(Delivered in Parliament on 9 January 2017)
Finally, the Effective Retirement Age of 67
Madam Speaker, this train has taken a very long time to arrive. Back in 1993 when Parliament amended the law to raise the retirement age from 55 to 60, the Government set 67 as the target retirement age to be achieved in a decade. This was not done. The retirement age was raised to 62 in 1999. Then in 2012 when Parliament amended the law to set the re-employment age at 65, the Government again set the target age, now for re-employment age, to 67. It has taken five years to move the extension and 23 years in total to reach the 67 target.
How many senior Singaporeans who had wanted to work longer have lost many good working years as a result? Why the long delay? I sincerely hope it was not due to the political calculation of electoral cycles. If not, what were the demographic and economic considerations underlying the long delay to raise the working age to 67?
The Government owes Singaporeans an explanation because during these 23 years, we saw a massive influx of foreign mid-skilled workers who out-competed senior Singaporeans in the labour market. It was also during these 23 years, we saw a culture of ageism take root, so much that analysts, unionists, Government leaders and members of this House have been calling for a mindset change among employers to change their attitude toward senior workers. Habits and norms, once settled in place, are very difficult to change. In this case, policy inaction has allowed the culture of ageism to deepen and shape society’s view that senior workers are less valuable than younger workers.
The Benefits of Allowing Senior Singaporeans to Continue Work
The benefits of allowing senior Singaporeans to continue to work go beyond the narrow dollar and cents of economic value. A study by researchers at SIM University in 2013 shows many benefits. Work gives senior Singaporeans a sense of social purpose, as they feel that they are doing something useful for others and society. Work is also recognition that they are still valued by others and society. Work provides for a sense of autonomy, as they have the opportunity to deploy their skills and solve problems. Work provides for positive relationships as many senior Singaporeans make good friends at their workplace.
For the senior Singaporeans themselves, many would like to continue working to remain financially independent, to be socially integrated, to maintain good health and for self-fulfilment. If we consider the qualitative benefits of work, beyond the quantitative measures of a narrow economic model, allowing senior Singaporeans to work longer kills many birds with one stone. It helps with the retirement insecurity of inadequate CPF savings. It helps to push back the onset of dementia and other ageing health issues. It helps to improve the psychological well-being of senior Singaporeans and enhances ageing in place, as the workplace is also meaningful social place for senior Singaporeans.
Getting the right retirement age policy to facilitate senior Singaporeans to continue to work is not just an economic issue. It will tackle with one stone the many issues related to the ageing population. However, that one stone has to be thrown right and accurate. It has to be decisive and courageous. We have already wasted 23 years. We have no more time to waste with the ageing society at our doorstep. What we have here is a throw of a stone that is still too tentative. In this regard, I have six points to raise for the Minister to address and consider.
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Linking Effective Retirement Age to Life Expectancy
First point, why is 67 the magic number after more than two decades? In 1993 the average life expectancy of Singaporeans was around 77 years. Today’s average life expectancy is around 83 years and still rising. What was the model that was used to calculate the optimal retirement age that led to 67 as the target retirement age in 1993? Is the same model in use today? Should the effective retirement age not be adjusted as life expectancy goes up? Should it not be around 70 years of age today?
The larger point is the automatic linking of effective retirement age to life expectancy, which is the emerging best practice in developed economies around the world. This is so that the financial risks of ageing could be more equitably borne by all sectors of society, especially employers. Would the Government consider this policy innovation and link the effective retirement age to life expectancy, since we have now reached the target age of 67?
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Raising the Retirement Age to 65
Second point, is the retirement age going to be stuck at 62? It has been stuck since 1999. 20 years is a good time to reconsider whether we should raise the retirement age to 65 for future cohorts and existing cohorts if they so desire. This will encourage employers to think longer-term when it comes to staff recruitment and, especially, training and retention. It would also give greater job security to Singaporeans and address the tight labour market conditions when we reduce the factor of foreign labour inputs.
At the 2015 National Day Rally, when announcing that the re-employment age would be raised to 67, the Prime Minister noted that employers had gotten used to employees working to 65 and were starting to benefit from it. If so, why not entrench 65 as the retirement age then? The employers are ready. They don’t even cut salaries by 10% at age 60 anymore, which is why the bill is repealing that part of the law. There are insignificant costs involved for employers. The benefit is added security for workers. Is there any reason why the Government would not do this?
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Lengthening the Term of Re-employment Contracts
Third point, in the extension of the reemployment age to 67, this bill could have dealt with one of the biggest issues faced by senior workers who want to continue to work: the short term length of their annual contracts. The one-year term contract or a three-year contract to be reviewed yearly sustains a sense of insecurity about contract review and renewal, which is not the right way to treat a senior employee and colleague.
