In a significant move to address the challenges of an ageing population, the National Trades Union Congress (NTUC) in Singapore has introduced important changes to the retirement and re-employment ages, set to take effect in 2026. This adjustment comes 1½ years ahead of the national schedule, reflecting a proactive approach to supporting senior workers. These new rules will gradually increase the retirement age to 65 and extend re-employment until 70.
Key Changes to Retirement and Re-employment Ages
The adjustments to the retirement and re-employment ages mark a pivotal shift in how Singapore is preparing for an ageing population. These changes reflect the government’s commitment to providing citizens with more opportunities to work longer and save more for retirement.
- Retirement Age: The retirement age will increase from 62 to 65 by 2026. This change allows older workers to stay employed for a longer period and continue contributing to their CPF accounts.
- Re-employment Age: Similarly, the re-employment age will rise from 67 to 70 by 2030. This adjustment ensures that those who wish to remain in the workforce can do so for a longer time, whether on a part-time or contract basis.
CPF Contribution Rates: What’s Changing?
In addition to changes in retirement and re-employment policies, the government is also revising CPF contribution rates for older workers. These adjustments will help individuals build more savings as they age, ensuring greater financial security.
- 55 to 60 years old: The contribution rate will rise from 26% to 37%.
- 60 to 65 years old: The rate will increase from 16.5% to 26%.
- 65 to 70 years old: Contributions will go up from 12.5% to 16.5%.
These higher contribution rates are designed to boost older workers’ savings in their Special Accounts, which offer higher interest rates than regular CPF accounts. The gradual increase will take effect from 2026, giving businesses time to adjust to the higher costs.
Transition to Higher Contribution Rates
Employers will need to adjust to the new CPF contribution rates, which will result in increased costs, particularly for businesses employing older workers. To help ease this transition, the Singapore government has introduced several support measures.
- Wage Offsets and Grants: Employers will benefit from wage offsets and grants designed to assist in managing the higher CPF contributions. These measures will help businesses retain older workers without facing undue financial strain.
Government Support for Employers
To support employers in hiring senior workers, the government has introduced various initiatives aimed at making it easier for businesses to employ older individuals.
- Part-time Re-employment Grant (PTRG): This grant encourages employers to offer part-time or flexible jobs to senior workers. Companies can receive up to S$125,000 depending on the number of senior workers they hire.
- Senior Employment Credit (SEC): This initiative provides wage subsidies to businesses that hire workers aged 60 and above. The subsidy helps reduce the cost of hiring senior employees by offsetting up to 7% of their wages.
Why Do These Changes Matter
As Singapore faces an ageing population, these policy changes are crucial for ensuring the continued participation of older workers in the labour market. By increasing retirement and re-employment ages, the government helps reduce the dependency ratio and addresses the economic challenges posed by an ageing society.
The extended working life also enables older workers to contribute their valuable knowledge and experience, benefiting both the economy and workplace productivity. These changes will help seniors enjoy greater financial independence while allowing businesses to retain skilled and experienced workers for a longer period.
