SINGAPORE: The tripartite workgroup tasked to look at issues concerning older workers has reached a consensus that the country’s retirement age and re-employment age will need to be raised, said Manpower Minister Josephine Teo on Tuesday (Mar 5).
Describing this as a "significant milestone", Mrs Teo said the workgroup will work out the details over the next few months, such as how far and how fast adjustments should be made, before submitting a final recommendation later this year.
But even if the age thresholds for retirement and re-employment go up, the Central Provident Fund (CPF) payout eligibility age will stay unchanged at 65 years old, the minister added.
The tripartite workgroup was set up last May to look at whether the retirement age of 62 and the re-employment age of up to 67 need to be changed, as well as examine the impact of CPF contribution rates on retirement adequacy of older workers, among other things.
READ: New tripartite workgroup to study concerns of older workers
The workgroup, according to Mrs Teo in an update during her ministry’s Committee of Supply debate, believes that the retirement age remains relevant and should go up beyond 62.
“A higher retirement age will motivate both workers and employers to invest in skills upgrading and job redesign for their older workers,” she explained.
There have been calls, including from Non-Constituency Member of Parliament (NCMP) Daniel Goh, for the retirement age to be removed.
On that, the minister reasoned that having a statutory minimum retirement age “is actually protection for workers”.
“When a company removes the retirement age from its HR policy manual, it is good news for its workers,” she said. “But if the retirement age is removed from the law, it is bad news.”
“It means the employers no longer have any obligation to keep their workers up to any age. In other words, any employer can retire any worker at any age."
The workgroup also believes that the re-employment age remains useful and can be raised.
"Although most workers who are eligible get re-employed in the same job at the same pay, the flexibility to reset jobs and terms help employers cope with business uncertainties," according to Mrs Teo. "Employers are more willing to employ older workers because of it."
Nonetheless, the workgroup said in its recent update to the minister and other advisers that any change should be “implemented in small steps overtime” so as to allow employers to adjust.
Other countries looking to raise the retirement age have typically made their intentions known five to 10 years in advance, with each move being “relatively modest”, Mrs Teo mentioned. For instance, the retirement age in Denmark is set to go up from 65 to 68 by 2030.
In Singapore, the re-employment age was first brought up in 2007 before it was passed into law in 2012, she added.
And even as the retirement age and re-employment age are raised over time, the workgroup cautioned that it is critical to ensure flexibility of employment arrangements and avoid being “overly prescriptive when setting new rules".
Mrs Teo said the workgroup has consulted widely with workers, unions and employers before developing this "clear" tripartite consensus.
In the next phase of work, it will look at how far and how fast the retirement age and the re-employment age should be raised.
It will also try to build a consensus on the CPF contribution rates for older workers, while balancing the need to help improve retirement adequacy and sustain employability of older workers.
West Coast GRC MP Foo Mee Har, Hougang SMC MP Png Eng Huat and Aljunied GRC MP Sylvia Lim asked about financial security, flexibility in the use of CPF savings and CPF top-ups.
To that, the minister said there is improving retirement adequacy for both older and younger Singaporeans.
She cited how more than six in 10 active CPF members turning 55 years old have at least the basic retirement sum last year. More than 96,000 members have also received about S$2 billion in CPF top-ups in 2018.
The issue of retirement adequacy will be discussed more fully when the workgroup submits its recommendations on CPF contributions for older workers later this year, said Mrs Teo.