Higher re-employment age passed into law in Singapore

Higher re-employment age passed into law in Singapore

The change is among amendments to the Retirement and Re-employment Act passed in Parliament on Monday (Jan 9).

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An elderly man in Singapore (File Photo: Francine Lim)

SINGAPORE: From the second half of this year, employers will be legally obliged to offer re-employment to eligible Singaporean workers up to the age of 67, two years higher than the current age ceiling. This change - which will apply to those who turn 65 on or after Jul 1, 2017 - was among amendments to the Retirement and Re-employment Act passed in Parliament on Monday (Jan 9).

In his speech tabling the Amendment Bill, Manpower Minister Lim Swee Say said that the changes were based on “extensive consultations” with tripartite partners, taking into consideration Singapore’s ageing workforce, and balancing the needs of older workers and companies.

“Over the last decade, the proportion of residents aged 60 and over in our labour force has increased from 5.5 per cent in 2006 to 12 per cent in 2015. As we live longer, we can expect this proportion to continue to grow,” he added.

Mr Lim also noted that in 2015, more than 98 per cent of private-sector local employees who wished to continue working at age 62 were offered re-employment. And among those who accepted re-employment in the same job, 98 per cent did not experience any cut in their basic wages, he said.

At present, the Government encourages the voluntary employment of employees beyond the age of 65 through an additional wage offset of up to 3 per cent of monthly salary. This scheme, according to Mr Lim, benefits around 120,000 local workers aged 65 and above every year.

Given the raised re-employment age, the continuation of the scheme - introduced in 2015 and set to expire on Jul 1, 2017 - is being assessed, he added. The extension is aimed at supporting the re-employment of those who are above 67 and those who are 67 but are not covered by the new re-employment age.

Other changes include allowing eligible employees to be re-employed by another employer, and removing the option for employers to cut employees’ wages at age 60.

Under the current re-employment model, an employer is required to offer a golden handshake, or an Employment Assistance Payment (EAP), if it is unable to re-employ an eligible worker. To increase flexibility, from Jul 1, an employer may transfer the re-employment obligation to another employer. In this case, if the worker rejects the re-employment offer, the original employer will have to provide the one-off EAP.

This change is based on feedback from employers who were unable to find suitable jobs within their companies for their older workers. “Some of these employees would like to help their older employees secure re-employment with another employer. However, today’s law does not allow them to transfer their re-employment obligations to another employer,” Mr Lim explained.

He added that there will be safeguards in place to protect the employee. First, the employee has to agree to the re-employment terms offered by the second employer. Next, the second employer has to agree to take over all applicable re-employment obligations. If either condition is not met, the original employer still has to fulfil his re-employment obligations. To guide employers and employees, revised tripartite guidelines relating to the changes have also been issued.

Lastly, the current provision for employers to cut up to 10 per cent of employees’ wages at age 60 will be removed from Jul 1. This legacy provision was introduced when the retirement age was raised from 60 to 62 in 1999, to help employers with seniority-based wage systems manage costs.

There is little need for this option today, as tripartite efforts over the years have successfully moved employers away from seniority-based wage systems. According to Mr Lim, in 2011, 98.5 per cent of companies with employees aged 60 and above did not reduce wages of employees at age 60.

MPs SUPPORT BILL, BUT WARN THAT MORE WORK IS NEEDED

Nominated Members of Parliament (NMPs) K Thanaletchimi and Randolph Tan, Non-Constituency MPs (NCMPs) Leon Perera and Daniel Goh, and MPs including Patrick Tay, Zainal Sapari, and Louis Ng were among members who spoke about the Bill in Parliament on Monday. While most supported the Bill, many highlighted outstanding issues, such as age discrimination.

“In my regular ground engagements with workers, especially PMEs (professionals, managers and executives), I still hear of instances where workers are confronted with ageism. Although not rampant and good work has been done by TAFEP (Tripartite Alliance for Fair Employment Practices), I believe we can do more to not just minimise but eradicate all forms of ageism,” said Mr Tay.

“I support the amendments but we need to rethink re-employment,” said the West Coast GRC MP, urging a move away from re-employment for the sake of statutory compliance, to re-employment aimed at supporting people development and changing stereotypical perceptions.

Associate Professor Tan and Associate Professor Goh took issue with the duration of the contracts many re-employed senior workers find themselves on.

“In June 2007, 25 per cent of resident employees aged 60 and over were on term contracts. Almost a decade later, in June 2015, we still have 21 per cent of resident employees aged 60 and above (who) were on term contracts,” said Assoc Prof Tan, who warned that the regulatory burden of the new legislation may drive more employers to place older employees on term contracts.

“The one-year term contract, or a three-year contract, to be reviewed yearly, sustains a sense of insecurity (around) contract review and renewal, which is not the right way to treat a senior employee and colleague,” said Assoc Prof Goh.

“There is a possibility for the loss of benefits in the switch from regular employment, to the re-employment contract. This loss of benefits - whilst being employed doing the same work for the same company, in the same workplace with the same colleagues - is solely due to the employee reaching a certain age. Is this not unfair, smacking of ageism and stigmatising for the senior Singaporeans?”

Mr Ng, who is the MP for Nee Soon GRC, sought to draw attention to those who work beyond the age of 65 not because they want to, but because they have to. “For many of the seniors, the reality is that they don’t have enough savings to retire. I’ve met many who continue to work despite physical illness and severe fatigue.”

Meanwhile, Mr Zainal, an MP for Pasir Ris-Punggol GRC, said the Bill “falls short if we look at life expectancy trends in Singapore”, and that there is a need to “be bolder to work towards removing (the) retirement age and allow a worker to work as long as he or she could.”

“Given the future reality, our retirement age must increase over time, to perhaps 75 to 80 years to ensure a steady income stream for livelihood. Alternatively, we should not look at a single retirement age but maybe a retirement age based on age cohorts,” he added.

GFX Changes to Retirement and Re-employment Act

(Infographic: Ministry of Manpower)

Source: CNA/ll

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