10 September, 2019
On 18 August 2019, Singapore Prime Minister Lee Hsien Loong made his National Day Rally speech in which he outlined among other things, the following changes that would affect the employment landscape in Singapore:
-
By 2030, the statutory retirement and re-employment ages will be increased from 62 to 65 and 67 to 70 respectively;
-
Central Provident Fund ("CPF") contributions for employees above 55 will be raised gradually year on year starting from 2021 to 2030.
The specific changes to be made to the relevant legislations have yet to be released, although more details are likely to be shared in Q4 2019. Organisations in Singapore should be aware of these upcoming changes and take steps to be ready for them.
Increase in statutory retirement and re-employment ages
|
Current |
2022 |
By 2030 |
|
|
Retirement age |
62 |
63 |
65 |
|
Re-employment age |
67 |
68 |
70 |
Accordingly, come 2022 eligible employees born on or after 1 July 1960 will benefit from the higher retirement age of 63, while those born on or after 1 July 1955 will benefit from the higher re-employment age of 68.
We anticipate that the other aspects of the Retirement and Re-employment Act (Cap. 274A) such as the quantum of the Employment Assistance Payment and the contents of the Tripartite Guidelines On The Re-Employment Of Older Employees will be amended moving forward. We will update you again once these changes are announced.
CPF contribution rates
The CPF contribution rates will be increased gradually until 2030 as per the table below:
|
Current |
By 2030 |
|
|
Less than or equal to 55 |
37% |
37% (no change) |
|
More than 55 to 60 |
26% |
37% (increase of 11%) |
| More than 60 to 65 |
16.5% |
26% (increase of 9.5%) |
|
More than 65 to 70 |
12.5% |
16.5% (increase of 4%) |
| More than 70 |
12.5% |
12.5% (no change) |
Please note that it is intended that the increases in the contribution rates will begin in 2021 and increase year on year on a gradual basis until the 2030 targets are met as set out above. The exact level of increase on a year on year basis will depend on the prevailing economic situation at the point in time.
A support package for employers to manage the impact of these changes will be announced in next year's budget in Q1 2020.
Conclusion
Singapore is facing an ageing population problem as such the changes above come as no surprise as the Singapore government seeks to tackle the issue of Singaporeans living longer and needing more money for their retirement. Organisations should take advantage of the long runway they have been provided to be ready for the changes and ensure that they take measures to manage their employee population when they reach the retirement/re-employment ages.
For further information, please contact:
Kelvin Poa, Principal, Baker & McKenzie.Wong & Leow
kelvin.poa@bakermckenzie.com
