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Changes to retirement, re-employment and CPF rules for a more inclusive economy

Changes to retirement, re-employment and CPF rules for a more inclusive economy

Source: Straits Times
Article Date: 03 Nov 2021
Author: Grace Ho

The Retirement and Re-employment (Amendment) Bill will raise the retirement age to 63 and re-employment age to 68 on July 1, 2022.

Should people be allowed to work as long as they want, no matter how old they are?

This was one of the central questions raised during the debate on the Retirement and Re-employment (Amendment) Bill and Central Provident Fund (CPF) (Amendment) Bill, which were passed yesterday.

It is a valid question as the population ages and medical advances allow people to stay healthier longer.

If Singapore is truly anti-ageist, said Ms Sylvia Lim (Aljunied GRC), it should leave retirement and re-employment ages to individual choice, while enacting an anti-discrimination law to prohibit age-based employment decisions.

The Retirement and Re-employment (Amendment) Bill will raise the retirement age to 63 and re-employment age to 68 on July 1 next year, up from 62 and 67.

The CPF (Amendment) Bill will simplify the CPF system, such as by making it easier for CPF members to receive retirement payouts, having higher tax relief caps, and reducing the time that CPF money is retained after death.

There are no changes to CPF withdrawal rules, such as the minimum lump-sum withdrawal age of 55 and automatic retirement payout age of 70.

Does Ms Lim's suggestion mean that Singapore should abolish mandatory retirement policies - such as in the United States, where age-based forced retirement is illegal except in certain industries and occupations?

The global evidence for this is inconclusive. For one thing, a lack of such policies may lead to unsafe work practices. Age does matter in some risky fields, such as certain military and medical roles.

Age legislation, without concurrent policies to encourage seniors to work, also does not seem to increase their participation rates significantly.

As Mr Heng Chee How (Jalan Besar GRC) pointed out, the statutory retirement and re-employment ages are still important as a floor and safeguard against employers who may not be as progressive.

The retirement age sends "a clear signal" to employers to keep older workers on the job, said Mr Heng. There should be more allowance for episodes of displacement, and more help rendered when these mature workers are in between jobs.

Two areas with room for further financial calibration are: short-term salary support, and Employment Assistance Payment (EAP), which is offered when an employer has considered all available re-employment options within the organisation and is still unable to identify a suitable job for the employee.

Mr Patrick Tay's (Pioneer) proposal for salary support was up to 50 per cent, capped at $3,800 per month for six months.

The tripartite partners have agreed to increase the minimum and maximum EAP amounts from July 1 next year. Currently, the one-off payment is equivalent to 3.5 months' salary, subject to a minimum of $5,500 and maximum of $13,000.

Manpower Minister Tan See Leng's point is understandable - if the EAP is too high, it may deter employers from hiring job seekers who are approaching retirement age.

But it should also be reviewed and increased over time. The amount must be high enough to nudge the right behaviour, so that companies have the incentive to find suitable internal vacancies for older workers instead of cursorily kicking them to the kerb because it is the cheaper alternative.

Another point raised in Parliament was the CPF payout age.

Associate Professor Jamus Lim (Sengkang GRC) called for the payout eligibility age to be lowered from the current 65 to 60 so that those nearing retirement can make other choices such as taking on a new part-time job. On the other hand, Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) observed that the pension withdrawal age in the Netherlands is being gradually raised to 67.

This is a longstanding and visceral issue for some Singaporeans.

The launch of CPF Life in 2009, along with the progressive increase in payout eligibility age (PEA) from 60 to 65, caused some unhappiness that the goalposts to access one's hard-earned money kept shifting.

This was even though the rationale for the move, such as increasing life expectancy and concerns that some members did not have enough savings to last their lifetimes, had been explained.

Dr Tan reiterated on Tuesday that the PEA is not linked to the retirement or re-employment age.

Members will also continue to have the flexibility to make lump-sum withdrawals from age 55, years before they start their CPF monthly payouts; and have the option to defer payouts for higher monthly payouts.

If there was one takeaway from the last two days, it is that legislation is not everything. There are larger issues here which will take more than one Parliament debate to resolve.

First, the need for structured and timely work conversations.

The Tripartite Guidelines on the Re-employment of Older Employees make clear that employers should engage employees at least six months before they reach retirement age. But one can imagine that not all employers do so.

As pointed out by Mr Sharael Taha (Pasir-Ris Punggol GRC) and Nominated MPs Abdul Samad and Janet Ang, how many companies actually have structured career planning conversations with their employees, let alone those in their 40s or 50s who are especially vulnerable to disruption?

Such conversations allow training needs and suitable job roles to be identified early. Workers will also be more motivated to pick up new skills if they have a clearer picture of how they fit in their companies' future.

Second, the need to adjust culture and mindsets, both as a society and as businesses.

How can Singapore have truly age-friendly workplaces if recruitment ads are full of young faces?

How can small and medium-sized enterprises be better supported, so they have the bandwidth and resources to redesign jobs to tap the strengths of seniors?

Other suggestions worth studying include: Extending the Senior Employment Credit beyond next year, mandating human resources practitioners to attend courses on fair employment practices, and having a fair employment practices champion in each company, similar to what is being done for workplace safety today.

The intent of the law is not for people to work till they drop dead. There will always be those who do not wish to continue working and the Bills passed yesterday do not change that.

Rather, they are meant to make employers exercise their responsibility to allow older workers to work longer if they want to.

On the CPF front, it will also be easier for members to build up their retirement nest egg, as well as to receive retirement payouts - all of which will lead to a more inclusive economy and society.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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