not At All

To Some Extent

To A Very Great Extent /To A Great Extent

2. To what extent do you think that employees should bear the full cost of future healthcare cost increases?

52%

42%

6%


To Some Extent


ABOUT AGEING WORKFORCETM

2006 This study focuses on strategic issues and future outlook about company healthcare and retirement benefits against the backdrop of an ageing population in the Asia-Pacific region. We interviewed key decision-makers or advisors on company benefits policy fromlarge local companies and MNCs in each participating country. In Singapore, 202 out of the Top 2000 companies, ranked by revenue, participated in this survey. 51% of these companies are foreign companies. These participating companies constitute a representative sample across all major industries.

BUSINESS & PROFESSIONAL

SERVICES5%

CONSTRUCTION / REAL ESTATE & ENGINEERING

12%

FINANCE8%

INFORMATION, MASS MEDIA &

COMMUNICATIONS4%

LEISURE & ENTERTAINMENT

3%

MANUFACTURING27%

Other1%

OTHER SERVICES2%

MINERALS & NATURAL

RESOURCES3%

TRANSPORT, STORAGE & LOGISTICS

7%

WHOLESALE & RETAIL TRADE

28%



3. To what extent do you think that statutory healthcare benefits are sufficient for employees’ basic healthcare expenditures?

32%

49%

19%


To Some Extent


4. What factors most significantly shape your company’s healthcare benefit strategy and planning? (Please tick up to 3 choices only)

14%

17%

21%

38%

38%

66%

Complying with my company’s global benefits practice

Best practice benchmark

The particular demographics of your workforce

Managing to specific and predetermined cost targets

Competitive market practice benchmarks

Complying with statutory healthcare benefits regulation set bygovernment

5. Does your company offer a supplementary healthcare benefits scheme?

Yes63% No

37%

No

Yes



6. Is your company planning to set up/increase supplementary healthcare benefits in the next 5 years?

34%

7%

36%

8%

14%

No, we have not thought of it at all

No, we have decided not to proceed after wethought of it

Not sure, we are waiting for more information

Yes, we are in the process of discussion

Yes, we are in the process of implementation

Questions 6A-10 are only answered by companies with Supplementary Healthcare Benefits. 6A. Which employee categories do your company’s supplementary healthcare benefits apply to? (Please choose all those relevant choices that most properly describe your supplementary healthcare benefits system)

2%

2%

3%

9%

20%

92%

Existing full-time employees who joined thecompany before certain date in the past

All full-time employees with certain years’service with company

New full-time employees

Full-time employees from certainmanagement level

Dependants of full-time employees includedas well

All full-time employees



7. To what extent do you think that your supplementary healthcare benefits help your company attract excellent job applicants?

38%

49%

13%


To Some Extent


8. To what extent do you think that your supplementary healthcare benefits help your company retain high-performing employees?

34%

48%

18%


To Some Extent


9. To what extent do you think that your company has an effective healthcare communication system in place?

21%

49%

30%


To Some Extent




10. In order to control costs, which of the following actions are most likely to be taken by your company in the next 5 years? (Please tick up to 3 most likely options)

8%

10%

13%

20%

24%

27%

35%

No action will be taken

Network or restricted hospital list

Exclude dependents

Exclude pre-existing medical conditions from cover

Reduced or capped benefits

Claimant paid excess over and above a certain prescribedlevel

Co-insurance/cost sharing on claims

Company’s Retirement Benefits Provision


Section 2: Company’s Retirement Benefits Provision 11. Which of the following company benefits do you think would be highly valued by your employees? (Please select up to 3 choices)

6%

21%

25%

28%

37%

45%

Benefits for immediate consumption (such as health clubmembership, cars, etc)

Post-retirement healthcare benefits

Longer annual leave

Supplementary retirement benefits

Financial protection benefits (life/disability insurance, etc)

Supplementary healthcare benefits

12. To what extent do you think your company has an obligation to help employees save enough in their retirement accounts to maintain a reasonable standard of living after retirement?

68%

27%

5%


To Some Extent


13. To what extent do you think that income from statutory retirement benefit scheme is adequate for employees to maintain the basic standard of living after retirement, if it is the only source of income?

