SINGAPORE: Her workload would remain the same. But as Margaret (not her real name) approached the statutory retirement age of 62 in 2012 - the same year that re-employment laws took effect in Singapore - the then-civil servant had to sign a new one-year contract with her employer. It entailed a pay cut, a downgrading by one job grade, and a S$500 medical claim limit annually.
While she felt that the terms were not well justified, she felt satisfied enough with them to sign the contract, mindful of the horror stories which she had been hearing about re-employment terms being offered to other employees of her age.
Margaret, now 69, said that at that time, she knew of older workers in the public service who had to take a more drastic pay cut after being downgraded by several rungs, and of supervisors having to step down and work under subordinates although they had not expressed any plans for retirement.
Much has changed since in the public service: Since Jul 1, 2017, wage adjustments were done away with, and the large majority of re-employed public officers received “no pay cut”, the Public Service Division (PSD) said in response to queries.
Public officers will continue to receive their last drawn salary if they are re-employed at the same grade, and those who are re-employed are also offered the “prevailing leave and medical benefits schemes, which are aligned to market practice”, PSD added.
READ: PSD to raise retirement, re-employment ages in 2021; more than 2,000 public officers to benefit
In the private sector, however, some older workers continue to get the short end of the stick.
Take Pamela (not her real name), 67, for example.
Until last year, she had worked as a head of department at a local bank.
Strictly speaking, her employer had abided by the Government’s re-employment rules, which require organisations to offer re-employment up to a stipulated age to eligible employees who reach their retirement age.
But it was the way she was treated towards the end of her second one-year contract with the bank - she was asked when she would be “calling it a day” - that left a sour taste in her mouth.
While the question was “subtly and politely put across”, the “hint was pretty strong”, she said. She left the bank as she felt unwanted by her employers.
For some older workers, subtle discouragement may come in the form of new employment terms.
A 61-year-old working at a multinational manufacturing firm, who declined to be named, said that despite having worked at the company for more than four decades, the number of days for her annual leave will be halved from 24 days to 12 days - same as what a fresh hire gets - under her new contract which will take effect in a few months when she turns 62.
Similarly, a 67-year-old who worked in port operations said he was given a S$200 cap for yearly medical claims under his re-employment contract. Previously, there was no such limit as far as he knows.
These employees were among more than a dozen older workers interviewed.
READ: Full restoration of CPF contributions for those aged 55 to 60; higher rates for workers above 60
READ: New retirement, re-employment ages of 65 and 70 by 2030; higher CPF contributions for older workers
To be sure, the employment rate of older workers has gone up since re-employment laws came into force, based on government data.
Still, the experiences of those interviewed suggest that mandating employers to rehire eligible workers once they reach retirement age is a work in progress, and it is more often than not an unpleasant experience for these workers - even though the policies aim to protect them and allow them to continue working if they wish to do so.
This is especially so when the older workers feel that they remain healthy and able to perform at the same - if not higher - levels compared with their younger colleagues.
In this regard, the public sector, as well as a few private sector firms, are leading the way by re-hiring older workers, without any changes to their roles and employment terms including salaries.
But the positive examples are too few and far between, as interviews with older workers show.
Still, experts pointed out the constraints faced by businesses - in particular, the seniority-based wage system that is entrenched in many companies in Singapore.
Workers here expect wages to go up with each passing year, noted Assoc Prof Walter Theseira, a Nominated Member of Parliament (NMP) and economist with the Singapore University of Social Sciences.
As a result, over time, there could be a “mismatch between pay and work output” among older workers, he said.
“At some point, work output may plateau or even fall, but pay keeps going up,” he added.
“It is common to paint this as a problem of unfair employers … It is also unfair to younger workers if they produce more output but they are paid much less than a more senior worker,” said Assoc Prof Theseira.
But is there scope to finetune the re-employment laws - say, for example, mandating that the terms offered to the older workers must take into account their health and work performance?
It would be unwise to make the laws more rigid, said several MPs who cautioned that doing so could backfire and put businesses off from hiring older workers.
