Delaying retirement and higher CPF contribution rates good for workers

FINANCIAL adequacy in retirement is a daunting issue for many Singaporeans, particularly as rising longevity demands that savings be stretched for longer than one may have reckoned for. In this regard, Prime Minister Lee Hsien Loong delivered good news for workers in his National Day Rally address.

One is the extension of retirement age in stages, from the current 62 to 63 in 2022, and eventually 65 by 2030. The re-employment age will also rise from 67 currently to 68 in 2022, and eventually to 70 by 2030. Second is the raising of CPF contribution rates for older workers. The rates for those age 55 to 60, for instance, will rise by 11 percentage points to 37 per cent over the next 10 years, putting the rates for older workers back on par with younger workers. Those were the key recommendations of the Tripartite Workgroup on Older Workers, set up last year by the Ministry of Manpower. The pace at which CPF contribution rates will rise will "depend on economic conditions".

For workers, the option of being able to stay employed longer proffers a number of benefits beyond remuneration alone. Work enables seniors to stay active and engaged, which enhances overall health. Prudential blazed a trail last year when it scrapped retirement age, enabling its 1,100 employees to remain on the job, drawing the same salary and benefits, including medical. Working longer will clearly enhance savings, allowing workers to delay income payouts from CPF Life, for example, thereby reducing the chance that they might outlive their savings.