RETIREMENT AGE (AMENDMENT) BILL

RETIREMENT AGE (AMENDMENT) BILL: Debate resumed.

Mdm Ho Geok Choo (West Coast): Mr Speaker, Sir, I would like to raise a few salient points with regard to the Bill.

Sir, neither the Act nor the proposed amendments provide for the re-employment of older workers who currently either wish to switch jobs or do not have a job but are looking for one. This is a gap in the legislation for the employment of older workers. This is clear from clause 4(d) of the Amendment Bill which defines "re-employment" as "the employment of an employee by the same employer on or after the date the employee attains the specified age".

Mr Speaker, we need to look at ways to protect the interests of all older workers, instead of just those who are content to continue working in their

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existing jobs. Older workers do have a hard time job hunting. The media regularly carry reports of workers above the age of 50, finding it difficult to land a job, despite the requisite skills and qualifications.

Second, I notice that the Amendment Bill mentions three ages: 62, 65 and 67.

With reference to clauses 6 and 9, does this mean that an employer is obliged to re-employ an employee who is between 62 and 65 years old and if he does re-employ the staff, he has to continue to do so up to when the employee reaches 67?

Sir, I see ambiguity here because I feel that employers who want to continue hiring someone beyond 67 will do so anyway while other employers may simply stop re-employing a worker once he hits 65.

In this respect, I wish to highlight the need for intensified public education about why the retirement age has to be increased. To be candid, Sir, we need to educate Singaporeans that a higher retirement age benefits them more than the Government. The money earned from the additional period of time not only helps them to maintain their current living standards but also provides an extra buffer to their CPF and Medisave savings. In its public education, the Government should set out its case in a holistic manner, linking the need for Singaporeans to work longer to their desired retirement lifestyle, the remuneration older workers can attract, and their productivity. These elements need to be explained alongside yet another factor – the inflow of foreign manpower and how that can be managed alongside the employment of older workers.

Sir, to motivate more to work till they are older, the Government could emulate

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those countries which hand out more pension money to those who retire later. In this respect, I would like to ask the CPF Board if it has plans to give older workers a higher interest rate on their CPF contributions, received from the employment beyond the age of 62. Or does it intend to come up with other incentives?

Sir, yet, winning Singaporeans over to the idea of working longer is only half the battle. No amount of legislation can completely meet the goal of getting employers to hire older workers unless employers embrace such workers. The right mindset has to be inculcated throughout the company, from the CEO down to the young Human Resource clerk.

Sir, in this regard, I am heartened that the Association of Small and Medium Enterprises (ASME) says that most of its members have no issue with re-employment. ASME president, Lawrence Leow, is quoted to have said that in offering re-employment, a company needs to look at how a person performs, instead of cutting his salary once he turns 62. Yes, I agree that an employee cannot have become less capable on his 62nd birthday than the day before when he was 61. The employee, on his part, has to accept that re-employment is likely to mean an eventual restructuring of his compensation package and job function. An employee, who has a positive mindset can appreciate that there is fair play in the way his re-employment has been structured. Thus, re-employment can be a win-win for both the performance-minded employer and the older employee.

On this note, I support the Bill.

4.03 pm

Assoc. Prof. Paulin Tay Straughan: Thank you, Mr Speaker, for this opportunity to share my thoughts on this very important Bill.

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The continued employment of older and experienced employees is an important development that will contribute significantly to economic and social stability in Singapore. I rise in strong support of this Bill, which mandates the re-employment of workers post-retirement. However, I have two primary concerns which I hope the Minister can comment on.

First, regarding the criteria for eligibility of re-employment. May I ask the Minister if he can provide clear guidelines on what constitutes satisfactory work performance. Related to this, can the Minister provide details of the appeal process should employees fail to meet eligibility criteria for re-employment? What help will be rendered to those who want to continue working but fail to meet the re-employment criteria? How can we help these workers to continue to be self-sufficient?

My second concern relates to the terms of re-employment for post-retirement. It is a very complex Bill and I may have misunderstood some of the details and, if so, I appreciate it if Minister can clarify. From my understanding, the Bill details re-employment as a new contract, and benefits therefore would be recalibrated for the re-employed worker. What are the implications of this on holiday leave, health and other benefits?

Related to this is the specified salary adjustment for post-retirement workers. I understand the rationale for reduced compensation for re-employed workers as the Bill seeks to alleviate the stress of manpower costs on employers. But it worries me that a structured guideline set out in the Bill may send an unintended message that older workers are less productive, and therefore deserving of less remuneration. And that is not fair. While an older employee may function a little slower due to physiological

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limitations, I think that they more than compensate for this with their wealth of work experience. Where the occupations are not reliant on physical strength and agility, why should an employee aged 63 suffer a pay-cut and reduction in benefits when his productivity and contribution may be even better than when he was 61 or 62 years old?

