Parliament: Govt, unions and employers agree retirement, re-employment ages should be raised

The Tripartite Workgroup on Older Workers said that the increases in the retirement and re-employment ages should be implemented in small steps over time because employers will need to make considerable adjustments. ST PHOTO: KUA CHEE SIONG

SINGAPORE - The first step for raising the retirement and re-employment ages beyond 62 and 67 respectively has been taken, as the Government, unions and employers agreed on the need for these changes.

The tripartite consensus is a "significant milestone", said Manpower Minister Josephine Teo on Tuesday (March 5), sharing an update given to her by the Tripartite Workgroup on Older Workers, which has been looking at this issue and others since May last year.

The group will now work towards a tripartite agreement on how far and how fast the ages should be raised.

Mrs Teo told Parliament that the workgroup, to which she is an adviser, believes that a higher retirement age will motivate both workers and employers to invest in skills upgrading and job redesign for older workers, as people enjoy more years of good health.

The re-employment age, up to which firms must offer eligible workers re-employment, though they have the flexibility to change job scopes and employment terms, also remains useful.

The workgroup said that the increases in the retirement and re-employment ages should be implemented in small steps over time because employers will need to make considerable adjustments. It is also critical to ensure employment arrangements remain flexible.

"Our economy is diverse, both in terms of business models and operational needs. Workers, too, have different preferences. We must therefore avoid being overly prescriptive when setting new rules," said Mrs Teo, during the debate on her ministry's budget.

She said that other countries raising their retirement ages typically announce their intentions five to 10 years in advance, and the moves are relatively modest. For example, Denmark's retirement age is set to go up from 65 to 68 by 2030, over 11 years.

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In Singapore, the re-employment age was discussed from 2007, before it became law in 2012.

Mrs Teo noted that in many other countries, it has been very hard to move on such issues. "Deep distrust and division prevent people from focusing on the future... We must try and avoid that and do better," she said, adding that this is why the workgroup has consulted workers and unions, as well as employers, to balance views on both sides.

Although there have been calls for the statutory retirement age to be removed entirely, including one by Non-Constituency MP Daniel Goh during Tuesday's debate, Mrs Teo said such a move would be "bad news" for workers.

When a company does away with a retirement age, its workers can continue working as long as they want to, she said. But if the retirement age is removed from the law, employers no longer have any obligation to keep their workers up to a particular age.

The workgroup will continue to look at the Central Provident Fund (CPF) contribution rates for older workers, balancing the need to help improve retirement adequacy and ensure older workers remain employable, said Mrs Teo. But the age from which CPF members can receive their payouts will remain unchanged at 65, even when the retirement age and re-employment age are raised, she said.

Responding to MPs Foo Mee Har (West Coast GRC), Png Eng Huat (Hougang) and Sylvia Lim (Aljunied GRC) who asked about retirement adequacy, Mrs Teo said that retirement adequacy is improving, with more than six in 10 active CPF members turning 55 last year being able to meet the Basic Retirement Sum of $85,500.

The issue will be discussed more fully when the workgroup makes recommendations on CPF contributions for older workers later this year, she said.

The ministry is also reviewing the WorkPro scheme to see whether it should be extended beyond June this year, said Mrs Teo. The scheme covers the Job Redesign Grant and Age Management Grant, which fund efforts by employers to make their workplaces more age-friendly.

Over 1,750 companies with about 20,000 older workers have used the Job Redesign Grant since it was enhanced last year, while over 250 companies with 3,800 older workers have used the Age Management Grant.

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