SINGAPORE: Singapore will raise the retirement age and re-employment age to 65 and 70 respectively by 2030, alongside increases in the Central Provident Fund (CPF) contribution rates for older workers.
This, announced by Prime Minister Lee Hsien Loong on Sunday (Aug 18), comes after the Government accepted "in full" the recommendations put forward by a tripartite workgroup studying the country’s ageing workforce.
These changes will be done in “gradual steps”, said Mr Lee in his National Day Rally speech.
The retirement age, which is currently at 62, will go up to 63 in 2022 before being raised further to 65 by 2030.
Similarly, the re-employment age of 67 will go up to 68 in three years’ time, and then to 70 by 2030.
Those born on or after Jul 1, 1960, will benefit from the higher retirement age of 63 in 2022, while the first tweak in the re-employment age to 68 will apply to those born on or after Jul 1, 1955, according to the Ministry of Manpower.
CPF contribution rates will also be raised for workers above the age of 55, announced Mr Lee.
Currently, the total CPF contribution rate is 37 per cent for workers up to 55 years old. It drops progressively as the age band increases – 26 per cent for workers aged 55 to 60, 16.5 per cent for those aged 60 to 65, and 12.5 per cent for those above 65.
By the time the changes are completed, workers aged 60 and below will enjoy full CPF rates, said the Prime Minister.
The CPF rates will only begin to taper down after 60 and level off after 70, he added.
The first adjustment in the CPF contribution rates is set for 2021 and will be followed by subsequent increases gradually.
According to Mr Lee, the whole process will take “10 years or so ... but it will depend on economic conditions”.
The changes will support older workers to continue working and help them be more financially independent, said the Prime Minister.
He stressed that these newly announced adjustments do not affect CPF withdrawal policies or withdrawal ages.
"We are not making any changes to CPF withdrawal policies or withdrawal ages," he said.
“You can still take out some money at age 55 and you can still start your CPF payouts from age 65. All of that remains exactly the same."
SUPPORT FOR BUSINESSES
These announcements come nearly 15 months after the formation of the Tripartite Workgroup on Older Workers. Comprising representatives from the Government, employers and unions, it was tasked to look into the concerns of older workers. Earlier this year, the group agreed on the need to raise the country’s retirement and re-employment ages.
Citing feedback from the workgroup, Mr Lee said there had been “intense discussions”.
“Older workers wanted to be certain of continued employment for longer ... but employers were worried about business costs and the uncertain economic outlook,” he said. “In the end, the workgroup reached consensus.”
With an average life expectancy of nearly 85 years, Singaporeans are now healthy for longer and living longer, with most seniors preferring not to stop working, Mr Lee said.
“We don’t want to spend more years in retirement,” he said.
“We want to stay active and engaged, to feel a sense of worth and purpose ... Also, many of us want to build up bigger nest eggs for when we eventually retire. Therefore, many of us have multiple careers in a lifetime,” he added.
Mr Lee said it will take a “joint effort” to enable seniors to continue working productively.
This includes having employers re-design their training, jobs and careers around the abilities and strengths of older workers.
Workers will also need to have the right mindset as jobs change or disappear.
“We must be ready to adapt, learn new things, and take on different responsibilities … Re-skilling ourselves must start early even when we are in our 40s and 50s, if not even earlier,” he elaborated.
This is so that workers can have useful skills as they near retirement age, and they can keep improving even in their 60s, added Mr Lee.
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Support from the Government will be given to both employers and employees in this area.
As such, Mr Lee said businesses can expect a “support package” to help them adjust to the changes in the retirement age, re-employment age and CPF contribution rates.
This will be announced by Deputy Prime Minister Heng Swee Keat in next year’s Budget speech.
And as a major employer, the public service will take the lead by raising its retirement and re-employment ages earlier in 2021, instead of 2022.
“I encourage private sector companies which can do the same, also to do so,” said Mr Lee.