Inherent in this flawed rationale that if employers had to extend employment of workers beyond retirement, this is an imposition on employers' resources. That is not necessarily true. With our sustained low total fertility rate and a fast-greying population, older Singaporeans who can continue to contribute meaningfully to the workplace cannot be thought of as liabilities. They are a critical and essential segment of the workforce, and their contributions to overall productivity is valuable and irreplaceable.

As the Singapore population continues to age, older Singaporeans are an indispensable part of the Singapore labour force. We cannot rely on augmenting labour shortages through the foreign labour pool as we need to keep a careful watch on the local-foreign composition in our society. A foreign worker who is not familiar with local culture and workplace norms is certainly not able to match up in terms of ability when compared to an experienced older worker who has been with the organisation for an extended period. That older Singaporeans are willing to continue to work past retirement is indeed a privilege that Singapore must be thankful for.

I was very glad to note the highlight of Singapore Airport Terminal Services’ new wage formula for managing compensation in the Straits Times recently. Rather than allow employers to exercise an automatic pay cut post-retirement, I think best-practice should dictate that compensation should be tied to job performance of the

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employee regardless of age. We already have in place a restructured organisational philosophy that favours on-the-job performance rather than tenure for remuneration. I think that insisting on the pay-cut post-retirement certainly does not commit well with the performance-based evaluation system.

I hope the Minister will send a strong message to employers that the re-employment of retired workers facilitates organisations’ ability to sustain their labour force and productivity, and that we will continue to encourage employers to keep loyal employees who will contribute meaningfully to the workplace on fair terms. Job experience is an invaluable asset that is very difficult to replace.

4.09 pm

Ms Sylvia Lim (Non-Constituency Member): Sir, three years ago, Singaporeans were subjected to Central Provident Fund reforms which deferred the age at which they start drawing down their balances from 62 to 65 years. At that time, the Workers' Party opposed the deferment of the draw-down age (DDA) to 65 as there would be Singaporeans who would not be able to work or work at the same pace till 65. Though this Bill does provide opportunities for Singaporeans to continue working till 65, my view is that the provisions give little assurance to older workers that they will remain meaningfully employed after they turn 62.

Let me elaborate by going into the specific provisions. First of all, the retirement age is not changed. The name of the Act is being amended to Retirement and Re-employment Act by clause 3. This enables the Government to provide for re-employment opportunities for older workers without actually changing the legal retirement age. Clause 6 which

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amends section 4 does not increase the national retirement age which remains at 62 years. The new section 4 merely enables the Minister the discretion to change the retirement age by Gazette to up to 67 years at some later point in time.

Next, re-employment obligations and hurdles. Clause 9 of this Bill provides for re-employment of workers beyond 62. It sets out three, what I consider hurdles for workers before re-employment is confirmed. The first hurdle concerns who is eligible for re-employment. Under the new section 7A, the employee qualifies for re-employment if he has obtained the satisfactory performance appraisal and is medically fit. How will medical fitness be determined? Though there is a presumption of medical fitness provided, the employer can prove otherwise, according to the Bill. If a worker has some medical condition, will medical opinion be conclusive as to the fitness for work or can be the employer make his own subjective assessment?

The next hurdle arises if the employer says that there is no vacancy to justify re-employment which is allowed under section 7C. Though there are tripartite guidelines on the re-employment of older workers, the guidelines I read simply said that the employer should consider all available re-employment options. But who can argue against the employer's assessment of whether there are vacancies or not? Will MOM be able to suggest to the employer how vacancies can be accommodated within the employer's business? Will the worker be able to suggest where vacancies might exist against the employer's assessment?

Assuming the worker manages to navigate the first two hurdles, he will be offered re-employment. This is where the third hurdle comes in. What kind of job and benefits will he receive? It is clear from the proposed section 7A that the employer is free to reinvent the wheel by

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offering a different job with different terms and conditions. He can even ask the employee to continue at the same job but with much reduced pay. In addition, the contracts for re-employment may be from year to year or even a shorter duration by agreement. The new section 7B makes clear that previous years of service will not be counted for benefits except entitlement to annual and sick leave.

Sir, with so many "ifs" and "buts", are we exposing our senior workers to shabby treatment? Indeed, it has been noted that the existing law which allows employers to cut workers' pay by up to 10% when they reach 60 has been used by employers liberally. It is reported that this cut was common, even in unionised companies and also present in the public sector. With this new re-employment legislation giving employers a free hand at 62, are we exposing our senior workers to being short-changed further when they reach 62?

