In his National Day Rally speech, Singapore's Prime Minister Mr Lee Hsien Loong announced plans to increase the retirement age and re-employment age in Singapore. The rates of CPF contribution will also increase for workers between the ages of 55 and 72.
Changes to retirement age and re-employment age
At present, the retirement age in Singapore is 62. This will be raised to 63 in 2022, and to 65 by 2030. The increase in the retirement age to 63 in 2022 will apply to workers born on or after 1 July 1960.
As for the re-employment age, this will be raised from 67 at present to 68 in 2022, and to 70 by 2030. The increase in the re-employment age to 68 in 2022 will apply to workers born on or after 1 July 1955.
Changes to CPF contribution rates for older workers
The CPF contribution rates for workers between the ages of 55 and 70 will also increase. The changes will be implemented gradually over the next few years, with a target to implement the final rates by 2030. The amounts by which these rates will increase depends on the age bands, as follows:
- Above 55 to 60: From 26% today to 37% by 2030
- Above 60 to 65: From 16.5% today to 26% by 2030
- Above 65 to 70: From 12.5% today to 16.5% by 2030
The CPF contribution rates for workers aged 55 and below (37%), as well as for workers over the age of 70 (12.5%), will remain unchanged. There are also no changes to the CPF withdrawal policies workers continue to be able to commence withdrawal of some CPF sums from 55 and start receiving monthly payouts from 65.
While these changes are forward looking, employers will need to account for the increase in CPF contribution rates in their budgets. Employers should also ensure that their insurance policies provide adequate coverage for older employees, and any retirement policies should be updated.