With the economy now recovering, there is no reason to further delay the planned increases in Central Provident Fund (CPF) contribution rates for older workers, which were deferred by a year because of the Covid-19 pandemic. The Government has signalled that the increases - which will involve employers and employees contributing either 0.5 percentage point or 1 percentage point more for those aged 55 to 70, depending on the worker's age - should go ahead in January next year. This will be followed in July by increases in the statutory retirement age to 63 and the re-employment age to 68. These changes are imperative because of demographics, age-related inequalities and the changing dynamics of the labour market.

The demographic realities are stark. With average life expectancy having risen to 84 years, the workforce is ageing rapidly. The share of workers 55 years or older has risen from 17 per cent in 2010 to 26 per cent last year and by 2030, this will rise to about 40 per cent. Absorbing and integrating more older workers is a reality that employers will increasingly have to face. Longer life expectancy will also translate into greater financial needs for older workers. Someone who retires at 62 will have to cope with living and medical expenses for more than 20 years after that. Age-related inequalities are another problem. Manpower Minister Josephine Teo noted during the Budget debate last week that older workers have fallen far behind younger ones in terms of their median incomes and CPF balances.