A Bill was passed in Parliament on 9 January 2017 to raise the re-employment age in Singapore from 65 to 67. It is one of the three key changes to the Retirement and Re-employment Act (RRA). It will take effect from 1 July 2017 for Singaporeans and Permanent Residents who turn 65 on or after the same date.
Manpower Minister Lim Swee Say said that this was “after extensive consultation” with the tripartite partners.
Up to 67
For workers who will be turning 65 before 1 July 2017, employers can still tap on the current 3 per cent wage offset provided by the Government, which will expire on 1 July 2017.
“This is on top of the Special Employment Credit of up to 8 per cent for employing Singaporeans aged 55 and above.
“The Government is studying the need and manner to further extend it to encourage voluntary re-employment of two groups of Singaporean employees,” said Minister Lim.
The two groups are those turning 67 before 1 July 2017, and those beyond the age of 67.
Labour Movement Weighs In
Labour Member of Parliament and NTUC Deputy Secretary-General Heng Chee How said that the Labour Movement understands mature workers’ needs to have the re-employment age raised, “and has been pushing hard for early resolution.”
Negotiations had taken a few years because the outcome needed to be balanced and sustainable for both employers and mature employees.
Re-employment Transfer
The second key change to the RRA is the option to allow eligible employees to be re-deployed to a subsidiary or another company if the current employer cannot offer them re-employment internally.
The new employer has to agree to take over all applicable re-employment obligations from the current employer. The transfer will only proceed if both the employee and new employer agree to the re-employment terms.
This will take effect from 1 July 2017, and it will not matter if the new job is found by the employer or employee.
Should the employee reject the new terms, he will still be eligible for the Employment Assistance Payment from the current employer, which is meant to help workers tide over a period while he finds new employment.
In 2015, over 98 per cent of local employees from the private sector were offered re-employment at the age of 62.
Minister Lim said that this change would benefit all three parties as the original employer will be deemed as having fulfilled his re-employment obligations, the employee will have more opportunities for re-employment and the new employer will benefit from an experienced employee. DSG Heng said that this provides security to workers.
To prepare employers and employees with the impending change, the tripartite partners have revised the Tripartite Guidelines on the Re-employment of Older Employees. In particular, there is now a new section to guide new employers re-employing a worker from another company.
No Wage Cuts
Also with effect from 1 July 2017, employers will no longer have the option to cut up to 10 per cent of an employee’s salary once he turns 60.
Minister Lim said: “With the restructuring and reshaping of Singapore’s economy, tripartite efforts have been successful in moving employers away from seniority-based wage systems.”
The seniority-based wage systems were introduced in 1999 to help employers manage costs as the re-employment age was raised from 60 to 62. DSG Heng said this announcement is timely.
“Very few employers resorted to that, given that most were fair-minded and that pay is much more performance-based nowadays,” he added.
In 2011, up to 98.5 per cent of employers with employees aged 60 and above did not cut employees’ wages when they turned 60.
