1. Recently your union conducted the elections of delegates leading to today’s delegates’ conference. At this conference you will elect your Executive Committee for the new term. The elections were keenly contested. As is to be expected in keen contests, emotions were aroused, and there was elation and disappointment, depending on how the results are seen by the contenders.
2. After today’s delegates’ conference, you will have an Executive Committee to lead members through the new term. One of the first tasks is to heal relations that may have been frayed by the electoral contests so that everyone can look forward to address the problems before you.
3. The consolidation of the banking sector was a key issue in past years. You have had to adapt to the changes. After that experience, you would have come to expect change. No job stays forever. To stay employed, one has to constantly upgrade his skills, or learn new skills. In today’s relatively more stable employment situation, never forget the lessons learnt in the more turbulent years.
4. Today I wish to take the opportunity to talk about another issue that will occupy the minds of your Executive Committee in the years ahead. It is about financial security in an ageing society.
5. When I started work, people expected to retire at 55 years, and live in happy retirement on Central Provident Fund (CPF) savings. In the 1970s, a fellow executive told us that he had done some calculations. His projections showed that he would have accumulated $1 million dollars by the time he reached 55 years of age. He thought there would be many millionaires! Today he has assets worth $1 million, but he is still working. Can he retire? Yes, he can, but he would probably have to moderate his lifestyle.
6. Today the official retirement age is 62 years, and many people do not have enough cash to retire in comfort. They do have assets, and most of the assets are significant. The principal asset that most people have is housing. This is the result of encouraging home ownership.
7. Some people have suggested that we consider some form of pension – for the old.
8. Within our CPF system, we do have something similar to a pension. It is the annuity stream that we get from our savings in the Minimum Sum. We draw on this annuity stream when we reach the official retirement age. I would describe this as a “personal pension plan” because how much we can draw depends on how much we have saved. For those who have the full Minimum Sum they will draw the maximum monthly pay-out. For those who do not, then the amount is less. Unfortunately not everyone has the full Minimum Sum in cash. Older Singaporeans today have less than what the succeeding generations will have. It will be necessary for us to help older Singaporeans who are poor.
9. But should we have a state-funded pension? I think it is worth while to reflect how pensions developed. The first state pension was introduced by German Chancellor Otto von Bismarck in 1889. At the time the retirement age was 70 years, while the life expectancy was 72 years. So the Germans would work until 70 and then live the remainder of their lives financed by the solidarity of all workers. Today the life expectancy of Germans is 80 while the retirement age has dropped to 60. There are fewer persons working and paying taxes to finance pensions. So the pension systems are under great stress.
10. Today countries with state pension systems are getting people to work longer. The Finns do so by giving incentives – defer drawing you pension, get a higher pay-out when you do. The Japanese hope to raise the retirement age by making it compulsory for employers to offer re-employment to workers when they reach 60 years. Recently the committee studying the problem in the United Kingdom also made the recommendation that people work longer.
11. Some countries have capped the pension pay-outs, and introduced savings schemes similar to our CPF system. Sweden and New Zealand are two countries that have done so. The United States save through 401(k) plans, and the Japanese introduced a variant of the US savings plan. We also encourage people to save with our Supplement Retirement Savings incentives.
12. Most people will not be able to save up enough cash to retire to the life they have achieved whilst working, when the non-working years are long. So clearly we too should work longer. How long? It should be as long as we can. With additional income, then we can live a better life in our senior years.
13. We have long recognized this, and therefore pushed for raising the effective retirement age. It is important to focus on the effective retirement age, and not on the legislated retirement age. Currently our official retirement age is 62, but many people drop out from the age of 55 years. The employment rate falls to 41.9% for those aged between 60 and 64 years. For those above 65 years, the rate is 13.8%. Clearly too high a proportion of our seniors are not working. It does not mean that most people work till the official retirement age, so legislation is not necessarily effective.
14. That is why a tripartite committee was set up to study how to help more of our older Singaporeans to work. Why do some employers employ some older workers, and not others? It is because those older workers continue to give good value to their employers. If workers do not give good value, then market forces will work, and through restructuring and other means employers will retain those workers who are good value. Unions therefore have to discuss with employers on how to retain workers – on the basis that their productivity justify the wages they are paid. Adjustments to terms and conditions of work and redesign of work processes are some of the difficult things that have to be sorted out.
15. So far we have “plucked the low-hanging fruits”. For example, the shipyards are short of skilled staff, so they re-employ retired staff in the current boom. The hospitals re-hire retired staff because there is a shortage of qualified medical staff. But we should ride on these early successes so that re-hiring of older workers become the norm rather than the exception. For some workers, it may mean a different job altogether because they are no longer suitable for the previous jobs, so re-training, even at senior ages, will be necessary.
16. Your union will need to play your part to help more of the older members continue working for as long as they can.
17. The support they will need from their family members will be less if they have their own income. We cannot forget family support. State pension systems first started in 1889, and CPF-type systems more recently. They do not replace the age-old system of family support. They supplement family support. We must keep family ties strong.
18. For some others, apart from working longer and maintaining family support, we can help them unlock the value in their assets. Reverse mortgage is one way. Selling the home, to move into a smaller unit to release cash is another.
19. With multiple measures then we can raise the quality of life of senior Singaporeans.
I look forward to DBS Staff Union playing its part to create a better life for senior Singaporeans.
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