Deputy Prime Minister Heng Swee Keat has decided to step aside as leader of the People's Action Party's fourth-generation (4G) team, and pave the way for a younger person with a longer runway to lead the country when Prime Minister Lee Hsien Loong retires.

Mr Heng, who turns 60 this year, cited the long-term and profound challenges of the Covid-19 pandemic, his age and the demands of the top job as reasons for his decision.

"This year, I am 60. As the crisis will be prolonged, I would be close to the mid-60s when the crisis is over. The 60s are still a very productive time of life," he said.

"But when I also consider the ages at which our first three prime ministers took on the job, I would have too short a runway should I become the next prime minister then. We need a leader who will not only rebuild Singapore post-Covid-19, but also lead the next phase of our nation-building effort."

Singapore's first prime minister Lee Kuan Yew was 35 when he took on the job, his successor Goh Chok Tong was 49 and PM Lee was 52.

Mr Heng, who said his decision was taken after careful deliberation and discussion with his family, said: "I have decided to step aside as leader of the 4G team so that a younger leader who will have a longer runway can take over." He added that he had made the decision with the best interests of Singapore and Singaporeans at heart.

PM Lee said he understood and respected Mr Heng's decision. Mr Heng will stay on in the Cabinet as DPM and Coordinating Minister for Economic Policies. As had been earlier planned between the two men, he will relinquish his finance portfolio when a Cabinet reshuffle takes place in two weeks. Mr Heng will also remain the PAP's first assistant secretary-general.

Noting that Mr Heng has done exceptional work as Minister for Finance, especially in the past year, PM Lee said: "I thank you for your selfless decision to stand aside. Your actions now are fully in keeping with the spirit of public service and sense of duty that motivated you to step forward when I asked you to stand for election in 2011."

The 4G leadership issued a statement saying it respected and accepted Mr Heng's decision, and that it must have been a difficult one to make. "But no one could have foreseen the disruption of Covid-19, the great uncertainty it has created and its long-lasting impact. We know that he has made the decision with Singapore's long-term interests at heart."

The statement, which bore the names of 30 office-holders, the Speaker of Parliament and the secretary-general of the NTUC, noted the critical role Mr Heng played in leading key initiatives, including delivering five Budgets last year.

It also said that tackling Singapore's pressing immediate challenges and ensuring that the country emerges stronger from this crisis remain the foremost priority.

"Under these circumstances, the 4G team will need more time to select another leader from amongst us. We have therefore requested PM Lee Hsien Loong to stay on as Prime Minister until such time when a new successor is chosen by the team and is ready to take over. We are grateful that PM has agreed to our request."

The statement added that this "unexpected turn of events is a setback for our succession planning", and sought Singaporeans' support and understanding.

The shocking news was announced at a 4.30pm news conference at the Istana yesterday. Facing the media were PM Lee, Mr Heng and seven other ministers who are in the PAP central executive committee. They included 4G ministers Chan Chun Sing and Ong Ye Kung, both 51, who had in earlier years been touted as contenders for the role of 4G leader, as well as younger ministers Lawrence Wong, 48, and Desmond Lee, 44.

Mr Heng, a former top civil servant, had been chosen by his PAP peers as "first among equals" in 2018, and was on track to be Singapore's fourth prime minister when PM Lee retired. While there was a question mark about his health after he had a brain aneurysm during a Cabinet meeting in May 2016, he fully recovered.

PM Lee, 69, had said he aimed to hand over the reins of power by the age of 70 in February next year. But the pandemic appeared to have affected the succession timeline. In July last year, when Singapore held its general election, PM Lee said he would see Singapore through the crisis and hand the country over "intact and in working order" to his successor.

Speaking at the news conference, Mr Heng - who was his usual relaxed and smiling self - said that when he joined politics, it was not with an ambition to become the prime minister.

Asked if the 2020 General Election results had a part to play in his decision, Mr Heng said it had not. In a surprise move, he had moved from his Tampines GRC ward to East Coast GRC. The PAP won East Coast GRC, considered a shakier ward for the party, with 53.41 per cent of the votes.

On when the 4G might decide on a new leader, PM Lee said: "I think they will take longer than a few months, but I hope that they will reach a consensus and identify a new leader before the next general election. I have no intention of staying on longer than necessary."