SINGAPORE'S Central Provident Fund (CPF) scheme continues to be the best retirement system in Asia, although adequacy - or the lack of it - remains its primary shortcoming.

So says the latest Mercer Melbourne Global Pension Index (MMGPI), which measures 25 retirement income systems against more than 50 indicators under the sub-indices of adequacy, sustainability, and integrity.

The human resources consultancy firm on Monday said that Singapore's total score dropped from 66.5 in 2013 to 65.9 this year, due to a decline in its "adequacy" score.

Said Neil Narale, Mercer's Asean retirement business leader: "The lack of tax-approved group corporate retirement plans and retirement savings for non-residents continues to isolate Singapore from other high-graded countries on the global scale."

Singapore scored 56.4 on adequacy, 68.5 on sustainability, and 77.4 on integrity. The global average scores for these categories were 63.0, 49.7, and 71.9 respectively.

But with changes recently announced to the CPF scheme, the Republic's score should improve in the coming years. Said Mr Narale: "Prime Minister Lee Hsien Loong announced at his National Day rally speech upcoming changes to the CPF which include the Silver Support Scheme and more flexibility in drawing down on pension amounts in retirement in the form of lump-sum. Once these changes are implemented, we expect an increase in Singapore's grade in the future."

Mercer also suggested ways to improve Singapore's system, including raising the minimum level of support available to the poorest aged members of society, and "opening CPF to non-residents, who comprise more than one-third of the labour force".

Mr Narale added that employers continue to be interested in implementing company-sponsored programmes such as Supplemental Retirement Schemes and customised initiatives for both Singaporeans and non-residents, but barriers remain in getting these implemented. "Policies that can help employer programmes get implemented will further increase Singapore's grade," he said.

With a score between 65-75, Singapore is rated "B" on the MMGPI, along with countries like Switzerland (73.9), Sweden (73.4), Canada (69.1), and the UK (67.6). Mercer said these systems have sound structures with many good features, but have some areas for improvement that differentiate them from an A-grade system.

At 82.4, Denmark remains the top-ranked system worldwide - with an overall score above 80, it is the only A-grade country. The average global index value is 60.6.

With the exception of Singapore, all other Asian countries studied received a "D" rating. China (49.0), Indonesia (45.3), Japan (44.4), and Korea (43.6) made up the bottom of the list; India fared the worst at 43.5.