Older workers will get more help to build up their retirement savings as their Central Provident Fund (CPF) contribution rates will be raised over the next 10 years or so.
At the same time, the retirement age will be raised from 62 now, to 63 in 2022, and eventually to 65 by 2030. The re-employment age will also be raised from 67 now, to 68 in 2022 and eventually to 70 by 2030.
Prime Minister Lee Hsien Loong said yesterday that these changes"will support older workers to continue working longer and to be more financially independent". CPF contribution rates now begin to taper down from 37 per cent after workers turn 55.
PM Lee said the rates for those aged 55 to 70 will be raised gradually from 2021 until those aged 60 and below enjoy the full CPF rates. The rates will begin to taper down after 60 and level off after 70. The whole process will take about 10 years or so, "but it will depend on economic conditions", he said at the National Day Rally.
The higher retirement age in 2022 will apply to those born on or after July 1, 1960, and the higher re-employment age will apply to those born on or after July 1, 1955.
Workers cannot be dismissed on the grounds of age before they reach the retirement age. Employers must also offer eligible staff work up to the re-employment age but with the flexibility to adjust contract terms.
These changes come as Singaporeans are healthy for longer and live longer, said PM Lee.
He stressed that there are no changes to CPF withdrawal policies or ages - CPF members can still withdraw some money at age 55 and start their monthly payouts from age 65.
"If you hear anybody tell you something different, please ignore him or her. And if it comes to you on WhatsApp from a friend, please delete it and tell your friend. Don't share it with more friends and confuse people, because that will be fake news."
He also said that businesses will get help to adjust to these new arrangements through a support package which Deputy Prime Minister Heng Swee Keat will announce in next year's Budget.
The Government will take the lead as a major employer to raise retirement and re-employment ages in the Public Service in 2021, a year ahead of schedule, said PM Lee. "I encourage private sector companies which can do the same to also do so," he said.
He also said the Tripartite Workgroup on Older Workers, which made the recommendations, told him over lunch last month that they had intense discussions.
They took in the views of older workers, who wanted to be certain of continued employment for longer, and employers, who were worried about business costs and the uncertain economic outlook, and wanted more flexibility. They eventually reached consensus.
Labour MP Heng Chee How, who is deputy secretary-general of the NTUC, welcomed the higher ages as they help workers have the choice to work longer, amid the country's labour constraints.
Singapore Business Federation chairman Teo Siong Seng said the group appreciates that the increases in retirement and re-employment ages and CPF rates are being made incrementally. "We hope the raising of the (ages) can also encourage companies to invest in skills upgrading and job redesign for their older workers."