Pasir Ris-Punggol GRC MP Zainal Sapari, who is also assistant secretary-general of the National Trades Union Congress (NTUC), reiterated that the signing of a new contract during re-employment “gives the flexibility for companies to offer a package that is sustainable for them and at the same time, allow workers to continue”.
Businessman Douglas Foo, who is the founder and executive chairman of Sakae Holdings, noted that should the flexibility be taken away from employers, operational costs could rise.
“That makes our country much less attractive for others to come and invest in the backdrop of a tight workforce,” said Mr Foo, who is also an NMP.
Singapore’s retirement and re-employment ages are back in the spotlight following Prime Minister Lee Hsien Loong’s announcement in his National Day Rally speech that the retirement age will be raised to 63 in 2022, and eventually to 65 by 2030.
The re-employment age will be increased from 67 to 68 in 2022, and eventually to 70 by 2030.
With Singaporeans having the world's longest life expectancy in 2017 with an expected lifespan at birth of 84.8 years, the changes are aimed at helping older workers to continue working and to be more financially independent.
WHAT OLDER WORKERS WISH FOR
The re-employment age - a concept pioneered in Japan - is viewed as a better alternative to raising the retirement age, given the concerns by businesses that a higher retirement age might affect costs and productivity.
When it was introduced in Singapore seven years ago, the objective was not only to protect the interests of older workers but also to create a pro-business environment that would ultimately safeguard jobs.
Older workers, however, said that they wish their employers can implement the re-employment policies with “a little more heart”.
Pamela said: “Do companies really subscribe to the Government’s thinking and the spirit of re-employing workers, or do they just do it because they are obliged to?”
She could sense the bank’s half-heartedness when it did not offer her any alternative positions, or at least seek out her preferences on continued employment, even though she had worked in the bank for nearly 30 years.
“They only think about crafting career paths for the young ones, but we (older workers) deserve a bit of attention too. The attachment (to the bank) is there. We have a proven track record,” she said, adding that the bank’s human resource (HR) department should have been more proactive in looking for alternative roles for her.
She also lamented how older workers in the bank would only find out whether their yearly contracts would be renewed for another year on their birthday month.
Tripartite guidelines encourage employers to inform employees who do not qualify for re-employment at least three months before retirement, so they can better prepare for retirement or seek other employment opportunities. However, this procedure is not always followed, based on our interviews with older workers.
Unsurprisingly, those who were re-hired by their organisations on the same terms, with their roles unchanged, are happy to continue working as long as their health permits.
One of them is Mr Abdul Aziz Abdullah, 64. The head of the logistics and hospitality team at Maybank has been working with the bank for 41 years and counting.
Despite reaching the retirement age a couple of years ago, he continues to lead a team of six relationship managers to manage a loan portfolio comprising hotels, foreign worker dormitories, and office buildings.
“It has never crossed my mind to retire from work when I turned 62 because I still have the passion for my job,” he said.
Likewise, Madam Noreen Wee, 63, is still going strong as the lead writer of insurance policy contracts at Prudential.
In October last year, the insurer abolished the retirement age for its employees, allowing its 1,100 workers to decide when they want to retire.
Mdm Wee, who intends to work until 70, described it as liberating not having to fear when she would be made to call it a day because of her age.
HOW RE-EMPLOYMENT CAME ABOUT
Given the demographic changes and increasing life expectancy, Singapore’s policymakers first started talking about re-employment in 2007.
It took five years before it became law in 2012, making it mandatory for employers to offer re-employment for workers who have reached the retirement age until they turn 65. This was raised to 67 in 2017.
Meanwhile, since its legislation in 1993, Singapore’s retirement age has been raised only once, from 60 to 62, in 1999.
Back in 2010, then-Manpower Minister Gan Kim Yong said the aim of Singapore’s re-employment laws was to raise the employment rate of older workers, by giving them a “flexible and effective” way to work for as long as they are able to.
At the same time, the laws have also been designed to be pro-business.
