SINGAPORE - The Government is aware of business cost pressures posed by an upcoming hike in Central Provident Fund (CPF) contribution rates for older workers, as well as a rise in retirement and re-employment ages, said Trade and Industry Minister Chan Chun Sing on Tuesday (Aug 20).
But these changes will be implemented gradually, over a period of 10 years or so, while taking into account business conditions every step of the way, he added on the sidelines of a visit to wholesale distributor Hai Sia Seafood.
The authorities are in the process of consulting business partners as well, to understand their challenges - both on business costs and in their larger external environment.
His comments come after Prime Minister Lee Hsien Loong announced at the National Day Rally last Sunday that CPF contribution rates for workers aged 55 to 70 will be raised gradually from 2021.
The hike in rates will see both employers and employees coming up with more.
There will also be a rise in the statutory retirement age from 62 to 63 in 2022, and to 65 by 2030. The re-employment age will go up too, from 67 now to 68 in 2022, and 70 by 2030.
Mr Chan said: "We are of course very cognisant of the business cost pressures... but we think that it is the correct thing to do, to ensure that our workers have sufficient retirement savings."
"By lengthening careers, it also allows people who live longer the chance to contribute meaningfully to society and that is, I think, beyond money," added the minister.
More details on measures to help smaller companies cope will be announced closer to next year's Budget, said Mr Chan in response to questions.
But he added that beyond trying to reduce costs, there is also a need to increase businesses' topline and revenue, developing the market beyond Singapore and remaining connected to the world, so that they are not "held ransom by any particular market".
He also highlighted the roles that firms and workers have to play in a changing employment landscape.
Companies such as Hai Sia, in redesigning jobs via automation and new machinery, have helped older workers stay employed and continue contributing to their employers.
The hope is that other firms and the public sector will also look into job redesign to facilitate older workers' employment, said Mr Chan.
Workers, too, need to continue retraining, thinking about the new skills need, and preparing for their next jobs so as to get ready for a longer career span, he said.
Asked about feedback he has received on the announcements, Mr Chan said the issues surrounding older workers have been discussed for many years.
The tripartite partners understand and share the same concerns about how to ensure retirement adequacy and provide meaningful careers for people over a longer time span, he said.
"So, the question is not where we want to go...The question is, how do we make this transition?" he added. "If we make it too sharp too fast, it is difficult for the business to adjust, especially in a challenging external economic environment."
"If we make it too slow, we will deprive many cohorts of older workers the chance to stay meaningfully employed," he said.
The current plan strikes a good balance, he added: "We are confident that if we work closely together, we will be able to mitigate these challenges."