The policy recently announced at the NDP 2019 Rally by the Prime Minister is overdue and the right one. For the senior citizen community, such a policy will support them working a few more years and allow them to put away more savings when they do retire. The legal retirement age will go up to 63 in 2022 and 65 in 2030 – a slow phased-in approach to allow employers and employees ample time to adjust to the policy changes. Here are the reasons why seniors should welcome this policy.
- With the change in statutory retirement age comes with it some legal protection against termination before the retirement age of 65 – “workers cannot be dismissed on the grounds of age before they reach the retirement age”. Another important number that will shift upwards is the re-employment age – moving up to 70 in 2030. For workers who are healthy, and many will be when they reach 65, they may continue to work past the official retirement age. To make this policy work, the government will need to work closely with the labor unions to ensure there are adequate safeguards against age discrimination. This is good for seniors.
- Better healthcare in Singapore has catapulted Singaporean life expectancy to among the highest in the world – and also in terms of the number of healthy years. But by 2030, 1 in 4 will be over 65 resulting in only 2 in 4 working. The new retirement policy will allow the seniors to continue to contribute financially and will be less of a burden to their children.
- The government made the right decision by staying away from one of the most controversial and sensitive topic to seniors – the “CPF withdrawal policy”. As a provident fund, the CPF is a difficult political balancing act. Allow too much and too early withdrawals means that there is nothing left at the later years. With life expectancy at 85, it probably mean that many will live past that age well into the 90s. NOT changing in CPF withdrawal policy is a smart political move because doing that would create so much noise and anger from the seniors – so much so that it would detract from other more important policy work.
- In line with changes in the retirement age by 2030, the government will slowly normalise CPF contribution rates for 55-60 from the current 26% to the base CPF contribution rate of 37%. This allows workers an extra 5 years of CPF contribution at the base rate to help boost their CPF account balances to account for the expenses needed as they live longer. This change is a no brainer.
- With this policy comes an expectation that the government will continue to put significant amount of monies to help retrain older workers to help them remain relevant in the future workforce. There are already attractive incentives for employers to retrain and rehire older employees – and his is in addition to funding for the individual employees through programs like SkillsFuture. With digital innovation and artificial intelligence technology becoming a reality in near future, retraining is a key component of this policy.
One good thing about the steady hands of the Singapore government is the believe that change needs to be managed carefully when it impacts people’s life. By announcing the policy today to have it take effect slowly over a decade means that society has plenty of time to react and adjust to these changes – and will not pose a “shock” to the community. This is a good approach to policy execution.