Mr Lim Swee Say, who was appointed Manpower Minister in 2015, said in 2017 that tripartite partners - the Government, employers and the unions - had hit the wall after raising the retirement age in 1999. Employers were objecting to a further increase due to the impact on their businesses, and younger workers were also against it because they did not want their career progression to be stalled, Mr Lim said.
So, Singapore began looking to Japan and its re-employment age. “When you raise the retirement age, the expectation is ‘same job, same pay’ ... When Japan introduced the idea of re-employment age, the concept is ‘not necessarily the same job, not necessarily the same pay’,” Mr Lim told Parliament during the 2017 debate to raise the re-employment age from 65 to 67.
Observers said that some employers have taken advantage of the flexibility accorded to them, to the detriment of older workers.
Mr Foo criticised such a practice as “an abuse of the whole spirit of what this policy is about”.
Employers should instead make use of the flexibility to tide over an economic downturn or stay agile in the face of disruptive innovations, said Mr Foo, who is also a vice-president of the Singapore National Employers Federation (SNEF).
Still, Mr Alexander Melchers - Mr Foo’s fellow vice president at SNEF - felt that the adjustment of some employee benefits such as annual leave days is fair.
These benefits may be tied to seniority, and some employers may adjust it to make it more equitable with other employees, he said.
“It is not about ageism but about ensuring the employability of our workers in an ageing society,” he added.
Checks with several employers revealed varying approaches when it comes to their re-employment policies.
Prior to the re-employment laws coming into force in 2012, the public service had taken the lead by first introducing the Public Service Re-employment Guidelines a year earlier.
Back then, the Public Service had made provisions for wage adjustments in order to encourage private sector employers to re-employ their employees, PSD said.
This was aligned with the national tripartite guidelines on re-employment at that time, it added.
Over the years, it monitored market practices and gathered feedback from public agencies and public service unions. Subsequently, PSD decided to remove wage adjustments for all officers by Jul 1, 2017.
Nevertheless, PSD said that officers “may or may not do the same job when they are re-employed”, citing changes to job scope or the agencies’ needs as the public service transforms itself and builds new capabilities.
Under the PSD’s re-employment guidelines, public agencies will consult officers on re-employment at least six months before retirement in an “open discussion” between supervisors and officers. This is to help “manage expectations as well as understand officers’ concerns and preferences on job arrangements, training opportunities, wages and benefits”, PSD said.
It added: “Any work arrangement, including any changes, are mutually agreed to by the officers and their agencies taking into consideration the officers’ preferences and the availability of suitable positions.”
In cases where the jobs are no longer available, public agencies will provide support to affected officers in terms of reskilling, redeployment, and employment facilitation.
Over in the private sector, TÜV SÜD PSB said it is committed to not cut the pay of any re-employed worker. It also offers options such as part-time employment should older workers wish to reduce their workload.
At CapitaLand Group, its head of group human resources Angeline Oh said its older workers could either work in the same capacity or take on a redesigned role which comes with flexible hours or reduced scope.
CapitaLand, which is a real estate developer, currently re-employs more than 30 individuals. About five employees stayed beyond the mandated re-employment age of 67, Ms Oh added.
Mencast Marine, which makes and repairs ship propellers, re-employ older workers on one-year contracts, renewable up to age 67, with the same employment terms as before. They comprise 7 per cent of the firm's employees. Nevertheless, the firm noted that the older workers’ ability to pick up new skills, such as advanced technical training, “remains a challenge”.
Deloitte’s talent leader Seah Gek Choo said the big-four accounting firm will first hold discussions with interested retirement-age employees on their role, salary, benefits and other employment terms.
Following that, the firm “will look at our business needs and the interests and skills of the individual”, she said. Eligible employees will be offered a yearly contract until they reach 67, or beyond, provided that they show “good work performance” and are certified “fit for work”.
Deloitte currently has about 25 employees on re-employment contracts. Three of them are above 67.
While Ms Seah believes most employers do see the advantage of re-employing older employees, “cost is a consideration”, she said. Government schemes such as the Special Employment Credit provide employers with support to hire older Singaporean workers, but these are “temporary”, she pointed out.
