Non-employment income to be included in Singapore’s annual household income report

The Department of Statistics (DOS) announced on 9 February that it will begin including non-employment income in Singapore’s annual Key Household Income Trends report.

According to DOS, the updated methodology will incorporate sources such as rental income, pensions, investment returns, annuities, and insurance payouts, under a broader classification referred to as “household market income”.

In a statement, the department said this change allows income trends to be analysed across all resident households, not just those with at least one employed member — a shift from previous reporting approaches.

Income inequality varies under new measure

An occasional paper released by the Ministry of Finance (MOF) on the same day noted that the revised method affects Singapore’s Gini coefficient, a commonly used measure of income inequality.

According to MOF, the Gini coefficient before taxes and transfers for 2025 was 0.426 when measured using only employment income. This figure increased to 0.452 under the new market income approach, which includes all income types.

The MOF stated that while the inclusion of non-employment income showed more evenly distributed income within certain segments, the overall coefficient was higher due to the inclusion of households with little or no employment income.

Both sets of data, MOF said, indicate that income inequality in Singapore has reached its lowest point since records on market income began in 2015.

Agencies cite demographic change as key driver

The change in scope is attributed by authorities to demographic shifts, particularly the rise in households made up entirely of older adults who are retired and no longer earning employment income.

According to the paper, such households now comprise half of the resident households in the lowest income decile. Among them, 20 per cent employed a domestic worker, 6.7 per cent lived in private housing, and 5.5 per cent owned a car.

In its publication, DOS stated that including all income sources provides “a more complete picture” of income distribution and growth trends.

Data collection and limitations acknowledged

MOF noted that capturing non-employment income comprehensively remains a challenge. Data is primarily collected via surveys such as the Household Expenditure Survey, conducted every five years, and is supplemented with administrative records where available.

The ministry cautioned that some forms of non-employment income — particularly investment income among higher-income households — may be under-reported. This could lead to underestimation in the data, especially regarding foreign asset income.

DOS has said it intends to continue improving the quality and coverage of its data.

International comparisons offered

MOF also presented comparisons with other advanced economies, using Gini coefficients before and after taxes and transfers:

• Before taxes and transfers:

  • United Kingdom: 0.522

  • France: 0.517

  • Japan: 0.513

  • Singapore: 0.406

• After taxes and transfers:

  • United Kingdom: 0.367

  • France: 0.299

  • Japan: 0.338

  • Singapore: 0.340

The paper stated that reductions in inequality tend to be larger in Nordic countries, where tax burdens are higher and transfers more extensive. According to MOF, Singapore takes a different approach by maintaining a lower overall tax burden while offering targeted support.

The ministry also cited the tax-to-income ratio per household member, estimating it at 11 per cent in Singapore, compared with 39 per cent in the UK and 45 per cent in Finland.

Agencies highlight benefits of revised approach

According to DOS, the new methodology enables more comprehensive insights into household income patterns, particularly as the population ages and income sources diversify.

However, the full effects of the revised reporting framework remain dependent on ongoing improvements in data quality and transparency, especially regarding less visible forms of income.