Beginning in the second half of 2017, the re-employment age in Singapore will be raised from 65 to 67.
Before you mutter something about working till you’re in the grave, realise that nobody’s forcing you to work till you’re 65. The age at which you can start receiving CPF payouts is still 65, so no change there.
Up till now, employers have been obliged to offer workers re-employment when they hit 62, up to the soon-to-be previous re-employment age of 65.
When the changes kick in on 1 July 2017, employers will offer workers re-employment when they hit 65, up to the new re-employment age of 67.
That means you will be able to work for two more years, up to age 67 and not 65, if you wish.
In addition, you can now be re-employed by another employer other than whomever you’re working for when you hit 65.
Employers are also barred from reducing your wages when you hit age 60, although to be fair 98.5% of companies don’t do that anymore.
Here’s what the changes mean:
If you haven’t saved up enough for retirement, you now have three more years to do so
You might be one of those people who never want to retire because they think not working is boring, or because they really love their job.
More realistically speaking, though, you might not have scraped together enough retirement savings to comfortably retire at 65.
Being able to enjoy re-employment till you’re 67, rather than 65, can help to lessen your retirement burden considerably. If you’re able to save, say, $1,500 a month for two more years, that’s $36,000 more to add to your retirement fund.
Considering retirement-readiness is a huge problem in Singapore, and most retirees are highly dependent on their children for financial support, anything that makes it possible for workers to continue earning for longer helps.
The vast majority of employers offer re-employment
The current law states that re-employment must be offered to eligible candidates when they hit 62 (soon to be 65).
But in practice, companies can avoid doing so for several reasons. For instance, if the company is not doing well and needs to retrench workers, they may let the retirement-age worker go along with other victims of the retrenchment.
In addition, some workers might not fit the criteria for being eligible for re-employment, such as if they haven’t been working for their employer for at least three years, or the employer assesses that their work performance is not satisfactory.
Still, despite these risks, the data at present looks very favourable for employees who are hoping to be re-employed
In 2015, over 98% of local employees working in the private sector who wished to continue working when they hit age 62 were offered re-employment. 98% of those who accepted re-employment by the same employer did not suffer pay cuts.
Workers now have a better chance of maintaining their salaries till a more advanced age
While you might have seen your salaries rise spectacularly during the first 10 years of your career, once you pass middle age your potential for career growth tends to stall.
In fact, until the recent changes take effect, it is actually legal for employers to lower an employee’s salary by up to 10% when they turn 60, although in practice 98.5% of companies don’t do so.
The reason the law even exists is because wage systems used to be based on seniority, which means that regardless of your productivity and performance your wages would increase just because you were getting older.
These days, as we all know, things don’t work that way in the private sector, and employees are more likely to fear retrenchment as they inch upwards in seniority than congratulate themselves on getting paid more just by being there. This law will soon be changed so that employees need not fear their pay getting reduced at age 60.
In reality, however, when some employers offer re-employment contracts starting at age 62 (soon to be 65), they might try to work in a pay cut. In addition, in the lead up to the re-employment age, many employees complain that their careers tend to stall as employers withhold decent annual increments and bonuses.
Be that as it may, the raised re-employment age and abolished right to reduce salary at age 60 are the first steps towards taking a longer term view of employees’ roles in the workplace.
Edit: After the changes kick in, workers will be granted re-employment contracts until they hit the new re-employment age of 67. The statutory retirement age has not been changed, and is still 62. Sorry for the mistake previously!
At what age do you hope to retire? Tell us in the comments!
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