Changes to Retirement Age and Re-employment Age in Singapore
The mandatory retirement age in Singapore is currently 62 years old which means that Singaporeans legally retire on the exact day they turn 62 years old. This is in accordance with the Retirement and Re-Employment Act (RRA).
Increase in Retirement Age Announced
However, on August 18, the Prime Minister of Singapore announced that the retirement and re-employment age will be increased to 65 and 70 respectively by 2030, alongside increases in the Central Provident Fund (CPF) contribution rates for older workers.
This announcement is a result of the Government accepting recommendations put forward by a tripartite workgroup studying the country’s ageing workforce.
The retirement age will increase to 63 in 2022 before being raised further to 65 by 2030. Similarly, the re-employment age will increase to 68 in three years’ time, and then to 70 by 2030.
CPF contribution rates will also be raised for workers above the age of 55. Currently, the total CPF contribution rate is 37 per cent for workers up to 55 years old. It drops progressively as the age band increases: 26 per cent for workers aged 55 to 60, 16.5 per cent for those aged 60 to 65, and 12.5 per cent for those above 65.
The first adjustment in the CPF contribution rates is set for 2021 and will be followed by subsequent increases gradually. According to Prime Minister of Singapore, the whole process will take “10 years or so … but it will depend on economic conditions”.
He also stressed that these newly announced adjustments do not affect CPF withdrawal policies or withdrawal ages.
Most Seniors Prefer to Keep Working
Earlier this year, the Tripartite Workgroup on Older Workers agreed on the need to raise the country’s retirement and re-employment ages. The group was formed over one year ago and is made up of representatives from the Government, employers, and unions.
Singapore’s Prime Minister explains that with an average life expectancy of nearly 85 years, Singaporeans are healthy and living for longer, with most seniors preferring not to stop working.
“We don’t want to spend more years in retirement,” he said. “We want to stay active and engaged, to feel a sense of worth and purpose … Also, many of us want to build up bigger nest eggs for when we eventually retire. Therefore, many of us have multiple careers in a lifetime,”
The changes will involve having employers re-design their training, jobs and careers around the abilities and strengths of senior workers, thus preparing them for having the right mindset as jobs change or disappear.
The Singaporean Government is prepared to support both employers and employees in this area and will be giving a “support package” to help both parties adjust to the changes in the retirement age, re-employment age and CPF contribution rates. More details on this will be announced by the Deputy Prime Minister in next year’s Budget speech.
Additionally, the Singaporean Government will also be taking the lead by raising retirement and re-employment ages earlier in 2021, instead of 2022, for members in public service.