Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Wednesday, 11 January 2017

Misconception of Re-Employment Age Extension

Singapore Parliament have recently made changes to the Retirement and Re-employment Act, these changes will act to protect and encourage older workers to participate in Singapore's economy.

Some of the changes made includes:
  1. Companies must now offer employees the eligibility to work until 67. Previously it was until 65.
  2. Companies are not allowed to reduce the salary of employees who turn 60 from July onwards.
  3. If the company is unable to find work for the older employee, the company can
    • transfer the older employees to their subsidiaries 
    • transfer the older employees to other companies if the employee agrees to the transfer
  4. If companies cannot continue employing the older employee at age 62, the company is required to pay a one-time Employment Assistance Payment to that employee, pegged at 3.5 times the employee's monthly salary.
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Common Misconceptions: Re-employment age increased from 65 to 67. This means I have to work until I am 67 before I can retire
You can retire at any age. You can retire the minute you strike 4D or Toto, there is no need to wait until 67 or 65 before you can retire. The Government has not shifted the retirement goal post further away from you. Instead, it mandates that if you wish to work and am fit to work, your company is REQUIRED BY LAW to keep you as an employee until you reach the age of 67.

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For more details on the changes, click HERE.

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  1. Good point. Could clarify also that it is a 're-employment' age rather than the retirement age that has changed. This means that workers above 62 can be re-employed ON A DIFFERENT CONTRACT (you might not continue at your old pay and job scope), so for people thinking their salary won't change, that might not be true.

  2. Yup yup ... workers are still officially "retired" at 62. After that companies are supposed to offer re-employment to their retired workers.

    However does the act cover the scenario whereby company offers re-employment contract but the worker doesn't accept and instead wants the EAP 3.5 months pay? I'm sure there are many who actually want to stop work at 62, but still want the benefit of the EAP (hey it's extra money!). Companies will naturally see this as exploitation by workers.