Manpower Minister Josephine Teo has confirmed that raising the Singaporean retirement age to 63 and the re-employment age to 68 will proceed as planned on July 1, 2022. The increase of Central Provident Fund (CPF) contribution rates in Singapore for older Singapore workers will also take effect on January 1, 2022.
On raising the Singaporean retirement age and the re-employment age, Mrs Teo said, " This will help to keep us on track to raise the Singaporean retirement age to 65 and re-employment age to 70 by the end of this decade".
The raising of CPF contribution rates in Singapore for senior workers, which was originally intended to take place on January 1 of this year, would have seen both workers and employers give either 0.5 percent or one percent more in contributions for workers aged 55 to 70. The move was delayed to help businesses contend with rising costs due to the COVID-19 pandemic.
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Government Initiatives on Raising Singaporean Retirement Age
Mrs Teo says she has three priorities for 2021: ensuring jobs rebound in the short-term, supporting business transformation, and helping every sector of the workforce, including senior workers. All three would contribute to the larger goal of Singapore emerging stronger post-pandemic.
Going forward with raising the ages will give senior workers the ability to work longer and enable them to build their retirement savings for the future, said Mrs Teo.
The plan for raising the Singaporean retirement age and re-employment age have been in the works since 2019, prior to the COVID-19 pandemic.
Mrs Teo also made it clear that senior workers have lost their standing to younger workers in terms of median incomes, not to mention CPF savings.
The Government pledged a $1.3 billion Senior Support Worker Package in July 2020, which allows for the Part-time Re-employment Grant and the Senior Worker Early Adopter Grant, which are intended to help employers increase the re-employment and retirement ages, respectively.
Since their announcements last year, 17,000 senior workers across 1,700 companies have been assisted, according to Mrs Teo. Both schemes will be increased by more than $200 million in an effort to help more than 75,000 older workers.
"But the larger goal is to create the momentum and shape a new norm among employers, where many more companies raise Singaporean retirement age and re-employment age to 65 and 70, well before 2030," she added. "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 percent more per month for life."
Mrs Teo also noted that raising the CPF contributions in Singapore for workers aged 55 and over will provide larger payouts to those workers.
The CPF Transitions Offset scheme will absorb half of the increase for employers. Additionally, the Senior Employment Credit will also give up to 8 percent of wage offsets until the end of 2022, where a possible extension will be considered.
Change in Risk Appetite Among Seniors in Singapore
Louis Chua, MP for the Workers’ Party, queried if MOM could offer CPF members alternatives to earn higher annual returns through government investment vehicles.
Mrs Teo dismissed the idea, saying "there is no magic formula" to assisting CPF members in earning larger returns, especially if it requires "taking higher risks".
She revealed that before the COVID-19 pandemic, the Government was, in fact, considering a Lifetime Retirement Investment Scheme for CPF members who " have the risk appetite and investment horizon but not enough investment knowledge".
However, the pandemic effects have made it clear that the investment landscape has changed, along with the appetite for risk amongst senior investors.
To sum up, the Singapore government’s initiatives serve to incentivise employers in raising the Singaporean retirement age and re-employment age, by reducing the costs incurred. At Rikvin, we help companies navigate through such schemes to ensure that you are benefitting from them. Engage us now on to learn more on such schemes and how you can upskill your senior employees.
- The Singaporean retirement age and re-employment age will be raised to 63 and 68 respectively in 2022.
- The government has rolled out the following schemes and grants:
- $1.3 billion Senior Support Worker Package
- Part-time Re-employment Grant
- Senior Worker Early Adopter Grant
- CPF Transitions Offset scheme
- Senior Employment Credit
- $1.3 billion Senior Support Worker Package
- The benefit is that raising the CPF contributions in Singapore will provide larger payouts for workers aged 55 and above.
- The Lifetime Retirement Investment Scheme is for CPF members who have the risk appetite and investment horizon, but lacks sufficient investment knowledge. However, this was halted due to the changes in risk appetite among senior investors brought by the pandemic.
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