· Updated By The HelloHQ team

Retirement Systems Are Policies, Not Assets

CPF, EPF, China's pensions, Taiwan's Labor Insurance and US Social Security are not accounts you own. They are promises that legislatures keep renegotiating. How to put a haircut on the state column of your retirement balance sheet.

Most retirement plans are written as if the state pension were a bond.

A fixed payout. A known date. A balance that sits in an account with your name on it.

In some places part of that is true. The balance in Malaysia's Employees Provident Fund is yours in a way that a promised public pension is not. But even there, the rules around the account (when you can touch it, how contributions are split, what it must be invested in) are set by policy, and the last few years show that they change.

A retirement system is a contract with a counterparty who can legislate. Price it like one.

What changed, system by system

Malaysia (EPF). On 11 May 2024 the EPF changed how contributions are split for members under 55: 75% to Account 1 (retirement), 15% to Account 2, and 10% to a new Account 3 that can be withdrawn at any time. A one-time window let members move money from Account 2 to Account 3. The EPF declared a 6.15% dividend for 2025 (RM79.6 billion paid out), after 6.3% for 2024.

The dividend is the number people quote. The restructuring is the one that matters: it traded some long-run accumulation for liquidity, and each ringgit that leaves Account 3 stops compounding.

Singapore (CPF). The CPF Board publishes interest floors: 2.5% on the Ordinary Account, 4% on the Special and MediSave Accounts, with extra interest on the first S$60,000 of combined balances (under 55). The MediSave cap (Basic Healthcare Sum) rose to S$79,000 for 2026.

That is an unusually clear statement of what the system promises. It also shows the shape of the risk: the promise is a rate, set by the government, and the rules around contributions and ceilings are adjusted from time to time.

China. The retirement age began rising in January 2025: from 60 to 63 for men, and from 50 to 55 or 55 to 58 for women depending on the category. The minimum contribution period rises from 15 years toward 20 starting in 2030. A nationwide private pension scheme began on 15 December 2024, with a RMB12,000 annual contribution cap, a pre-tax deduction, and 3% tax on withdrawals.

At the same time, the one-year bank deposit rate fell below 1% in May 2025 for the first time, to 0.95%. Savers were pushed toward other assets, and, as the Zhongzhi bankruptcy showed, not every alternative was what it was sold as.

Taiwan. The Labor Insurance Fund's insolvency horizon moved from 2028 to 2031 in its latest actuarial review, with the fund at about NT$1.1 trillion and implicit liabilities of NT$13.23 trillion, up from NT$10.29 trillion. The government has committed NT$387 billion over six years to the system. Meanwhile Taiwan became a "super-aged" society in 2025, with 20.06% of the population aged 65 or older.

United States. Social Security faces a long-term funding gap, and its trustees have repeatedly warned that benefits would have to be cut if Congress does not act. Separately, the SECURE 2.0 Act, under final rules published in September 2025, requires catch-up contributions to be Roth for employees earning over US$145,000 in the prior year, from 2026, and the age for required minimum distributions rises to 75 for those who turn 73 after 2032. The 2026 401(k) deferral limit is US$24,500.

The common thread

None of this is alarming on its own. Systems adjust. The point is that the terms are not fixed. Four kinds of change appeared in these five systems within a few years:

  • Timing (retirement age in China, required distributions in the US)
  • Liquidity (Account 3 in Malaysia)
  • Contribution rules (CPF, SECURE 2.0)
  • Solvency (Taiwan's Labor Insurance, US Social Security)

The finance fundamentals

Liabilities come first. The standard approach to institutional and individual portfolios is liability-driven. You define the future spending, then choose assets to meet it. Your retirement is a liability stream. State benefits are an asset that helps fund it.

Treat the state benefit as an asset with its own risk. Social-insurance benefits resemble an inflation-linked bond whose issuer can change terms. That has two consequences. They deserve a place on your personal balance sheet. And they deserve a discount, set by how much you trust the issuer's political and fiscal position.

Human capital matters. Finance treats future earnings as an asset (human capital), particularly early in a career. For a household, retirement age is a lever: working a few years longer reduces required savings and shortens the period to be funded. It is also the lever the state is changing for you in China.

Longevity is a risk, not an average. Planning to the average lifespan leaves a large chance of outliving the plan. Good planning treats longevity risk explicitly, with ranges, not point estimates.

A three-column balance sheet

Draw three columns for your retirement:

Column Examples Treat as
State CPF, state pension, Social Security, Labor Insurance A promise with a political discount
Employer Provident funds, company plans A contract with a corporate counterparty
Yours Own investments, property, private pension An asset, with market risk

Then run two stress tests on the state column:

  1. Haircut. What if the state column delivered 20% less than the statement says?
  2. Delay. What if it started three years later than today's rules?

If the plan still works under both, the state column is a bonus. If it fails, the plan depends on a counterparty, and that is a decision worth making deliberately.

Practical implications

  1. Write the state column in your own words. What does the system say it will pay, when, and what must be true for that to happen?
  2. Check the account rules each year. Contribution splits, withdrawal ages, interest floors and ceilings change. A calendar reminder is enough.
  3. Be deliberate about liquidity. Malaysia's Account 3 shows the trade-off in a single number. Money that can be withdrawn will, in some years, be withdrawn.
  4. Prefer scenarios to point estimates. Show the plan under a haircut and a delay, not only a central case.
  5. Keep a bridge. If retirement ages rise or benefits start later, you need your own assets to cover the gap.

Update, October 2026: what the following months added

United States. The 2026 Social Security Trustees Report, published on 9 June 2026, was read in two ways: one headline put depletion of the retirement-only fund at 2032, and several summaries put the combined fund at 2034, with about 83% of scheduled benefits payable after that point absent changes. The sources conflict, and we could not read the primary report.

Singapore. An increase in CPF contribution rates for workers aged 55 to 65 is scheduled for 1 January 2027, though we could not confirm the exact rates.

What we could not confirm

The body of this post reflects what was known on 3 March 2026; later developments are in the update section. We could not open the primary Social Security Trustees report, so the 2032 versus 2034 depletion dates rest on secondary summaries that conflict. CPF contribution rates from 2027 and some ceilings (such as the Full Retirement Sum) come from secondary sources. This is education, not retirement advice.

Sources

Topics

Retirement

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