Increase In Retirement Age (Along With CPF Contributions): What Employers Need To Know

What employers need to know about employing older workers

Employers in Singapore will increasingly see themselves hiring more senior workers. The reason for this is quite simple – Singapore has a rapidly greying population. The government is also taking proactive steps to ready both employees and employers for such a future.

Big investments are being made into upskilling the local workforce, with greater attention paid on senior workers. Employers should also pre-empt this by implementing senior-friendly workplace policies.

The government is also introducing three changes that will affect employers in 2022. Here’s what you need to know.

Read Also: 4 Government Support Schemes Singapore Businesses Can Tap On To Adopt A Senior-Friendly Workplace

#1 Increase In Retirement Age To 63 In 2022 (And To 65 By 2030)

The last time the government raised the retirement age was over 20 years ago when it was increased from 60 to 62 in 1999.

On 1 July 2022, the retirement age will be increased to 63. This is also part of a broader plan to bring the retirement age in line with the start of CPF LIFE disbursements at 65. This is set to happen by 2030.

The retirement age in Singapore is set to increase from 62 to 63 from 1 July 2022. By 2030, the government also expects to raise the retirement age to 65 – in line with individuals’ ability to start their CPF LIFE payouts.

Changes to retirement ageTodayFrom 1 July 2022By 2030
Retirement Age626365

#2 Increase In Re-employment Age To 68 In 2022 (And To 70 By 2030)

The re-employment age is a constraint placed on employers rather than employees. Employees are actually being protected by requiring employers to mandatorily provide re-employment opportunities. Employees who hit the retirement age must be offered re-employment up to the re-employment age of 67.

In tandem with the increase in retirement age, the government will also increase the re-employment age. On 1 July 2022, the re-employment age will be increased from 67 to 68. The re-employment age will also be raised to 70 by 2030.

Changes to re-employment ageTodayFrom 1 July 2022By 2030
Retirement Age676870

Companies can go beyond the retirement age to retain employees even after their re-employment age. 

Read Also: Retirement And Re-Employment Act: 7 Things Employers Need To Know About Retaining Older Workers

#3 Employers (and Employees) Have To Pay More CPF Contributions

In 2022, CPF contribution rates for senior workers will also be increased for both employers and employees. This was a move meant to front-run the increase in retirement and re-employment age, to be implemented in 2021. However, due to the COVID-19 pandemic, was pushed back to begin in 2022.

From 1 January 2022, the CPF contribution rates for senior workers aged 55 to 70 will increase between 1.5% and 2%. This will be to boost their retirement adequacy, with the increases being channelled into their CPF Special Account.

Age bandsToday1 Jan 2022By about 2030
55 and below37%37%37%
Above 55 to 6026%28% (+2%)
·1% from employer
·1% from employee
37%
Above 60 to 6516.5%18.5% (+2%)
·1% from employer
·1% from employee
26%
Above 65 to 7012.5%14.5% (+1.5%)
·0.5% from employer
·1% from employee
16.5%
Above 7012.5%12.5%12.5%

As we can see in the table above, the increase in CPF contributions will be shared by both employers and employees. For employers, cost will increase. For employees, they will also see a slightly lower take-home salary.

Read Also: Complete Guide To Employer’s CPF Contributions In Singapore

Employers Will Be Provided Financial Support During This Transition

To help employers cope with the rising cost, the government has also announced a Senior Worker Support Package. 

A major component of the package include a CPF Transition Offset package. This will pay employers a one-year offset for half of their increased CPF contribution requirements. Employees aged a

Age BandsIncrease in Employer CPF Contributions Rates From 1 January 2022CPF Transition Offset for Employers In 2022
55 and belowNo change
Above 55 to 60+1% point0.5% point
Above 60 to 65+1% point0.5% point
Above 65 to 70+0.5% point0.25% point
Above 70No change

Employers will also receive a Senior Employment Credit (SEC) in 2022. This was also provided in 2021. The SEC is to support firms that are employing senior workers and to safeguard the employability of senior workers.

For senior workers earning up to $4,000 a month, employers will receive between 1% and 8% of the wages paid to workers aged 55 and above.

Age of employee as of  1 Jan 20212021 (up to)2022 (up to)
55-592%1%
60-643%3%
65-665%5%
67 and above8%8%

Read Also: Guide To Senior Employment Credit (SEC) Payouts For Employers Hiring Older Workers In Singapore

Businesses will receive the CPF Transition Offset (CTO) payout and SEC payout in two tranches. 

  • For wages paid from January to June 2022, the CTO payout will be in September 2022
  • For wages paid from July to December 2022, the CTO payout will be in March 2023

Read Also: Senior Worker Early Adopter Grant (SWEAG) And Part-Time Re-employment Grant (PTRG): Up To $375,000 In Grants For Employers Supporting Senior Workers

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