National Day Rally 2019: Increase In Retirement Age, Re-employment Age And CPF Contribution Rate For Older Workers
National Day Rally 2019
Here we are, once again, tuning in to National Day Rally 2019. We did a summary of National Day Rally 2019 so that you don’t have to!
As we take a moment to appreciate how far we have come, with a recap of Operation Sook Ching, World War 2 and how the nation was built, we look forward and dive in on some of the policies that us, as we remain hopeful for our future.
Before we dive deeper into the topic of jobs, retirement and CPF contribution rates here’s a quick fun fact to blow your mind!
TL;DR – Increasing Retirement Age
3 Key changes to Singapore’s workforce
- Retirement age to increase from 62 to 65
- Re-employment age from 67 to 70 years old
- Increase the CPF contribution rate for older workers
All the above will be slowly implemented by the year 2030.
Increased Retirement And Re-employment Age
|Year 2022||Year 2030|
|Retirement Age||Increase from 62 to 63 years old||Increase to 65 years old|
|Re-employment Age||Increase from 67 to 68 years old||Increase to 70 years old|
- Retirement age to go up from 62 to 63 in 2022, and to 65 by 2030.
- Re-employment age will go up from 67 to 68 in 2022, and to 70 by 2030.
CPF Contribution Rates
Kicking off with a more sensitive topic, CPF.
- From the year 2021, the contribution rates for workers above 55 will be raised.
- Changes will be slowly implemented over 10 years
Here’s what to expect of the CPF Contribution:
|Age Group||CPF Contribution Rate|
(By the year 2021)
|CPF Contribution Rate
(By the year 2030)
|Above 55 to 60||26%||37%|
|Above 60 to 65||16.5%||26%|
|Above 65 to 70||12.5%||16.5%|
There will be NO CHANGE to your CPF withdrawal policies, or to CPF withdrawal age.
In contrast, here’s the current CPF contribution rate:
|Contribution Rate (%) for monthly wages ≥ $750||Allocation Rates (%)|
|Employer's Contribution||Employee's Contribution||Total||OA||SA||MA|
|>35 - 45||21||7||9|
|>45 - 50||19||8||10|
|>50 - 55||15||11.5||10.5|
|>55 - 60||13||13||26||12||3.5||10.5|
|>60 - 65||9||7.5||16.5||3.5||2.5||10.5|
Life Expectancy Of Singapore
Singaporeans are living longer. Our life expectancy at birth is now the longest in the world, at nearly 85 years old, longer than that of Japan.
Looking at how much the world has progressed in the past 85 years, the next 85 years we might be applying for jobs in Mars. Just kidding, but you get the point.
Increased Life Expectancy vs Low Birthrate
With the ageing population, we need to stretch our workforce by allowing seniors to continue working in a more productive environment.
Here are some ways to do so:
- Redesigning of training, jobs, and careers around the abilities and strengths of older workers
- Singaporeans to adopt the right mindset.
- Re-skilling must start even when they are above 40 years old.
To recap on how much Singaporeans need to retire, we take a look at how much we need to retire.
While the above example assumes someone who lives till the age of 90, the changes in retirement and re-employment policies allow Singaporeans to have more time to achieve their retirement goals, should they remain in good health.
Singaporeans A Unique Bunch
Singaporeans are a unique bunch where our heavy expenses such as housing, wedding, education loans are high and front-loaded to the early years of our lives.
This leaves us with little capacity to plan for retirement until the later years. In fact, most Singaporeans will only start their retirement planning at age 37.
While these changes allow one to work longer, there is one factor we fail to take into account. Our number of years in good health.
On average, Singaporeans will only have good health until the age of 73.
These changes in policy can be a good backup plan in life, but we should still aim to retire as early as possible.