As Singapore’s population rapidly greys, employers will increasingly see themselves hiring more senior workers. 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 to senior workers. Employers should also pre-empt this by implementing senior-friendly workplace policies.
Here are three ways that both employers and employees will feel a direct and instant impact today.
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 Singapore statutory retirement age increased to 63. This is part of a broader plan to bring the retirement age in line with the start of CPF LIFE disbursements at 65 by 2030.
| Changes to Retirement Age in Singapore | 1993 (Introduction of Retirement Age Act | 1999 | From July 2022 | By 2030 |
| Retirement Age | 60 | 62 | 63 | 65 |
#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 68.
In tandem with the increase in retirement age, the government also increased the re-employment age. On 1 July 2022, the re-employment age was raised from 67 to 68. The re-employment age will also be raised to 70 by 2030.
| Changes to Re-employment Age in Singapore | 2012 (Introduction of Retirement & Re-employment Act) | July 2017 | July 2022 | By 2030 |
| Re-employment Age | 65 | 67 | 68 | 70 |
Of course, 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 was also raised. This will be applied to both employers CPF Contributions and employees CPF Contributions. 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 2022 as well.
In 2023, there was another round of CPF contribution rate increases for senior workers. These increases in CPF contributions will go towards their Special Account in full, to boost their retirement adequacy.
| Age bands | 2016-2021 | 1 Jan 2022 | 1 Jan 2023 | 1 Jan 2024 | By about 2030 |
| 55 and below | 37% | 37% | 37% | 37% | 37% |
| Above 55 to 60 | 26% | 28% (+2%) ·1% from employer ·1% from employee | 29.5% (+1.5%) ·0.5% from employer ·1% from employee | 31% (+1.5%) ·0.5% from employer ·1% from employee | 37% |
| Above 60 to 65 | 16.5% | 18.5% (+2%) ·1% from employer ·1% from employee | 20.5% (+2%) ·1% from employer ·1% from employee | 22% (+1.5%) ·0.5% from employer ·1% from employee | 26% |
| Above 65 to 70 | 12.5% | 14% (+1.5%) ·0.5% from employer ·1% from employee | 15.5% (+1.5%) ·0.5% from employer ·1% from employee | 16.5% (+1%) ·0.5% from employer ·0.5% from employee | 16.5% |
| Above 70 | 12.5% | 12.5% | 12.5% | 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 pay if they are earning the same salary.
Read Also: Complete Guide To Employer’s CPF Contributions In Singapore
Employers Will Be Provided Financial Support During This Transition
A major component of the package includes a CPF Transition Offset package. This will pay employers a one-year offset for half of their increased CPF contribution requirements.
| Age Bands | CPF Transition Offset for Employers In 2022 | CPF Transition Offset for Employers In 2023 | CPF Transition Offset for Employers In 2024 |
| 55 and below | – | – | – |
| Above 55 to 60 | 0.5% point | 0.25% point | 0.25% point |
| Above 60 to 65 | 0.5% point | 0.5% point | 0.25% point |
| Above 65 to 70 | 0.25% point | 0.25% point | 0.25% point |
| Above 70 | – | – | – |
Employers also received a Senior Employment Credit (SEC) in 2021 and 2022. During Budget 2023, this scheme was extended from 2023 to 2025. 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 employees | 2021 (up to) | 2022 (up to) | 2023 (up to) | 2024 & 2025 (up to) |
| 55-59 | 2% | 1% | – | – |
| 60-64 | 3% | 3% | 3% | 2% |
| 65-66 | 5% | 5% | 5% | 4% |
| 67 and above (in 2021 and 2022) 68 and above (in 2023 and 2024) | 8% | 8% | 8% | 7% |
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 each year, the CTO payout will be in September of the same year
- For wages paid from July to December each year, the CTO payout will be in March of the following year
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