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Singapore

Statutory retirement age still needed, says Manpower Minister as Bill passed for higher retirement and re-employment ages

SINGAPORE: A statutory retirement age is still important as a safeguard against those employers who dismiss older employees due to their age, said Manpower Minister Tan See Leng on Tuesday (Nov 2), as Parliament voted to pass an amendment to the Retirement and Re-employment Age Act.

The Bill passed on Tuesday amends the Retirement and Re-employment Act so that the Minister for Manpower can prescribe a retirement age and re-employment age of up to 65 and 70 respectively.

This is in line with recommendations by the Tripartite Workgroup on Older Workers in 2019 that both the retirement age and re-employment age be raised by three years to 65 and 70 respectively by 2030.

The prevailing retirement and re-employment ages will continue to be prescribed by notification in the Gazette, said Dr Tan. 

As announced earlier, the statutory retirement age and re-employment age will be increased to 63 and 68 respectively, on Jul 1, 2022. The public sector has already implemented it on Jul 1.

These ages will be raised gradually, subject to consensus by tripartite partners.

“Let me assure Members that raising the retirement and re-employment ages provides the flexibility for older workers to work longer, but does not compel them to do so. Those who do not wish to continue working need not do so, and can enjoy their retirement,” said Dr Tan.

Responding to several MPs’ speeches on whether a statutory retirement age is still needed, Dr Tan said that the workgroup had looked at the experiences of other countries, and found that countries without the equivalent of a statutory retirement age do not necessarily have better employment rates for senior workers, despite some of them having anti-discrimination legislation. 

“Some progressive employers may take the initiative to abolish their internal retirement ages and allow workers to work as long as they wish, and we wholeheartedly applaud them,” he said.

“But as Mr Heng Chee How emphasised, the statutory retirement and re-employment age is still important as a floor and safeguard against employers who might not be as progressive.”

"SEAWALL" FOR OLDER WORKERS

He added that Singapore’s average effective retirement age has risen faster than the OECD average.

Mr Heng (PAP-Jalan Besar), who is NTUC's deputy secretary-general and Senior Minister of State for Defence, was part of the Tripartite Workgroup for Older Workers.

Speaking during the debate on Monday, he said that the statutory ages are like “a pair of seawalls” for older workers.

“They stand as visual reminders of our nation’s commitment to protecting our older workers as an asset,” he added.

Another recommendation of the workgroup was to raise the CPF contribution rates for workers aged above 55 to 70 over the next decade, to boost retirement adequacy for seniors. 

The first increase in senior workers’ CPF contribution rate will take effect from Jan 1, 2022.

Employees aged above 55 to 70 will see an increase in total CPF contribution rates of up to 2 percentage points. 

CPF CONTRIBUTION RATES TO BE RAISED
Age Bands Before Jan 1, 2022 Jan 1, 2022 Long-Term Target
≤55   37% (no change)  
> 55 - 60 26% 28% 37%
> 60 - 65 16.5% 18.5% 26%
> 65 - 70 12.5% 14% 16.5%
> 70   12.5% (no change)  

This increase was deferred by a year from the original announced timeline of Jan 1 this year to help employers manage costs amid the COVID-19 pandemic.

“The re-employment framework is designed to balance the need to enable senior workers to continue working, while giving employers sufficient flexibility so that businesses can remain nimble and sustainable," said Dr Tan. 

"Different businesses may also face different challenges, so we must strike a careful balance."

FAIRNESS OF RE-EMPLOYMENT OFFERS

Several MPs also raised questions on the need to ensure that employers fulfil their re-employment obligations and that re-employment offers are fair.

MP Joan Pereira (PAP-Tanjong Pagar) was concerned that some senior workers who need the income may not have much room in re-employment negotiations.

“Older workers with lower education levels are particularly vulnerable to poorer workplace treatment. The fear of losing jobs keep some in unfair arrangements or toxic work environments,” she said.

“On the other hand, due to such difficult conditions, there are workers who resign before reaching their retirement age or forgo re-employment offers. We need to find ways to protect and help them.”

In response, Dr Tan said that there are guidelines laying out employers’ and employees’ responsibilities for re-employment, raising some of them as examples.

The Tripartite Guidelines on the Re-employment of Older Employees make clear that employers should engage employees at least six months before they reach retirement age, he said.

On the issue of medical fitness, they should offer re-employment to eligible workers who are medically fit to perform any job within the company, not just their existing job role. 

Employers are also advised to presume that their senior employees are medically fit, unless there are clear reasons to believe otherwise. 

He said that the "vast majority" of re-employed workers continue on their existing contract or a new contract in the same job. More than 95 per cent of workers re-employed in the same job did not experience any cuts to their wage and benefits, he added.

Source: CNA/hm(mi)

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