Q How did the changes come about?
A The Tripartite Workgroup on Older Workers was formed in May last year to look at issues concerning older workers. It has representatives from the Government, employers and unions, which is important as employers and workers have different concerns.
For instance, older workers may want the option to work as long as they want, but companies may be worried about ensuring they can contribute productively and also about footing their insurance bills.
The group heard from more than 1,500 people, and the proposals were what was eventually agreed on by both the employer and union sides. It released its report on Monday.
Q Why the need for these changes?
A Singapore's population is greying very fast. By the end of the next decade, 2030, the number of Singaporeans aged 65 and above will almost double to reach 900,000.
The Government wants to get people and companies prepared, both mentally and financially.
A higher retirement age does not mean people must work until that age. They can retire any time they want, but companies cannot dismiss them because of age before the retirement age. So, rai-sing the retirement age extends the protection for older workers.
Businesses will eventually have no choice but to employ more older workers because of demographics. Having this push should encourage them to start looking at how to better allocate resources so their older workers can continue contributing meaningfully to them.
Q Why the higher CPF contributions, and will they cost businesses?
A Higher CPF contributions are meant to help workers save more for their retirement and CPF Life payouts as they can earn up to 6 per cent interest. The additional contributions will go into the Special Account, which accrues the highest possible interest.
For the first increase in CPF rates in 2021, employers and workers will each increase their contribution by either 0.5 percentage point or 1 percentage point for workers aged 55 to 70, based on the worker's age.
For someone who was 55 in January this year and earns $3,000 monthly, both he and his employer contribute 13 per cent, or $390 a month, to his CPF savings. In January 2021, the contribution rates for each party would go up to 14 per cent, or $420 a month. That is $360 more in contributions each year.
To help businesses cope, the Government will announce a support package next year.
Q How can companies help older workers work longer?
A They can redesign more manual jobs so that technology does the tough part and older workers can do higher value-add work. There are also firms which have implemented wellness programmes like health screenings and nutrition advice to help their workers stay healthy.
Some progressive companies have already gone ahead to raise or remove their retirement age. Also, insurance firm Prudential recently announced it will contribute more to older workers' CPF accounts if the workers also contribute more. Workers can choose whether to prioritise having cash for immediate spending or building up more retirement savings in their CPF accounts.