SINGAPORE - By 2030, older Singaporeans who want to continue working on the same employment terms will have the assurance that they can do so up to the age of 65, instead of 62 now.
Central Provident Fund (CPF) contribution rates will also be raised over the next 10 years or so for workers aged 55 to 70, so that they can build up more retirement savings.
Prime Minister Lee Hsien Loong said on Sunday (Aug 18) that these changes, which were recommended by a tripartite workgroup and accepted in full by the Government, "will support older workers to continue working longer and to be more financially independent".
He announced at the National Day Rally that the statutory retirement age will go up to 63 in 2022, and eventually to 65 by 2030.
The re-employment age will also go up from 67 now to 68 in 2022, and eventually to 70 by 2030.
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.
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.
These changes come amid Singapore's life expectancy at birth rising to be the longest in the world at nearly 85 years, which means about half of Singapore residents can now expect to live longer than that, said PM Lee.
"We are healthy for longer, we live longer, but we don't want to spend more years idle in retirement. We want to stay active, engaged, feel a sense of worth and purpose... Also, many of us want to build up bigger nest eggs for when we eventually retire," he said.
PM Lee 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. POFMA will catch you," he said, referring to the Protection from Online Falsehoods and Manipulation Act.
He added 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.
As for CPF contribution rates, they 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.
PM Lee said the higher ages and CPF rates are key recommendations by the Tripartite Workgroup on Older Workers, which was formed last year by the Manpower Ministry and comprises government, employer and union representatives.
He said he met the workgroup members in July for lunch and they told him that they had intense discussions, as older workers wanted to be certain of continued employment for longer, while employers were worried about business costs and the uncertain economic outlook, and wanted more flexibility.
In the end, the workgroup reached consensus.
PM Lee added that the Government will take the lead as a major employer to raise the retirement and re-employment ages in the Public Service in 2021, a year ahead of schedule.
"I encourage private sector companies which can do the same, also to do so," he said.
Enabling seniors to continue working productively takes a joint effort by employers and employees, he said.
Employers must redesign their training, jobs and careers around the abilities and strengths of older workers, while employees must also be ready to adapt, learn new things and take on different responsibilities.
He highlighted two workers who have learnt to do new jobs: DBS employee Nahariah Mohd Nor, 47, who was a bank teller but is now a customer service officer for video teller machines; and Mencast Marine foundry specialist Chan Ban Kiong, 64, who now operates 3D printers to make ship propeller prototypes, instead of making them by hand.
"I hope more companies will likewise help their older workers remain employable well into their 60s," said PM Lee.
Labour MP Heng Chee How, who is deputy secretary-general of the National Trades Union Congress, welcomed the higher retirement and re-employment ages, as they help workers have the choice to work longer.
They also come amid the country's labour constraints which means companies are constantly looking for enough workers, he said.
"We will have to borrow from the rest of the world, and it will become more so in the future, unless we can make better use of our locals as well," he said.
Singapore Business Federation chairman Teo Siong Seng said the group appreciates that the increases in ages and CPF rates are being made incrementally. He noted that the higher CPF contribution rates will impact business costs and competitiveness.
"We hope the raising of the (ages) can also encourage companies to invest in skills upgrading and job redesign for their older workers," he said.