Singapore will gradually increase the retirement age in the city state from 62 to 65 years by 2030, and raise compulsory pension contribution rates for older workers, in a move to help them become more financially independent.
The government is also increasing the age at which employers must offer to rehire their employees, from 67 to 70 years.
Prime Minister Lee Hsien Loong announced the changes on August 18 at the National Day rally, the annual leader’s address to the nation which typically takes place on the first or second Sunday after Singapore’s National Day on August 9.
The city state’s move underscores a key issue facing many other countries: how increased longevity is putting pressure on workers to work longer in order to save for a lengthier post-retirement life.
The retirement age in Singapore is already one of the highest in Southeast Asia. Workers in other countries in the region, including Malaysia, Thailand, Philippines and Vietnam, retire at between 55 and 60. Some countries such as Vietnam and Brunei have a lower retirement age for women.
Mr. Lee said the changes will be done gradually, with the retirement and reemployment ages first increased to 63 and 68, respectively, in 2022.
Workers 55 and older will, like their younger cohorts, have to contribute 37% of their monthly salaries – shared between employers and employees – to the Central Provident Fund (CPF), instead of contributing a progressively lower rate as they age.
"All these changes – to the retirement age, the reemployment age, and the CPF rates – will support older workers to continue working longer and to be more financially independent," Mr. Lee said. "The whole process will take ten years or so, about there, but it depends on economic conditions.”
He acknowledged that the move will increase costs for businesses. He said the government will announce a support package in next year’s budget to help businesses adjust to the changes.
Mr. Lee also said that the government, as a major employer, will take the lead by raising the retirement and reemployment ages for civil servants one year earlier, in 2021, and encouraged the private sector to follow suit.