While delivering the National Day Rally speech on Sunday (18 August), Prime Minister Lee Hsien Loong said that by 2030, senior Singaporeans who wish to pursue working on the same employment terms will be guaranteed to do so until the age of 65, instead of 62 now.
On top of that, the Central Provident Fund (CPF) contribution rates will also be increased over the next 10 years for employees from the age 55 to 70, in order to allow them to build up more retirement savings.
He added that the statutory retirement age will gradually be raised to 63 in 2022, and eventually to 65 by 2030. In addition, the re-employment age will also go up from 67 now to 68 in 2022 and soon to 70 by 2030.
If that is not all, employees cannot be laid off due to their age before they reach the retirement age. Employers must also allow eligible staff work up to the re-employment age with the flexibility to adjust the contract terms.
PM Lee also noted that these changes were suggested by a tripartite workgroup and fully agreed by the Government, as it “will support older workers to continue working longer and be more financially independent”.
The higher retirement age in 2022 will be applicable to those born on or after 1 July 1960, and the higher re-employment age will apply to individuals born on or after 1 July 1955.
All these are made since Singapore’s life expectancy at birth has increased to the longest in the world at nearly 85 years. This means that close to half of Singaporeans are expected to live longer than that, said PM Lee.
“We are healthy for longer, we live longer, but we don’t want to spend more years idle in retirement. We want to stay active, engaged, feel a sense of worth and purpose..Also, many of us want to build up bigger nest eggs for when we eventually retire,” he explained.
Besides that, he also highlighted that there are no changes when it comes to CPF withdrawal policies or ages. This means that CPF members are still allowed to withdraw a certain amount of money at the age of 55 and begin their monthly payouts from the age of 65.
“If you hear anybody tell you something different, please ignore him or her. And if it comes to you on WhatsApp from a friend, please delete it and tell your friend. Don’t share it with more friends and confuse people, because that will be fake news. POFMA will catch you,” he said, referring to the controversial Protection from Online Falsehoods and Manipulation Act which was passed in June.
He also said that employers will receive assistance to adjust to these new arrangements via a support package that Deputy Prime Minister Heng Swee Keat will reveal in 2020’s Budget.
Speaking of CPF contribution rates, PM Lee explained that they are now being tapered down from 37% after employees turn 55. He added that the rates for those aged 55 to 70 will be slowly increased from 2021 until those aged 60 and below enjoy the full CPF rates. The rates will begin to taper down after 60 and even out after 70.
The entire process will approximately take about 10 years, but it will still rely on “economic conditions”, said PM Lee.
He also explained that the higher ages and CPF rates are recommendations raised by the Tripartite Workgroup on Older Workers, which was created last year by the Manpower Ministry and comprises of government, employer and union representatives.
After meeting the workgroup members in July, he found out that older workers wanted to be guaranteed of continued employment for longer, while employers were concerned about business costs and the uncertain economic outlook, and wanted more flexibility.
Thankfully, PM Lee said the workgroup finally reached consensus. He also said that the Government will lead as the main employer to increase the retirement and re-employment ages in the Public Service in 2021, a year ahead of schedule.
He also said he encourages private sector companies to do the same as “enabling seniors to continue working productively takes a joint effort by employers and employees”.
He stressed that employers need to redesign their training, careers and jobs to suit the abilities and strengths of older workers, while workers must learn to adapt, learn new things and accept different responsibilities.
After reading what PM Lee had to say about extending the retirement age, many netizens applauded the move in ST’s Facebook page as they see it as good news. This is because it will help those who wish to work longer or those who don’t have any savings to survive in Singapore.
However, others opined that it’s unfair to make seniors to work for survival at such an old age, with some questioning why is CPF payouts not distributed earlier so these individuals will have a choice not to work. Others said it’s sad to see older Singaporeans work at hawker centres and get scolding from their bosses because they’re slow, when they should actually be relaxing during their final years.
A group of them also pointed out that it’s actually quite hard for seniors to find a job, so it’s no point for the Government to increase the retirement age. They added that employers who would actually want to hire them are only “security and cleaners company”,and they cannot find “jobs in their relevant industries”. Goh Guan Sam also questioned the need to raise CPF contribution if the wage does not increase. This is because “increase contribution means less take home wage”, which is obviously not helpful for the older individuals.