22 proposed changes made by the tripartite workgroup on older workers that the Government will fully implement

One of the key themes of PM Lee Hsien Loong's National Day Rally 2019 speech was the government's aim of supporting the wish of older workers in Singapore to continue working in their golden years.

Towards this end, PM Lee explained that the Tripartite Workgroup on Older Workers was formed in 2018 to study how to best do so. PM Lee said that the Workgroup has delivered its final report and recommendations, which the government has accepted in full.

The entire report was released to the media yesterday, which consists of a whopping 22 recommendations, including the 4 key recommendations that PM Lee covered in his National Day Rally 2019 speech.

Here's an outline on all 22 recommendations, explained in as little words as possible.

9 RECOMMENDATIONS TO KEEP RETIREMENT AND RE-EMPLOYMENT FRAMEWORK RELEVANT

#1 "Both the Retirement Age and Re-employment Age remain relevant. They ensure that Singaporeans can remain active in work for as long as they are able and wish to, while businesses can continue to tap on a pool of experienced older workers."

The Workgroup reaffirms the validity and usefulness of the statutory Retirement Age and Re-Employment Age to safeguard the interests of older workers as well as expand the labour pool for companies.

#2 "Both the Retirement Age and Re-employment Age should be raised by three years to 65 and 70 respectively. This is a realistic goal, taking into account improvements in healthy life expectancy, the better-educated and higher-skilled workers today, and enhanced organisational capacity to manage older workers well."

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As PM Lee announced, the Retirement Age will be raised from 62 to 65, and the Re-Employment Age increased from 67 to 70. This is in view of both quantitive measures like Singaporeans' increasing life expectancy and Healthy Average Life Expectancy (HALE) as well as qualitative feedback from older workers.

#3 "The raising of the Retirement Age to 65 and Re-employment Age to 70 should be completed by the end of the next decade (i.e. by 2030)."

This recommendation sets a specific deadline for completing the phased increase of both the Retirement Age and Re-Employment Age.

#4 "The first increases in the Retirement Age (to 63) and Re-employment Age (to 68) should take effect from 1 July 2022."

This recommendation gives a specific start date for starting the phased increase of both the Retirement Age and Re-Employment Age.

#5 "The minimum re-employment contract duration should be retained at one year, to accord businesses some flexibility. Employers are encouraged to offer re-employed workers longer contracts beyond what is required under the RRA."

After reviewing the current practice of reviewing re-employment contracts every year, the Workgroup recommends continuing with the current arrangement, which gives companies flexibility in planning their manpower requirements, while giving older workers a degree of assurance.

#6 "The Employment Assistance Payment formula should be updated and take effect from 1 July 2022."

The Employment Assistance Payment (EAP) requires employers who are unable to offer older workers re-employment with a cash payout to help them transition to a new job or adjust to not being employed.

The following is the current formula for EAP:

#7 "For employees hired at age 55 and over, the qualifying period to be eligible for re-employment should be reduced from three to two years."

In the past, workers who are hired at the age of 55 or older do not need to be offered re-employment by companies unless they worked for at least 3 years. This will be reduced to 2 years, which it will be easier for older workers to qualify for protection under the Re-Employment Age framework.

#8 "Government should continue to work with employers, including public sector agencies, to conduct periodic reviews to ensure the relevance of the current exemptions for specific groups."

Some sectors and vocations are exempted from needing to fulfil the obligations mandated by the Retirement Act and Re-Employment Act framework. These includeSAF regulars, police officers, airport emergency officers, which require workers to maintain a higher level of physical fitness to respond to emergencies or national security threats.

#9 "Government should provide a wage offset scheme to accompany the raising of the Retirement Age and Re-employment Age to 65 and 70 respectively."

Wage offset packages have been implemented in the past to improve the employability of older Singaporeans and help companies with managing their costs. Known as the Special Employment Credit (SEC), it was first introduced in 2011, and most recently extended during Budget 2019 till the end of 2020 for employers hiring Singaporean workers aged 55 and above, and earning up to $4,000. With this recommendation, we can expect another round of extension and perhaps enhancement to the SEC.

6 RECOMMENDATIONS TO STRENGTHEN OLDER WORKERS' RETIREMENT ADEQUACY

#10 "Raise CPF contribution rates for workers aged 55 to 70, retaining a stepped reduction in CPF contribution rates by age bands. (a) The total CPF contribution rate for those aged 55 to 60 should be raised to 37 per cent in the longer term. (b) For workers aged 60 to 70, the CPF contribution rate increase should be smaller but meaningful. (c) For workers above 70, the total CPF contribution rate should remain unchanged at 12.5 per cent. Raising CPF contributions risks making these workers less employable, with no significant gains in retirement adequacy, as employers have no obligation to re- employ workers beyond the age of 70."

The Workgroup recommends tapering down of older workers' CPF contributions only at 60 and not the current 55. The contributions should increased across the board until the age of 70, where the current rates should remain unchanged.