Sir, in addition, the Bill gives employers the option of not offering re-employment but to pay the employment assistance payment under the new section 7C. In some way, this Bill does not ensure employment till 65. In fact, it subjects our senior workers to a stressful re-employment process at 62. Sir, further, the re-employment law only applies to workers who at 62 are still employed. It does not help Singaporeans aged 62 find a new job. As at 2009, the employment rate of older residents aged from 55 to 64 was about 57%. The rate of those aged 60 or more would be lower. Even for those who are working, what kind of employment they had and whether there was under-employment is not clear since the person is counted as employed as long as he works for at least one hour a week.

Sir, if the Government wants to delay Singaporeans their CPF draw-down age to

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65, it should at least correspondingly provide for a more seamless transition of employment from 62 to 65. Further, Sir, the Workers' Party is still of the view that the CPF draw-down age should not be linked to the retirement age or the re-employment age limit, whatever we wish to call it. Not everyone can work till then and some may need to have an easier pace of life. In fact, in the Minister's Second Reading speech, he acknowledged that workers in this age group would need to have choices. Sir, as such, I believe that Singaporeans should be able to commence their CPF balance draw-down at about 60 years old. These CPF balances were accumulated through decades of work and the money belongs to CPF members.

The Government can always educate and encourage people to work longer or to delay drawing down their CPF monies voluntarily.

4.15 pm

Mrs Mildred Tan (Nominated Member): Sir, I congratulate the Government for bringing this to the Second Reading of the Bill. To say that raising the retirement age is something easy to do would be scratching the surface. Sir, I support this Bill because it gives security to the suppliers of labour that they will have a fair market in which to work in, and also buyers of labour that the market is one that is priced fairly.

This Bill mandates that employers must offer re-employment to workers who turn 62 until they are 65. In reality, even before this new legislation kicks in, there are older employees who have already negotiated with their current employers for re-hiring. So it would not be wrong to say that this Bill does not create a new market. What it does is to make it a better market.

Under the classical economic model, any intervention to a free market makes it less perfect. This, of course, assumes

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that buyers and sellers have perfect knowledge and are equally equipped or empowered to negotiate on price alone. However, these assumptions do not necessarily hold true in daily economic life. In the current market we are speaking, these assumptions may be too general.

This Bill contributes by giving older workers the assurance that they will be hired after 62 and at least until 65. The question really is: why are employers reluctant to re-hire older workers? As an employer, the age of a worker is not my concern but from a business perspective, it is about cost and output. If we see labour as a factor of production and if we say we can get the same output with less cost, that makes economic sense.

However, older workers can sometimes cost more due to the seniority-based wage system and because of healthcare issues. For wages, we have the flexibility to negotiate individual contracts, but for healthcare costs and issues, it is less straightforward and there is more work that needs to be done.

I would like to suggest that the tripartite partners work together to make medical insurance including Eldercare, MediShield and Medifund more accessible to older workers. I would also like to suggest that such insurance be made portable among companies. In this way, it reduces the cost of older workers by lowering the risk of higher healthcare costs, and makes it more attractive for firms to re-hire at more competitive salaries.

Sir, with Singapore's maturing economy and shifting demographics, we cannot afford to be oblivious to the non-economic considerations in this discussion. We need to view the issue of re-hiring older

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workers with extended lens beyond economics.

First, let us question the inclination to regard the output from all workers as being perfectly comparable. For example, I know that Sembawang Shipyard has a very good policy of re-designing work for older workers. When the engineers and technicians become too old to clamber up and down ships, they are re-deployed to the workshops on land.

With the benefit of having worked on ships before, these older workers have a better idea of how design impacts the ship and what will work or what will not work. Like a fine craftsman, it boils down to the feel of the steel between your fingers that produces excellent work, even if he might not know how that would translate into economic dollars per year. So the benefits of hiring and re-designing work for older workers are there and Sembawang has reaped it in the strong camaraderie at the yard and in their sterling results every year.

My point is that if all the value must be reduced to economic value for us to take notice, the challenges lie in us not being able to capture it all in the planning stage. For example, it is not possible to say that an older worker who has worked on board a ship will add 10% more value than someone who has been working on land all his working life. There is no basis for this, except a post facto one. It is only after a man has come into the workshop, and after the workshop performance has improved, that we are able to talk about the added value the man has brought.

The second challenge is that it is not only post facto ; it is also non-uniform. That is to say, not all workers hold an equal premium over younger ones. Many factors come into play. It depends on the job, the organisation, the opportunities and the man himself. An older midwife is infinitely more valuable if you have a

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difficult birth. Her experience makes the difference between life and death but you will never know unless you have difficult births.

These considerations are messy, particularistic and hard to handle. No wonder they are discussed as non-economic considerations. But they can impact the bottom line, and they can add or subtract value. In this sense, I urge these non-economic considerations be regarded seriously and for more firms to be like Sembawang Shipyard in providing and rewarding opportunities for older workers.

