Britain has launched a workplace pension scheme to help people save for their retirement. It is hardly a new idea. The British introduced a similar scheme in Singapore in 1955
Given the difficulty that many countries face in funding pensions, it may be better if you have no choice but to save.
Ask a Singaporean and that is the most likely answer you will get.
Through a mandatory government savings scheme called the Central Provident Fund (CPF), most Singaporeans are likely to retire in relative comfort despite minimal social security benefits from the state. It breeds self-sufficiency that the tiny South-East Asian state and its people are proud of.
Singapore has the British to thank for it. It was they who started the simple old-age savings scheme in 1955 to ensure British funds would not be drained to look after the social security of its colonies. The UK had started similar schemes earlier in Africa and Malaysia, but it was in Singapore that the legacy became one of the most effective instruments of saving in the world.
Imagine if Britain had done the same at home. The UK government would then not be bearing so heavily the burden of pensions, especially in times of crisis.
Nevertheless, better late than never - albeit more than half a century later - the UK government is launching a similar programme, the workplace pension scheme. It is a private pension to top up the contributory (through the National Insurance) state pension and aims to encourage Britons to save for a more comfortable retirement. According to government estimates, seven million people are not saving enough for their retirement.
With the uproar over the fall in value of the pension pot and the fact that people may well have to work until they drop, thanks to the global economic crisis and medical science that promotes longevity, the scheme has been hailed by businesses and the Trades Union Congress, the umbrella body of UK unions.
"[It] will radically transform the pensions landscape in this country," said Steve Webb, the pensions minister, at the launch of the reform bill last month. "Millions of people who currently have little or nothing put by for their retirement will, from 2012, find themselves enrolled in a workplace pension - setting them on the road to a more secure future." The bill, which also includes raising the retirement age to 66, is due for a second reading in parliament but will almost certainly become law.
Under the scheme, which is statutory and due to start next year, all employers will have to automatically enrol any workers with no workplace pension provision into a retirement scheme. Both employers and employees will each contribute 3 per cent towards the fund, while the government will contribute 1 per cent in the form of tax relief.
Employees have the right to opt out, while employers may not. But workers who opt out will be re-enrolled every three years.
It is a small step forward. Britons are lucky to live in a welfare state although in a way, Britons do "save" for their state pension and benefits through their monthly National Insurance contribution paid during their working lives. It means there is state help, however meagre, for those in need.
For Singaporeans, the CPF is their social security. What began as a retirement nest egg has evolved to a fund through which they pay for their monthly housing mortgage, hospital bills, their children's higher education and investment on the stock market. They can withdraw their CPF savings when they reach 55 (or every three years thereafter if they continue working), provided that they have set aside a minimum sum to provide them with a basic monthly income when they retire.
Depending on age, Singaporeans save up to 20 per cent of their monthly pay in the CPF. The amount is then topped up by the employer (up to 15 per cent) and earns interest - currently at 4 per cent. Both employee and employer contributions go up and down depending on the state of the economy.
"The monthly deduction of 20 per cent sounds quite a lot," said Suriah Salleh, a nurse. "But if you think of your retirement and all those medical bills that will surely come, it is worth it."
One day, maybe, the UK government will have to start looking at expanding on the workplace pension scheme to meet growing demand. If that time comes, the UK might start reaping a similar harvest by instituting the successful scheme that its intrepid forebears sowed abroad more than half a century ago.