46%

42%

13%


To Some Extent




14. To what extent do you think that employees should bear all the investment return risk in their retirement funds?

17%

28%

55%


To Some Extent


15. What kind of actions has your company taken to help employees make the right investment choices for your employees’ retirement fund? (Please tick all that apply)

2%

3%

4%

6%

10%

77%

Telephone hotline

Brochures/written material

On-line learning and informationsystem

Provide access to financial planners

Face-to-face training seminars

None



16. What factors most significantly shape your company’s retirement benefit strategy and planning? (Please tick up to 3 choices only)

7%

10%

11%

15%

30%

34%

64%

Control/reduce the risk of pension liabilities

Complying with my company’s global benefits practice

Best practice benchmark

The particular demographics of your workforce

Competitive market practice benchmarks

Managing to specific and predetermined cost targets

Complying with statutory retirement benefit provisionrequired by government regulations

17. Does your company offer supplementary retirement benefits?

No, 93%

Yes, 7% YesNo



18. Is your company planning to set up/increase supplementary retirement benefits in the next 5 years?

61%

8%

27%

3%

1%

No, we have not thought of it at all

No, we have decided not to proceed after wethought of it

Not sure, we are waiting for more information


Yes, we are in the process ofimplementation

Questions 18A-25 are only answered by companies with supplementary retirement benefits. 18A. Which employee categories do your company’s supplementary retirement benefits apply to? (Please choose all those relevant choices that most properly describe your supplementary retirement benefits system)

7%

7%

14%

21%

79%

Full-time employees from certain managementlevel

New full-time employees

All full-time employees with certain years’service with company

Existing full-time employees who joined thecompany before certain date in the past

All full-time employees



19. How is the supplementary retirement benefit paid to the employees?

Lump sum, 58%Income stream,

25%

Mix of both , 17%Lump sumIncome streamMix of both

20. To what extent do you think that your supplementary retirement scheme helps your company attract high quality job applicants?

36%

57%

7%


To Some Extent


21. To what extent do you think that your supplementary retirement scheme helps your company retain the high-performing employees?

29%

64%

7%


To Some Extent




22. To what extent do you think that your company has an effective retirement benefit communication system in place?

36%

43%

21%


To Some Extent


23. What type of supplementary retirement scheme does your company provide to employees?

Defined Benefit (DB) , 64%

Defined Contribution (DC) , 14%

Hybrid retirement benefit , 21%

Defined Benefit(DB) DefinedContribution (DC) Hybrid retirementbenefit

24. Are you considering changing your current scheme to a DC scheme in the next 5 years?

0%

50%

42%

8%

0%

Not applicable

No, we will keep the current scheme

Not decided yet


Yes, we already have an implementationplan



25. Are employees required to contribute to a supplementary retirement benefit?

86%

14%

0%

No, employeesdon’t contribute at

all

No, but employeescan contribute

voluntarily

Yes, compulsorycontribution for

employees

Impact of Demographic Changes on Company


Section 3: Impact of Demographic Changes on Company 26. What will be the most significant demographic change in your country over the next 15-20 years? (Please tick one only)

Population decrease, 4%

Aging population,

86%

Others, 1%

Population increase, 8%

Aging population

Population increase

Population decrease

Others

27. To what extent do you think that the demographic changes will have serious impact on the society and economy in your country over the next 15-20 years?

9%

34%

58%


To Some Extent


28. To what extent do you think that your company is fully aware of the impact of demographic changes on your company’s business?

9%

40%

51%


To Some Extent




29. To what extent do you think that employees’ appreciation of healthcare benefits will increase over the next 15-20 years?

11%

38%

51%


To Some Extent


30. To what extent do you think that employee’s appreciation of retirement benefits will increase over the next 15-20 years?

