Over-Saving in Singapore
The question of over-saving in Singapore’s case has been discussed, more or less
directly, since the second half of the 1980s, partly initiated by the country’s
recession in 1985/86 which only Singapore experienced and was preceded by
sustained increases in the country’s saving rates peaking at 46.6 percent in 1983.
One of the earliest examples, a study group of the National University headed by
Prof. Lim Chong-Yah, who was also the president of the tri-partite National
Wage Council, did not necessarily address the question of over-saving directly,
but still recommended changes to the CPF among them a reduction in
mandatory contribution rates.458 The study group argued that after provisions
have been made for housing, for life annuity, and for Medisave, the 50% rate of
contributions to the CPF in the early 1980s was quite in excess of the needs of an
average worker in Singapore. Koh (1987) reads this as implying that Singapore
had over-saved.459 In fact, the government seems to have reached the same
conclusion, because it did indeed lower the CPF contribution rates twice in 1986
and 1987.460 Nevertheless, the government has always emphatically disputed the
view that Singaporeans are saving too much.461 Han (1996), in a book edited by