With the extension of the reemployment age to 67, this means senior Singaporeans who would like to continue working would suffer twice the anxiety of contract review or renewal, four times from 63 to 66 years of age. Is there any reason not to stipulate the contract length to be at least 2 years, unless the senior chooses otherwise to have one-year contracts? 2 years seems more reasonable and balanced. It makes more sense too since employers should consider performance records of the past 2-3 years when re-employing senior workers.
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Protecting the Medical Benefits of Re-Employed Workers
Fourth point, there is the possibility for a loss of benefits in the switch from regular employment to the reemployment contract. This loss of benefits while still being employed to do the same work by the same company in the same workplace with the same colleagues is solely due to the employee reaching a certain age. Is this not unfair, smacking of ageism, and stigmatizing for the senior Singaporeans?
This has real physical consequences when it comes to medical benefits. There is a short circuit to the current policy logic. Employers are required to re-employ senior workers who are medically fit. Yet they are allowed to reduce the medical benefits, when the benefits present a serious cost concern. Is it not self-defeating that the reduction of medical benefits could lead to senior workers becoming medical unfit for continued re-employment?
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Re-balancing the Eligibility Criteria for Re-employment
Fifth point, other than the criterion of medical fitness, employers are required to re-employ workers who have satisfactory work performance. However, for medical fitness, the Act currently has a section stating that the employee is presumed to be medically fit unless the employer proves otherwise on the balance of probabilities. There is no equivalent clause for the work performance eligibility criterion.
I understand there is a need to balance the interests of employers and workers and allow for enough flexibility when it comes to re-employment. However, what recourse does a senior worker have when the employer refused him or her the right of re-employment on grounds of unsatisfactory work performance, which the senior worker disagrees with?
If the normal convention applies, the burden of proof is on the senior worker to show that the termination is unfair. This is onerous and borders on the impossible for many senior workers, especially when they are not PMETs who would usually have access to human resource records for formal performance reviews. Does the Ministry depart from the convention of placing the burden of proof on the worker for senior workers seeking recourse on this matter? If not, would the Ministry do so for senior workers being rejected for re-employment by investigating the evidence on the balance of probabilities?
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Lowering the CPF Life Minimum Payout Age to 60
Sixth point, Manpower Minister Lim Swee Say said during the General Election in September 2015 that the payout age of 65 for the CPF Life scheme would not be raised when the re-employment age is raised to 67. Will this promise be fulfilled?
If so, this effectively delinks the CPF Life minimum payout age from the re-employment age. This means, at 65 years of age, senior workers could enjoy monthly CPF Life income to augment their regular income from re-employment to 67 years of age. The Workers’ Party has been calling for this delinking of the CPF drawdown age from the retirement age since the debate on CPF reforms in 2007.
With this delinking, we are now in line with the practice of pension and retirement policy in many developed countries internationally. With this delinking, the Government is acknowledging that there is no need for a rigid fixing of the pension income payout age to the retirement age because there is no rigid relationship between the two. Many developed countries allow for earlier pension income payout regardless of employment status of senior citizens, so that the seniors could start adjusting to their retirement plans even as they continue to work.
Now, why not allow senior workers to begin collecting their CPF Life payout earlier at 60 years of age if they choose to? This will allow them to augment their regular income earlier, which may well be critical for seniors workers to maintain their good physical health so that they can be medically fit for reemployment at 62.
The only reason I can think of not allowing senior workers to start collecting their CPF Life payout earlier is that the Government does not trust our senior workers to use a few extra hundred dollars a month wisely by investing in their own health and in their own retirement plans, especially if they would like to continue to work. When it comes to retirement and re-employment policy, we have been catering flexibility for employers to protect their bottom-line for many years now. We should also cater flexibility for employees to help them protect their financial and physical health.
Harness Retirement Age Policy for Our Ageing Society
Madam Speaker, in summary, the Government should explain to Singaporeans why it took all of 23 years to raise the effective retirement age to the targeted 67. And now that it has, I have these six questions for the Government.
One, should the Government consider linking the effective retirement age to the average life expectancy of Singaporeans? Two, why leave the retirement age stuck at 62 now when employers have grown accustomed to senior Singaporeans working to 65?
Three, why maintain the annual review and renewal structure of reemployment contract? Four, why are the medical benefits for senior workers not protected for re-employment?
Five, should the Ministry depart from the convention of placing the burden of proof on the worker for senior workers seeking recourse on being rejected for re-employment due to alleged poor work performance?
Six, since CPF Life payouts are now delinked from effective retirement age, why not let senior workers get their payout earlier and trust them to invest in themselves?
Madam Speaker, in conclusion, I support this bill because it finally fulfils the promise to raise the effective retirement age to 67 after a very long delay. Retirement age policy is a critical tool that could be used to effectively tackle many of the economic, social, psychological issues related to the ageing population. This tool should not be influenced by short-term economic and political concerns. It is important for us to harness retirement age policy for its long-term impact and implications for the ageing society. I hope the Government will have the courage to do so even if it would prove unpopular in the short run. Thank you.