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Singapore's plan to raise retirement age sparks debate

Experts see Singapore on track to setting retirement at 65 and re-employment at 70 by 2030.

In six years’ time, Singapore is set to shelter one in four citizens aged 65 and older, with the majority of them expressing a desire to remain in the workforce.
 
Following the previous hike in retirement and re-employment ages to 63 and 68, respectively, in 2022, Singapore has announced its plan to further elevate these thresholds to 64 and 69, respectively, in 2026. The goal is set 65 as the threshold for retirement and 70 for re-employment by 2030.
 
Last year, over 90% of senior workers who were eligible and wished to continue working were offered re-employment opportunities. This measure represents a step forward in Singapore’s pursuit of broader workplace inclusivity.
 
“Raising the retirement and re-employment ages would create more opportunities for our seniors to participate more and for longer in the labour market. This also enables businesses to tap into a wider workforce,” Ang Tze Phern, partner for the Employment Group at Rajah & Tann, told the Singapore Business Review.
 
In taking this course of action, the government needs to consider four key factors, said Ang: life and healthy years expectancy; timing and pace; government support; and terms of re-employment.
 
All of these have been considered by the Singapore government, which is why it is gradually implementing the age thresholds until it meets the targeted ages by 2030. Additionally, there are measures in place to provide security and support for both employers and senior workers.
 
Viewing another perspective, Seow Hui Goh, partner and head of Bird & Bird’s Singapore Employment Group, told Singapore Business Review that from a socio-economic standpoint, the strategy is logical.

“People are living longer… want to work longer, and people are also healthier. So… it makes sense to raise the retirement and re-employment ages, which have consistently been going up,” Seow said.
 
“The retirement age isn’t mandatory. It’s just a minimum retirement age [and] you don’t have to force someone to retire at that retirement age. I think it’s pretty unique globally, [as] it’s based on the idea that people should work into their old age for as long as they are able, and willing to do so,” she added.
 
The Survey on Retirement and Employment carried out by PAPSG and NTUC U Women and Family (NTUC U WAF) showed that approximately 88% of participants aged 50 and above support a retirement age of 63 or older, whilst around 80% support raising the re-employment age to 68 or higher. The survey collected responses from 1,471 individuals from 7 to 21 August 2023.
 
“Culturally, and [philosophically], I think here (in Singapore), it is… seen as a positive thing to be able to support oneself to be financially independent [or] as an older person being able to contribute to the economy. So I think this stems largely [from] cultural, social, and political views of our country,” Seow said.
 
This adjustment will affect sectors such as wholesale and retail trade, administrative and support services, transportation and storage, accommodation and food services, and manufacturing. These are the primary industries that employ individuals aged 65 and older.

Workplace and employment concerns
Although this change will benefit a lot of senior workers, it will also be the root cause of some inevitable consequential reactions in the increasingly inter-generational workforce.
 
Elaborating on this, Ang predicted that the difference in backgrounds and mindsets, plus the rapid changes in technology in relation to skill sets across different generations, will be magnified.
 
“Generational gaps in values and work ethics may lead younger employees to feel that older workers are not agile enough to meet changing demands, whilst mature workers may feel uncomfortable reporting under a younger authority,” he said.
 
“Moreover, stereotypes may exist such that older workers tend to be considered less capable of training and adapting to change. This can pose difficulties if the workplace culture is not welcoming of age diversity,” he added.
 
Ang suggested that progressive employers prepare to cope with these workforce dynamics to effectively tap on the growing pool of senior workers to meet their manpower needs in the long run.
 
Offering proof of this insecurity, the Survey on Retirement and Employment revealed that 63.4% of senior workers worry about negative employer attitudes and age discrimination; whilst 59.6% express concerns over inflexible working arrangements or longer working hours.
 
Another 54.1% fear age-related health issues and physical constraints, and 52.6% report a scarcity of job opportunities available to them.
 