17%

43%

40%


To Some Extent


31. Do you think that there will be a reduction in the supply of labour due to the demographic changes?

Don't know, 8%

No, 41%

Yes, 51%

YesNoDon't know



32. How do you think your society will respond to the reduction in the labour supply? (Please select up to 3 most possible choices)

12%

23%

28%

33%

35%

39%

56%

Encourage immigration

Move work offshore

Adopt technology to replace labor

Increase workforce participation rate

Later retirement to lengthen working phase

Import labor force from overseas

Training/development of the labor force to increaseproductivity

33. What kind of government statutory benefits do you think will have to change to address the demographic changes? (Please select up to 3 most important choices)

1%

13%

15%

18%

43%

48%

66%

Nothing needs to be changed

Unemployment benefits

Housing benefits

Child care

Elderly care (long term nursing care)

Retirement benefits

Healthcare benefits



34. What changes do you think your company will have to make to the following benefits programmes to address the demographic changes over the next 5 to 10 years?

12%

15%

19%

18%

45%

31%

66%

46%

38%

2%

2%

3%

1%

0%

1%Post-retirementHealthcare Benefits

Healthcare benefits

Retirement Benefits

Introduction of new benefits

Increase of existing benefits

No change

Reduction of existing benefits

Removal of existing benefits

35. Other than government tax incentives, what will be the other significant drivers for your company to increase the benefits provisions for your employees? (Please choose up to 3 most important choices)

17%

34%

49%

56%

Employee’s demand for changes tobenefits provisions

Competitors’ benefit provisions

Employer’s response to the changingneeds of their employees

Changes of government legislation



Questions 36-40 are only answered by companies choosing “Ageing Population” as the most significant demographic changes in your country over the next 15-20 years.

36. Statutory healthcare system will be unsustainable as ageing population becomes more serious in the future?

10%

56%

34%


To Some Extent


37. Statutory retirement system will be unsustainable as ageing population becomes more serious in the future?

14%

51%

35%


To Some Extent


38. In order to address the increased retirement and healthcare benefit needs brought about by an ageing population, which of the following methods does your company prefer? (Please tick one choice only)

8%

14%

20%

28%

29%

Others

Increase supplementary benefits plans foremployees

Let employees bear the cost of increasedneeds

Increase company’ statutory contributions

Set up supplementary benefits plans foremployees



39. What actions does your company think the employees should take in meeting the increased healthcare and retirement needs? (Choose only one choice)

7%

7%

19%

66%

Work longer than before

No action needs to be taken by employees

Bear the whole cost on their own, e.g., buypersonal insurance or have enough savings

Share the cost with employers

40. What actions does your company think the government needs to take in meeting the increased healthcare and retirement benefits needs? (Please select up to 3 most important choices)

0%

5%

15%

18%

19%

28%

31%

35%

57%

Others

No action needs to be taken by government

Increase legal retirement age

Increase employee’s contribution to statutory benefit

Develop insurance market to provide relevant insuranceproducts

Increase employer’s contribution to statutory benefit

Encourage employees to save more

Pass legislation to encourage supplementary benefitsprovision

Provide company with tax incentives to help set upsupplementary benefits scheme

Company’s Views on Sickness Absence


Section 4: Company’s Views on Sickness Absence 41. To what extent are you concerned about the rate of sickness absence within your company?

Very concerned ,

24%

Not concerned –

within acceptable limits, 15%

Quite concerned,

33%

A little concerned,

28%

Very concerned

Quite concerned

A little concerned

Not concerned – withinacceptable limits

42. Does your company know the cost of absence to your business?

15%

42%

43%

No, too difficult to assess

Yes, we attempt to measure the cost, but ourunderstanding could be improved

Yes, a strong understanding from our continuousefforts to monitor and measure the cost

43. Are you considering to actively manage the level of short-term sickness absence occurring within your company in near future?

15%

16%

22%

30%

17%

No, not an issue currently

No, not immediately

Yes, maybe

Yes, when possible

Yes, with high priority

Singapore Country-Specific Questions


44. If your company had a choice over the potential methods to control the excessive sickness absence beyond the entitled days of fully-paid sick leave, which of the following methods will your company choose? (Please tick only one choice)

2%

8%

11%

21%

58%

Terminating services of employee ifexcessive sick leave has been taken

Others

No change will be made

Reduced pay coverage rather than full payfor excessive sick leave

No pay for excessive sick leave

Section 5: Singapore Country-Specific Questions 45. As CPF contribution rate decreased from 16% to 13% effective from Oct 2003, and CPF contribution ceiling decreased from SGD 5,500 per month to SGD 5,000 per month from Jan 2005, does your company know the impact of these changes on employees’ retirement welfare?

