SINGAPORE: Given that the newly announced increases in retirement and re-employment ages, as well as Central Provident Fund (CPF) contribution rates for older workers, will be rolled out incrementally, companies will get more time to make the necessary adjustments.
This is according to the Singapore Business Federation on Sunday (Aug 18), which expressed its support for the announcements made by Prime Minister Lee Hsien Loong during his National Day Rally speech.
The business body said it is calling on its 26,100 member-companies to do the same.
In “gradual steps”, Singapore will raise its retirement age and re-employment age to 65 and 70 respectively by 2030, said Prime Minister Lee Hsien Loong in his National Day Rally speech.
The retirement age, which is currently at 62, will go up to 63 in 2022 before being raised further to 65 by 2030. Similarly, the re-employment age of 67 will go up to 68 in three years’ time, and then to 70 by 2030.
Increases in CPF contribution rates for those above the age of 55 will also be made to help older workers be more financially independent.
Sunday’s announcements come nearly 15 months after the formation of a tripartite workgroup to study the issue of older workers.
Discussions within the workgroup had been “intense”, according to Mr Lee, with employers expressing concerns about costs given the uncertain economic outlook.
READ: NDR 2019: New retirement, re-employment ages of 65 and 70 by 2030; higher CPF contributions for older workers
READ: More than 50 firms voluntarily raise retirement, re-employment ages: Ng Chee Meng
To help businesses, the Government will implement a support package, with more details set to be announced during next year’s Budget.
SBF chairman Teo Siong Seng said: “We are heartened to note that the Government will help businesses to adjust to these new arrangements through a support package.”
He also added that the business body appreciates the incremental roll-out of the changes, with the adjustments in CPF rates set to take into account economic conditions.
This is “helpful” for companies, especially small- and medium-sized enterprises.
“The increase in CPF contribution rates will impact business costs and competitiveness,” Mr Teo said.
“This is especially so when our companies, across different sectors and industries, are facing unique challenges in today’s uncertain global climate.”
He added that the business body will work closely with companies to understand and address concerns about the costs of retaining and training older workers, which could include healthcare needs such as insurance and medical leave.
The federation said: “For Singapore, a small country with a tight labour market where companies are continuously confronted by talent shortage, these mature and experienced workers are a valuable pool of talent.”
“With medical advances, Singaporeans today enjoy more years of good health and can remain productive at work for more years,” added Mr Teo.
The increase in CPF contribution rates will also help encourage more experienced workers to remain in the workforce and help them build up their retirement funds.
“It is a good thing, given Singapore’s tight labour market. This also lessens the inequality in CPF contributions for our older workers,” the SBF chairman said.