To protect the welfare of senior workers, the government will enforce the Workplace Fairness Legislation in 2H2024, which will prohibit workplace discrimination, amongst other objectives.
 
“The most common defence put up by companies for not being able to re-employ [is] there’s no more job, or there’s no more job that this senior person is trained or skilled enough to do. [But] I think that’s going to be harder for organisations to run that line [now],” Seow said.

Adding to this, Ang said: “Raising the retirement and reemployment ages postpones the need for such workers to negotiate new re-employment contracts beyond the statutory retirement age, with employers prohibited from prematurely dismissing employees on the grounds of age up to the statutory retirement age.”
 
For Seow, the best employers can do to adapt to this change is to start planning. “The entire workforce starts to age, [and] you [have] to start planning, you should know who is reaching that age, [or] who in your workforce is reaching that age soon,” she said.
 
She emphasised the importance of knowing your employees above everything else, to determine if there is a necessity to change roles, offer additional training, or restructure some of the company functions.
 
“You have to start planning for different possibilities and when you come to the conclusion that after exhausting the various permutations, then you have to think about offering this person [an employment assistance package],” she said.
 
Ang also cited other proactive measures that employers should explore. “[Employers] should consider setting up age-friendly workplaces to better tap on the growing pool of senior workers, such as by implementing technological solutions to minimise physical work for senior workers,” he said.
 
“In addition, employers should also adapt by putting in place progressive hiring practices that centre on skill sets rather than age, and by reviewing their hiring and HR policies to provide for flexible work arrangements and re-employment opportunities,” he added.
Employers are highly encouraged to adopt progressive and proactive measures, especially since the government is already providing substantial support.
 
“I think there’s a bit of a challenge if the government becomes overly prescriptive. I do think that what is in place is sufficient and we cannot go too far to overprescribe,” he said.
 
Government support

The government understands that this would be a massive change, especially to employers. Hence, the government has prepared appropriate measures to alleviate these effects for both employers and senior workers.
 
“Raising the retirement and re-employment age can lead to higher business costs, medical costs, and the need for adjustments to workplace and hiring policies. Increased business costs may be incurred by employers who implement seniority-based wage practices,” Ang affirmed.
 
“When this is coupled with an increase in CPF contribution rates for senior workers, employers may find it difficult to manage such cost increases, which may in turn affect the employability of older workers. Apart from increases in costs, employers would need to provide guidance and support to make available training opportunities for older workers to bridge any skill gaps,” he added.
 
To accommodate seniors seeking low intensity and flexible jobs, the Ministry of Manpower (MOM) incentivises employers to offer jobs tailored to such needs.
 
Employers are in turn supported by the Part-Time Re-employment Grant (PTRG) which provides them up to $125,000 of financial support and free training to learn how to properly conduct structured career planning.
 
The government also offers the Support for Job Redesign and the Productivity Solutions Grant (PSG-JR) for employers who may need to redesign jobs and workplaces to be more age-friendly.
 
In addition, employers can also benefit from the Senior Employment Credit Scheme, which provides wage offsets to employers who hire Singaporean workers aged 60 and above. In 2023, the scheme disbursed $315 million dollars, benefitting 90,000 employers that hired 400,000 senior workers.
 
To support the upskilling and reskilling of senior workers and maintain their relevance in the workforce, the government has established Career Conversion Programmes (CCPs) where senior workers can undergo training with up to 90% salary and course fee support.
 
Lastly, MOM is in partnership with National Trades Union Congress (NTUC) to equip firms through the Company Training Committees (CTCs) to support companies that have set up CTCs to implement their transformation plans, by co-funding their proposals to raise productivity, redesign jobs and improve work prospects, including for senior workers.  
 
“In our refreshed social compact, we want to ensure that all members of our society can participate in the workforce. One key group are our senior workers. Given our ageing population and slowing workforce growth, it is important that we help every worker contribute as much as they are able to, for as long as they wish,” Gan Siow Huang, Minister of State for Manpower said in her Committee of Supply 2024 speech on 4 March 2024.

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