In August 18, Prime Minister Lee Hsien Loong announced that by 2030, Singapore will raise retirement age to 65 and re-employment age to 70 respectively, alongside with the increase of Central Provident Fund (CPF) contribution rates for older workers. This announcement came after government accepted the recommendation by Tripartite workgroup.
The changes will be done gradually: in 2022 and 2030. The retirement age will currently at 62, will go up to 63 in 2022. Then by 2030, it will go up higher at 65.
The same goes for re-employment age which currently is at 67 will go up to 68 in 2022 and go up higher at 70 by 2030. Along with the changes, CPF contribution rate will also be raised for workers above 55 years old. Currently, the CPF rate for workers up to 55 years old is 37%. The rate for workers aged 55 – 60 years old is 26%, 60 – 65 years old rate is 16.5%, and 12.5% for the workers above 65 years old. When the changes are completed, the workers below 60 years old will enjoy the full rate and the rate will only go down after the age of 60 and 70.
With this changes, older worker will enjoy the opportunity to continue working and become financially independent. Moreover, they are near the retirement age. The adjustment on CPF for older workers contribution will not affect CPF withdrawal policies and withdrawal age. So that when workers are turning 55 years old, they still have the rights to withdraw cash from their CPF OA and SA with the rules:
- $5,000 or your OA and SA savings above the Full Retirement Sum (FRS)*, whichever is higher
- Any RA Savings (exclude top up money, government grants, and interest earned) above the Basic Retirement Sum (BRS) that comes with a sufficient property pledge.
Older workers actually wanted to be certain of longer employment, but employers are worried about the business cost and economic uncertainty. With the life expectancy up to 85 years old, older Singaporeans are ready for living longer. They prefer not to stop working and spent less years on retirement. Older workers want to stay active and prepare for better retirement years.
On the other side, government will take the effort to let older workers to continue working. One of the efforts is to encourage employers to re-design the training, jobs, and career around the skills and abilities of older workers. With the opportunity to work longer, older workers can build useful skills and keep improving as they are near the retirement age.
The Prime Minister, Lee Hsien Loong, said that business can expect a “support package” to help them to adjust to the changes of re-employment, retirement age, and CPF contribution rates. Those will be announced by Deputy Prime Minister, Heng Swee Keat, on next year’s Budget speech.
In the changing regulation of CPF for older workers contribution, using technology such as HR system will help a lot. Because HR system provider will ensure that your business will keep updated with regulation changes and you don’t need to be worried about regulation compliance. You only need to subscribe and let the system do the work on CPF rates and its changing regulation.
Need to prepare for the changes of CPF rates?
Contact our team and we will be ready to help.