Remember the days when your parents talk about retiring at 55? That number has gone up over the years and is now 62. So what is all the fuss about that number? Well, it is all about law, politics and money. Here is what you need to know how this number impacts you!
- If you are a Singaporean and joined your employer before you turn 55, you enjoy certain protections under the Retirement and Re-Employment Act (RRA). While your employment may be terminated for other reasons, your company cannot ask you to retire before the minimum retirement age of 62 – it literally mean the day you turn 62! If you feel you have been wrongly asked to retire before that, you have one month to appeal to Ministry of Manpower.
- By 2030, one-in-four persons will be above 65 and this group forms a crucial political voting block. In 2040, Singapore lifespan is expected to reach 85.4 years – the third highest after Japan and Spain. Changing the retirement age is a political hot potato and is often not well received — the general complain is that the government would like us to “keep working until we drop”! The reality is that Singapore’s ageing society will put a huge strain on the country’s finances as there will only be two persons in the work force for every person over 65. Therefore it is not surprising that it is a tough balancing act — and it is likely that the government will further increase the retirement age in pursuit of “productive longevity” to help with the country’s finances. Watch this space.
- To the average citizen or permanent resident, this is also about money that they have dutifully paid into the Central Provident Fund(CPF). Currently, the two numbers that matter are 55 and 65. According to CPF website, “from their payout eligibility age (65 years old), members born in 1958 or after also have the option to withdraw a lump sum of up to 20% of the savings in their Retirement Account as at their 65th birthday. This includes the first $5,000 that can be withdrawn at 55.” Another important thing happens at 65 — that is when your CPF LIFE payout starts. So if the government increases the legal retirement age, it is only logical that it will also impact CPF withdrawal and payout age at some point.
In Asia, Japan is the world leader is ageing. Policy makers in Japan are looking to ask employers to allow employees to stay employed until 70. Is this something that we can expect in Singapore as well?