Group insurance for employees also stops at age 70, so organisations “do not have the incentive to employ older workers beyond that age”, she added.
Over at DBS Bank, workers seeking re-employment can choose between working full-time with no pay adjustments, working part time, and taking up a different role with the bank.
Since 2012, the bank has seen a “three-fold increase” in the number of workers aged 62 and above, said Ms Theresa Phua, DBS’ Singapore HR Head.
More than 95 per cent of the bank’s older workers chose to work full-time, while the others opted for flexible work arrangements.
OCBC, meanwhile, said it takes a “long-term view” on employees. It initiates conversations about retirement much earlier, compared to most companies, through a programme catered to employees aged 40 and above.
Through the programme, the older workers are given the option to participate in workshops on financial planning or health and wellness. They can also take part in reskilling or upskilling courses, which could potentially help transition them to other areas of interest, OCBC head of HR planning Jacinta Low said.
OLDER, BUT ‘ABLE AND WILLING’
The number of older workers in Singapore who are able and willing to continue working is set to increase, experts have said.
There is a gap of 12.2 years between the average number of years which Singaporeans are expected to lead healthy lives - known as the Health-Adjusted Life Expectancy (Hale) - and the current retirement age of 62.
Before the recent announcements, retirement age - meant to prohibit employers from dismissing workers younger than 62 due to their age - had remained unchanged for two decades. But based on the Hale benchmark, the average Singaporean can now typically work up till 74.2 of age, an increase of more than seven years from 67.1 in 1990.
For example, Mdm Pow Soh Liew, who turns 62 next month, cannot see herself stopping work at her age.
The production executive at Panasonic Appliances Refrigeration Devices Singapore said she would “not be able to take it” if she had to sit around at home for more than two days.
Mdm Pow, who has three grown-up children, said that if she were to leave her current employers, she would look for work in a supermarket to earn “pocket money” so that she can go on holidays.
Dr Danny Ker, 62, who graduated top of his class last month with a specialist diploma in advanced digital manufacturing at German Institute of Science and Technology – TUM Asia, also has no plans to stop working.
“Sixty-two is still an active working age in my case … 67 years old is also still too young to retire,” said the vice-president for quality management at TÜV SÜD PSB, a testing, inspection and certification service provider.
Adding that his father retired at the age of 85, he said that he would look to start his own business if the day comes that nobody is willing to hire him because of his age.
FIRMS AND WORKERS 'NEED TO BE OPEN WITH EACH OTHER'
Despite the negative experiences of some older workers, experts and observers believe that the re-employment and retirement ages are here to stay, and they serve as important safeguards - even though they are not foolproof.
Senior Minister of State Heng Chee How, who is the deputy secretary-general of NTUC, reiterated that without legislation, firms can unilaterally set lower retirement ages.
“For the foreseeable future, the view of the tripartite partners is that having a statutory retirement age remains a valid and significant safeguard,” said Mr Heng, stressing that there are avenues for older workers - whether they are union members or not - to lodge complaints against errant employers.
Assoc Prof Theseira also stressed the need for retirement and re-employment laws.
And he believes that older workers need to adjust their expectations. “If wages and work responsibility are inflexible, this could lead to more unemployment among older workers,” he said.
He noted that it is unrealistic for workers in Singapore to expect wages to keep going up.
He sees re-employment as an opportunity for employers to reset the relationship between pay and work output. “It is just that we do not accept… that wages can go down,” he added.
CIMB Private Banking economist Song Seng Wun felt the key is for employers and older workers to have open communications, even if these entail uncomfortable discussions on changes to wages and job roles.
Such discussions could centre around the contributions that the older worker can continue making, with an eye perhaps on gradually scaling back his or her involvement with the firm.
Citing himself as an example, Mr Song, 59, said he would not mind taking a hefty pay cut if this comes up for discussion with his employers. “(For some people,) it’s not really a case of you needing the money, but something to do,” he said.
“It is not a right that because I ended up, at 60, with this amount of salary ... I am entitled to that forever and even more, just because I am still working,” he said.