Older workers will get a boost to their retirement savings as long as they stay employed.
How the government is tweaking retirement age, re-employment age and CPF contributions to support older workers were outlined by Prime Minister Lee Hsien Loong during the 2019 National Day Rally on Sunday, Aug. 18.
Here are all the facts.
• The retirement age will be increased to 65 by 2030.
• The retirement age was last raised in 1999, when it went up from 60 to 62.
• Retirement age was introduced in 1993.
• The retirement age will be raised from 62 to 63 in 2022 and eventually to 65 by 2030.
• The re-employment age was raised from 65 to 67 in 2017.
• The re-employment age will be increased from 67 to 68 in 2022.
• It will eventually increase to 70 by 2030.
• The concept of re-employment age was pioneered in Japan.
• It was announced in Singapore in 2007, and later legislated in 2012.
• It was seen as a better alternative to raising the retirement age.
• Not that it was not controversial.
• The issue was debated back in 2005.
• The concerns with a higher retirement age then were that costs will go up and productivity will go down for businesses.
• When the re-employment age was raised to 67, eligible employees who turn 62, up to age 67, must be offered re-employment to continue their employment in the company.
How older workers can benefit?
• The first raise of the retirement and re-employment ages will take effect on July 1, 2022, the Ministry of Manpower said.
• Those born on or after July 1, 1960 will benefit from the higher retirement age of 63.
• Those born on or after July 1, 1955 will benefit from the higher re-employment age of 68.
Raising of older workers' CPF contribution rates
• The government will raise older workers' Central Provident Fund (CPF) contribution rates starting from 2021.
• In 2021, the first step will be taken to raise CPF contribution rates for those above 55.
• This will occur over the next 10 years or so “depending on economic conditions”.
• Workers aged above 55 to 60 -- when the changes are fully implemented: Full 37 percent CPF rate.
• After 60: CPF rates will begin to taper down.
• After 70: CPF rates level off.
• Aged above 60 to 65: CPF contribution rate will go up above the current 16.5 percent.
• Aged 65 to 70: CPF contribution rate will go up from 12.5 percent.
• Aged 70: Rate remains unchanged at 12.5 percent.
• Raising CPF contribution rates of older workers to be on a par with that for younger workers is to ensure that older workers shore up retirement savings.
CPF withdrawal policies remain the same
• CPF withdrawal policies and ages will not have any changes.
• The status quo is that some money can be taken out at age 55.
• CPF payouts can start from age 65.
Singaporeans living longer
• Singaporeans are living longer with a life-expectancy at birth of 84.8 years.
• This is the longest in the world, and even higher than Japan.
Government will take the lead
• The government “will implement a support package” for businesses to help them cope.
• The details will be announced by Deputy Prime Minister Heng Swee Keat in 2020's Budget.
• The Public Service Division will raise retirement and re-employment ages of its officers in 2021 instead of 2022.
• This is a year earlier to set the example for other employers.
• Raising the retirement and re-employment ages, as well as the CPF contribution rates, have been more than a year in the making.
• A tripartite workgroup formed in May 2018 studied the situation and put forth these recommendations.