By Chris Kuan
Deputy Prime Minister Tharman Shanmugaratnam has suggested* that the retirement age has to go at some point allows older workers to continue working if they wish to, given that each generation is healthier than the previous.
While I welcome this, I also have a suspicion that it sets the stage for raising the drawdown age of CPF LIFE** under the Central Provident Fund (CPF) scheme to age 67, which is what Norway, the UK and a quite a number of countries have done with their state pensions.
The CPF withdrawal age may no longer be 55 but older. (Note in the UK, Basic State Pension age raised from 65 to 67, but employment pensions withdrawal age remained at 55).
The current retirement age in Singapore is 62, though the re-employment age will rise from 65 to 67 next year. The CPF LIFE’s drawdown age is currently at 65 years old.
If this comes to past, there will be yet another round of anguish as we are seeing our retirement income recede further into the future. It makes it even harder on those who are forced to retire early because of illness or because of changes in the workplace, e.g. unemployment among older workers. Unlike in Europe, we do not have the crucial support of social benefits to help us until our CPF LIFE income or our CPF withdrawals begin to kick in.
All the more, we need a serious discussion about the retirement proposition because CPF as it stands today is not sufficiently flexible to deal with costs and changing patterns of employment.
I reiterate that we should introduce flexibility into CPF LIFE to allow members to draw an income any time after 55 subject to the caveat that the earlier the drawdown the lower the amount. In addition, we should introduce an inflation adjusted Basic State Pension of $600 a month, maybe more, means tested up to median income earners to kick in at age 65 but adjustable to any raising of the pensionable age, e.g. 67 in line with many European countries.
If the government wish to raise the CPF LIFE drawdown and CPF withdrawal age, this is a conversation that needs to take place. Or citizens can help make sure this conversation takes place by their voting choice.
*DPM Tharman had said that Singapore’s retirement age has to go at some point during a dialogue at the World Cities Summit yesterday.
Mr Tharman, who is also Coordinating Minister for Economic and Social Policies, was speaking at the opening session of the World Cities Summit at Marina Bay Sands.
Mr Tharman said that Singapore does not have compulsory retirement but has a retirement age, like many other societies. “At some point, this (retirement age) has to go,” he said and added, “Older folks are an asset. They have wisdom, experience and they also learn on the job. We have to make this (integrating older workers) part and parcel of the workplace… We have not done it very well in Singapore so far and we have to do much better in this realm,”
His comments were in response to a question by Ambassador-at- large Tommy Koh, who moderated the dialogue. Professor Koh asked Mr Tharman if the Singapore Government could abolish compulsory retirement.
**CPF LIFE is an annuity scheme that provides the CPF member with a lifelong monthly payout starting from the member’s payout eligibility age . There are two CPF LIFE Plans – the LIFEStandard Plan and the LIFE Basic Plan.