SINGAPORE - The retirement and re-employment ages for Singapore workers will be progressively raised to 65 and 70 years old respectively under the law, to support older Singaporeans who wish to continue working to do so.
Speaking at the start of the debate on changes to the Retirement and Re-Employment Act and the Central Provident Fund (CPF) Act, Manpower Minister Tan See Leng told Parliament on Monday (Nov 1) that these changes will also better prepare Singaporeans for retirement.
The process will start on July 1 next year, when the retirement age will be raised to 63 and the re-employment age to 68, he added.
These changes to the retirement and re-employment ages are in line with the recommendations made by the Tripartite Workgroup on Older Workers in 2019.
The work group recommended that the retirement age be raised to 65 and the re-employment age to hit 70 by 2030, in a step-by-step process.
The timing of the subsequent shifts will be subject to agreement among the tripartite partners of the ministry, labour union and employers' federation.
Dr Tan noted that, by 2020, about a quarter of the resident labour force was aged 55 and above, up from 16.5 per cent a decade ago.
"Under this (statutory retirement and re-employment age) framework, employers cannot terminate an employee on grounds of age before the statutory retirement age. Workers have the assurance of continued employment up till the statutory re-employment age if they are able and wish to do so," he said.
"At the same time, businesses have sufficient flexibility to adjust re-employment terms, enabling them to continue providing employment opportunities to our senior workers while remaining competitive."
Firms can also raise the retirement and re-employment ages ahead of the timeline. The public sector has taken the lead from July 1 this year, Dr Tan added.
Another recommendation of the work group was to raise the CPF contribution rates for workers aged above 55 to 70 over the next decade, to boost retirement adequacy for seniors.
From Jan 1 next year, the first increase in senior workers' CPF contribution rate will take effect. Employees aged above 55 to 70 will see an increase in total CPF contribution rates of up to 2 percentage points.
"This increase was deferred by a year from the original announced timeline of Jan 1, 2021, as a nimble move to help employers manage costs amid the Covid-19 pandemic," Dr Tan said.
"The deferment was also supported by the labour movement, who viewed this as a balanced approach to help senior workers keep their jobs."
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There are no changes to CPF withdrawal ages. At 55, people can still withdraw at least $5,000, and they can still start their CPF payouts from 65.
Dr Tan noted that the Government is also doing its part to help employers adjust to the changes, with the $1.5 billion Senior Worker Support Package introduced last year to help offset senior workers' wages and the additional employer CPF contributions.
Lastly, Dr Tan added that the work group recommended that employers make changes to their policies and processes to support older workers.
"To encourage more age-friendly workplaces, employers should also embark on job-redesign, as well as provide more part-time re-employment opportunities," he said.
He also highlighted that while raising the retirement and re-employment ages provides the flexibility for older workers to work longer, it does not compel them to do so.
"Those who do not wish to continue working need not do so, and can enjoy their retirement," he said.
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