SINGAPORE – With the raising of the statutory retirement and re-employment ages as well as Central Provident Fund (CPF) contribution rates for older workers over the next two years, employers are calling on the Government to provide wage offsets in this year’s Budget measures to help businesses cope.
The Singapore National Employers Federation (Snef) said on Tuesday (Jan 21) that it is proposing that the Government help defray the employment costs associated with hiring older workers, similar to the Special Employment Credit scheme which is set to expire at the end of this year.
This scheme provides wage offsets of up to 8 per cent for employers hiring Singaporean workers aged 55 and above, and earning up to $4,000. An additional offset of up to 3 per cent is available for employers that hire older workers turning 67 and above.
Snef also proposed transitional one-off wage offsets for employers to mitigate the higher CPF contribution rates, which kick in on Jan 1 next year.
CPF contribution rates for those aged 55 to 70 will be raised gradually over this decadeuntil those aged 60 and below enjoy the full CPF rates.
The retirement age will also be raised from 62 now, to 63 from July 1, 2022, and eventually to 65 by 2030. The re-employment age will be raised from 67 now, to 68 from July 1, 2022, and eventually to 70 by 2030.
Prime Minister Lee Hsien Loong said at the National Day Rally last year that a support package to help businesses adjust to the changes will be announced in this year’s Budget. The Budget will be presented by Deputy Prime Minister and Finance Minister Heng Swee Keat on Feb 18.
Snef submitted its recommendations to the Ministry of Finance in August last year, following the report by the Tripartite Workgroup on Older Workers in August which included related proposals. Snef, which has over 3,300 member companies, was represented on the workgroup.
“Employers recognise the wealth of knowledge and experience older workers have to contribute, and are committed to employ older workers,” said Snef in a media statement on Tuesday.
“However, there are some key challenges associated with hiring older workers, such as higher wage costs, higher medical costs from insurance, and ensuring that older workers continue to have relevant skills.”
Its other recommendations include providing funding to help employers start a “recareering programme” and be more proactive in reskilling older workers well before the retirement age so that they can be moved smoothly to other roles during re-employment. They could use this money to train human resource practitioners and supervisors, for instance, said Snef executive director Koh Juan Kiat.
ST’s Budget coverage
Get real-time updates and watch livestreaming on straitstimes.com on Feb 18.
Receive a special-edition Budget newsletter. To get the newsletter, sign up for ST Evening Update here.
It also asked for funding to help employers provide more part-time re-employment opportunities for older workers beyond retirement age. They could use this money to redesign jobs or hire an additional older worker to take on the other half of a job, said Mr Koh.
Finally, it called for support in promoting the benefits of portable medical benefits schemes. Mr Koh said this could mean employers making additional contributions to workers’ Medisave accounts instead of buying group medical coverage. Workers can then use the top-ups to pay for MediShield Life premiums or an Integrated Shield Plan, or save it for their retirement years.
The focus on older workers was also in the Budget recommendations released on Tuesday by the Singapore Business Federation, which represents more than 26,000 companies. It had, among other things, called for support for firms to innovate and hire more older workers.