SINGAPORE - Raising the statutory retirement age to 63 and the re-employment age to 68 will go ahead as planned on July 1 next year, said Manpower Minister Josephine Teo on Wednesday (March 3).
The public service will also fulfil its earlier commitment to raise the ages a year ahead of legislation for its roughly 146,000 officers on July 1 this year, she added.
"This will help to keep us on track to raise the retirement age to 65 and re-employment age to 70 by the end of this decade," Mrs Teo said during the debate of her ministry's budget.
Meanwhile, the raising of Central Provident Fund (CPF) contribution rates for senior workers will also go ahead on Jan 1, 2022, "barring any unforeseen circumstances".
The increase, which was to have taken place on Jan 1 this year, would have seen employers and workers contribute either 0.5 percentage point or one percentage point more for workers aged 55 to 70, based on the person's age. It was deferred by a year to help employers manage costs amid the Covid-19 pandemic.
Mrs Teo was laying out the Ministry of Manpower's three priorities for 2021, which involve securing the jobs rebound in the short term by shoring up the hiring of locals through the extension of the Jobs Growth Incentive, a wage subsidy scheme, and supporting business transformation.
The third priority is helping every segment of the workforce - including senior workers - emerge stronger from the pandemic.
Going ahead with the age rises as planned will provide older workers with the choice to work longer and help them build up more savings for their retirement, said Mrs Teo.
The move to lift the statutory retirement and re-employment ages were first announced in 2019.
Mrs Teo noted that older workers had fallen far behind younger ones when it came to median incomes and amounts accumulated in their CPF accounts.
The $1.3 billion Senior Worker Support Package was announced last year, which includes the Senior Worker Early Adopter Grant and the Part-time Re-employment Grant, to help employers in raising the retirement and re-employment ages.
Since the grants were introduced last July, 1,700 companies with 17,000 senior workers have been supported, said Mrs Teo, adding that the budget for the scheme will be topped up by more than $200 million to benefit 75,000 more senior workers.
"But the larger goal is to create the momentum and shape a new norm among employers, where many more companies raise retirement and re-employment ages to 65 and 70, well before 2030," she noted.
"A senior worker who can leave the workforce at age 70 instead of 67 and defers the start of his CPF Life payouts accordingly, can get around 20 per cent more per month for life."
Raising the CPF contribution rates for those 55 and above will further increase the amount of payouts they get, she added.
Half of the increase will be absorbed for employers through the CPF Transition Offset scheme. The Senior Employment Credit will also provide up to 8 per cent of wage offset for the next two years until the end of 2022, with a possible extension later, said Mrs Teo.
On Tuesday, Workers' Party MP Louis Chua (Sengkang GRC) asked the MOM to consider offering CPF members options to earn higher investment returns through government investment vehicles.
Mrs Teo said "there is no magic formula" to helping CPF members earn higher returns, which involves "taking higher risks".
She added that before the pandemic, the Government was looking at introducing a Lifetime Retirement Investment Scheme for CPF members who "have the risk appetite and investment horizon but not enough investment knowledge".
But the pandemic has changed the investment environment and planning assumptions need to be updated, said Mrs Teo, adding she will share details when they are ready.
Correction note: An earlier version of this story referred to the CPF Transition Offset scheme as the CPF Transition Offset Package. This has been corrected after MOM's clarification.