News

Plan to Raise Retirement and Re-employment Ages Will Continue as Promised on 1 Jul 2022

2021-03-04 , 12:40 pm

From 1 Jul 2022, the statutory retirement age will be adjusted to 63 years old, and the re-employment age to 68 years old.

The public service will lead by example and raise the ages a year ahead of the regulation from 1 July 2021.

This move will affect around 146,000 officers, Manpower Minister Josephine Teo revealed on 3 Mar 2021.

By doing so, they’ll be on schedule to raising the retirement age to 65 years old, and re-employment age to 70 by the end of the decade, says Ms Teo.

What is This All About?

According to the Ministry of Manpower (MOM), here’s the purpose of the retirement age.

As long as you are a Singapore citizen or Permanent Resident (PR) and joined your employer before you turned 55 years old, they can’t ask you to retire before you reach the retirement age.

Of course, after you hit the retirement age, you can still continue working for your company.

That’s as long as you fulfil the following criteria:

A Singapore citizen or PR
Worked for your employer for at least 3 years before you hit the retirement age
Satisfactory work performance
Medically fit to continue working
Born on or after 1 Jul 1952

When you’re re-employed, you will not be employed on a permanent basis, but on a one-year contract basis instead.

Increase CPF Contribution For Senior Workers

The increase in Central Provident Fund (CPF) contribution for senior workers was announced back in August 2019.

The change was supposed to be implemented in Jan 2021, but was pushed back for reasons that are obvious.

It has been scheduled for 1 Jan 2022, which will see employers and workers contribute 0.5 to 1 per cent more for workers aged 55 to 70 years old.

Giving Older Workers An Opportunity To Work Longer

While most, if not all of us, wish that we can retire earlier and enjoy our golden years, most of us are not financially ready to do so.

In fact, we’re probably all holding on to our jobs as long as we can.

With the increase in retirement and re-employment age, Ms Teo says, older workers will have the chance to work longer and save up more for their retirement.

“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.”

She pointed out that when it comes to median incomes and CPF monies, the older workers have “fallen far behind” their younger counterparts.

By raising the CPF contribution rates, it’ll also increase the payouts they’ll get in the future.

It was added that half of the increase will be absorbed through the CPF Transition Offset scheme for the employers, and 8% of wage offset for the next two years by the Senior Employment Credit.

Creating A New Norm

The Senior Worker Support Package, which gives wage subsidies and CPF contribution offsets to employers who hire older workers, was announced in 2020.

And since then, it has supported 1,700 companies with 17,000 senior workers.

The budget for the scheme will have another S$200 million injected to benefit another 75,000 senior workers.

However, the goal here is to create a norm where companies raise their retirement age to 65 years old, and re-employment age to 70 years old well before the deadline in 2030.

The Lifetime Retirement Investment Scheme

Yes, you can use your CPF monies to invest.

But did you know that the Singapore government actually considered a scheme for CPF that can earn you higher interest?

Called the Lifetime Retirement Investment Scheme, it’s meant for those who are willing to take risks but do not have enough investment knowledge to invest.

However, due to COVID-19 and how it subsequently changed the investment environment, they will need to bring it back to the drawing board and update planning assumptions.

More information will be revealed when they are ready, Ms Teo says.

Feature Image: joyfull / Shutterstock.com