1%

1%

6%

26%

66%

No, not at all

No, almost nounderstanding

Yes, a littleunderstanding

Yes, someunderstanding

Yes, very clearunderstanding

Singapore Country-Specific Questions


46. What kind of actions does your company take to address the impact of these changes on employees’ retirement welfare?

77%

10%

5%

6%

1%

No, we have no intention to take anymeasure

Yes, we are considering othermeasures to address the impact

Yes, we have already taken othermeasures to address the impact

Yes, we are considering to provideprivate pension scheme for employees

Yes, we already have launched aprivate pension scheme for employees

to complement their CPF

47. What are the key factors considered in taking the above actions to address the impact of the CPF policy changes?

15%

27%

29%

42%

54%

Others

Concern overemployee benefits

Competitive practicesof the industry

Legislativerequirements

Cost control

W A T S O N W Y A T T A S I A - P A C I F I C O F F I C E S Vice President & Regional Managing Director Dr Chuly Lee Email: [email protected] ASEAN ASEAN Managing Director Andrew Heard Email: [email protected] BANGKOK Watson Wyatt (Thailand) Ltd 6/F Gaysorn Place 999 Ploenchit Rd, Pathumwan Bangkok 10330, Thailand Tel: (66) 2-656-1470 Fax: (66) 2-656-1469 Manager: Tayat Sriplung Email: [email protected] JAKARTA PT Watson Wyatt Indonesia Menara DEA Building 2nd Floor Jl. Mega Kuningan Barat Kav. E.4.3 No. 1 Jakarta 12950, Indonesia Tel: (62) 21-576-2635/6 Fax: (62) 21-576-2639 Manager: Lilis Halim Email: [email protected] KUALA LUMPUR Watson Wyatt (Malaysia) Sdn. Bhd. 18/F Menara Uni.Asia 1008 Jalan Sultan Ismail Kuala Lumpur 50250, Malaysia Tel: (60) 3-2731-6688 Fax: (60) 3-2691-3967 Manager: Eustace Gomez Email: [email protected] MANILA Watson Wyatt Philippines, Inc. 21/F Tower 1, The Enterprise Center 6766 Ayala Avenue, Makati City Philippines 1200 The Philippines Tel: (63) 2-841-5100 Fax: (63) 2-841-5200 Officer in charge: Rachelle C. Arcebal E-mail: [email protected] SINGAPORE Watson Wyatt Singapore Pte Ltd 9 Raffles Place #17-21 Republic Plaza II Singapore 048619 Tel: (65) 6880-5688 Fax: (65) 6880-5699 Manager: Kwan Chee Wei Email: [email protected] AUSTRALIA MELBOURNE Watson Wyatt Australia Pty Ltd Level 4, 1 Collins Street Melbourne, Victoria 3000, Australia Tel: (61) 3-9655-5222 Fax: (61) 3-9654-8227 Manager: Andrew Boal Email: [email protected] SYDNEY Watson Wyatt Australia Pty Ltd Level 14, 60 Margaret Street Sydney, New South Wales 2000, Australia Tel: (61) 2-9253-3333 Fax: (61) 2-9253-3199 Manager: Andrew Boal Email: [email protected]

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ABOUT THE ASIA-PACIFIC RESEARCH AND

INNOVATION CENTRE

The Asia-Pacific Research and Innovation Centre

(ARIC) is a dedicated centre set up to serve as Asia-

Pacific’s focal point for human capital, benefits,

investment and financial services research.

Complementing prominent research efforts by other

research centres in the USA, Canada and UK, ARIC

is committed to supporting research-based

consultancy by Watson Wyatt Worldwide through

assisting companies create value in their own

organisations.

ABOUT WATSON WYATT WORLDWIDE

Watson Wyatt is a global consulting firm focused on

human capital and financial management. We

specialise in four areas: employee benefits, human

capital strategies, technology solutions, and

insurance and financial services.

We combine human capital and financial expertise to

deliver business solutions that drive shareholder

value. Our consulting is grounded in the most

extensive research in the business. This translates

into unique perspectives and forward-thinking

solutions.

Watson Wyatt has approximately 6,000 associates in

30 countries.

36

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