#11 "As a first step, the CPF contribution rates should be raised from 1 January 2021. Employers and workers will each increase their contribution by either 0.5 per cent-point or 1 per cent-point."

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This sets a firm start date for implementing the CPF contribution rate increase at 1 January 2021, and specifies minimum percentage increase.

#12 "Both employers and workers should be involved at each step of the series of rate increases. This is consonant with the tripartite approach to improving retirement adequacy, with CPF contributions from employers and workers, and Government providing progressive and risk-free interest rates to grow CPF savings."

This recommendation reaffirms the fact that CPF contribution rates affect everyone (employer and employee both make contributions), and all stakeholders are committed to work together to find mutually beneficial solutions to shared problems.

#13 "Each subsequent increase in CPF contribution rates should not exceed 1 per cent-point for workers or employers. This will minimise the impact on take- home pay and wage costs. There may be a need to defer the contribution rate increases in some years if economic conditions warrant. While aiming to complete the full increase within a decade, we should also retain the flexibility to stretch the timeline beyond 2030 if necessary."

To minimise the impact of CPF contribution increases on companies, and consequently reduce the attractiveness of employing older workers, the Workgroup recommends that each CPF contribution rate increase not exceed 1 per cent, and leaves the door open on when the target increase will be completed, depending on economic conditions.

#14 "The contribution increases should be fully allocated to the Special Account (SA). This will maximise the interest earned and provide a bigger boost to workers' retirement incomes."

This specifies that all the increase in CPF contribution rates for older workers be allocated to the CPF Special Account, which is meant purely for Singaporeans' retirement needs and for which CPF members earn higher interest rates.

#15 "Given the economic slowdown and uncertain outlook, employers feel strongly that the Workgroup's recommendations are ambitious in scale. The Government should provide transitional support to employers, in the form of one-off wage offsets, to mitigate the higher CPF contribution rates."

Similar to wage support for the Retirement Age and Re-Employment Age increases, the Workgroup recommends a wage offset package to help employers adjust to the higher CPF contribution rates.

7 RECOMMENDATIONS TO PROMOTE AN INCLUSIVE AND PROGRESSIVE WORKPLACES

#16 "Employers should engage mature and older workers in structured career planning sessions. Conversations with mature workers (around age 45) can be centred on their future career plans and potential support from companies, while those with older workers (around age 55) can focus on relevant skills needed for re-employment."

Recognising that acquiring relevant skills for the future takes time, employers should engage their employees early, which also encourages employees to take ownership of their own careers and formulate plans for their professional development.

#17 "Employers should embark on job redesign to effect organisation-wide and systems-level changes so as to (i) increase the number of older workers who can perform the job; and/or (ii) extend upwards the age at which workers can do a job."

Employers are encouraged to rethink job roles and how they can be re-designed to cater to older workers's needs, such as reduced working hours, less physically straining, and even more conveniently-located.

#18 "Employers should be encouraged to provide part-time re-employment opportunities, and commit to do so via their HR policies and employment contracts. The approach should be promotional."

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The Workgroup encourages the creation of part-time re-employment opportunities, which gives older workers additional options to remain employed and earn an income, but yet still have more time for themselves. This is not a replacement to the requirements mandated by the Re-Employment Age.

#19 "Employers should restructure employer-provided medical benefits from GHS schemes to additional MediSave contributions or other flexible benefits. Such MediSave contributions or flexible benefits could be used by employees to purchase portable medical benefits, such as Integrated Shield Plans that ride on MediShield Life."

The Workgroup recommends employers relook the Group Hospitalisation & Surgery (GHS) insurance that they currently provide and instead make additional MediSave contributions instead, which employees can use to purchase Integrated Shield Plans and enjoy portable protection for life, even after leaving the company.

#20 "Employers' determination of a worker's fitness for work in a particular role should not be based solely on age, but also on the objective assessment of (i) job requirements; and (ii) relevant health or physical conditions that would affect his performance of those job requirements."

Rather than use age as the sole criteria to how long can older workers remain in a particular job role, employers should use more objective criteria, such as occupational, health and safety assessments or sign off from medical doctors.

#21 "Employers should implement workplace health programmes that are appropriate for the ageing profile of their workforce. At the same time, the Workgroup calls on workers to take responsibility for their health, keep themselves fit for work, and participate in workplace health programmes."

Remaining fit and active is in everyone's interests. The workgroup recommends taking pro-active steps by employers and employees to keep the workforce fit and health, so they can continuing to enjoy productive and fulfilling golden years.

#22 "Government should support employers to undertake key shifts in their HR policies. In particular, to: (i) systematically create part-time opportunities for employees seeking re-employment; (ii) raise awareness of structured career planning sessions, and build capabilities to conduct such sessions; and (iii) support transformational job redesign to overhaul organisation-level systems and processes, so as to benefit more older workers."

The Workgroup recommends initiatives be launched by the government on a national level to support employers in carrying out some of the specific recommendations outlined previously, in particular, #16, #17, #18.

This article was first published in Dollars and Sense.