COME July 1, 2017, the re-employment age will be raised from 65 to 67. At the same time, the law supporting a pay-cut of up to 10 per cent for workers reaching 60 will be removed.
Announcing these changes in Parliament, Minister of State for Manpower Sam Tan recalled that a commitment was made to raise the re-employment age at an appropriate time following the introduction of the Re-employment Act four years ago.
And in his National Day Rally speech last year, Prime Minister Lee Hsien Loong said the government would extend the re-employment age to 67 by 2017.
Mr Tan said that until then, the government will continue supporting employers who voluntarily re-employ older workers beyond 65, "so the additional wage offset of 3 per cent for employers who re-employ workers above 65 will similarly be extended to July 1, 2017".
The re-employment law will also be amended to enable a new employer to take on the re-employment obligations of a worker's original employer, if the employee agrees.
The Employment Assistance Payment, given to employees when re-employment is not possible, will also be increased.
Mr Tan said the Tripartite Guidelines on Re-employment of Older Employees has been updated and will be released soon.
As for the removal of the law backing the pay-cut for employees reaching 60, Mr Tan said that, with flexible and performance-based wage systems now entrenched, more than 98 per cent of employers no longer reduce the wages of their workers who hit 60, "so the wage-cut provision is no longer relevant".
The cut was introduced in 1999, when the minimum retirement age was raised to 62 and when older workers were less wage-competitive because of rigid seniority-based wages.