Sir, finally, a word on implementation. I know that a common pastime for workers and staff is at the coffee machine or the pantry and it is usually to criticise policies devised by Human Resource (HR) or the Management that are being implemented. A young worker recently told me that she was very happy when her HR in her company introduced a flexi-time policy in her workplace where workers are allowed to report to work anytime between 8.30 am and 10.00 am, so long as they clock in the required eight hours a day. So I said, "Is that not a good thing? Flexibility means you can decide for yourself how best to fit the work day in." To that, she replied, "Yes, you can come in any time but it must be the same time every day."

Sir, I realise that flexible negotiations between firms and older workers are provided for in this Bill. Flexible is a key word here. At the same time, the considerations are multiple and hard to quantify. In this case, I call for all three partners in the labour equation to work together to ensure a fair deal for all.

Sir, I support the Bill.

4.21 pm

The Minister of State, Prime Minister's Office (Mr Heng Chee How): Mr Speaker,

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Sir, thank you for allowing me to join this debate.

I rise in full support of this very important law. In order to cater to an ageing population and an ageing workforce, we need a holistic approach; a total systems approach. To me, this Bill before us is a very key instrument to allow us to help Singaporean workers, most of whom are expected to live longer, to accumulate the resources through extended working life so that they may continue to enjoy a good quality of life.

Earlier on, I heard the arguments by the hon. Mr Low Thia Khiang as well as Ms Sylvia Lim talking about, "Why not just let our workers, our Singaporeans, draw on their CPF monies earlier rather than later because they would want to be able to spend this in their later years, especially when they may or may not be continuing to work." But I thought that that is the very argument. We all agree that Singaporeans on the whole are living longer. The Minister had earlier shared those statistics. So, the question is, where are we going to find the resources for our Singaporeans as they live more years to be able to enjoy the quality of life?

The Bill before us today is to enable more workers to work longer, more years and accumulate those resources so that they can enjoy the very quality of life that Mr Low and Ms Lim hope that they would. So let us, instead of just worrying about the darkness, complaining about possible twilight, work together and bring this candle and bring this light to our workers. Otherwise, it would be like saying, "You have a bank account, I have no idea how you are going to add money there but I know you have to spend. So do not listen to these guys when they tell you how to add more money into your account, just listen to me and go and draw whatever you have and start spending." I do not think this is helpful.

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And earlier we also heard – does it work? There are different concerns about this law. I would like to share the experience of the National Trades Union Congress (NTUC). Since 2007, we, as part of this tripartite effort, have been working the ground through our unions, working with companies to promote re-employment, by getting companies to be committed, by getting companies to incorporate this into their collective agreements, by incorporating them into the HR policies and executing them well. So we have a tiered system of measuring them and categorising them. Now, we have more than a thousand companies – I last counted 1,055 unionised companies – already committed and some doing very well in terms of systematic practice. Together, more than 9,000 unionised employees since 2007, when we started measuring, have benefited from in-company arrangements with their unions in re-employment. So, never mind all the theory and concerns. We know if you work well, if you know how to do it, it will work and it will actually benefit many, many workers. Therefore, I support this Bill very, very much. Sir, I would like to now make six observations and suggestions which I hope can help further strengthen the overall effectiveness of this Bill as it passes into law and goes into implementation.

The first is that this is a re-employment law, which means to say that we anticipate the day when the worker reaches 62 years old and it obliges the employer to re-employ him. But I think it is also important for us to ensure that across the different age cohorts, before 62 years old, the employment rate in these cohorts is kept high and, in fact, can be raised. And our statistics show that among males, the employment curve actually goes up and then turns down after about age 50 or 55, and for females, earlier, in their 30s. There are various

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socio-economic factors explaining that. But I think it is important that even as we support this re-employment law, to continue to put in our efforts so that the pipeline into the re-employment age is kept strong and, in fact, can be sustained and strengthened over the years; so more and more workers, a higher percentage of whom will reach 62 years can therefore benefit from re-employment.

Sir, secondly, I also note that contract work is becoming more prevalent, both amongst the rank and file as well as the PMETs in our economy. This is done on the part of the companies for labour flexibility. We also therefore need to look at the possible impact it would have on the employment rate across the different cohorts so that people do not leave prematurely or are made to leave prematurely before 62 years old.

Next, the law is passed in 2011 and it takes effect from 2012. Much as we understand that there will be time needed for companies that have yet to figure out how to do it, to now re-double their efforts, I think, on the ground, expectations would be created. Workers would say, "Now that we have the law, can we have it effective earlier rather than wait till January 2012?" And in particular, there will be recommendations, whether in the law or in the guidelines, for consultations between company and employee on the re-employment to take place six months before they are supposed to be re-employed. And that means middle of 2011. So I would like to ask the Minister whether anything can be done with respect to helping workers who will reach retirement age by January 2012 so that companies will also be obliged to begin consultations by the middle of 2011.

Sir, next, workers are also concerned about the flexibility over how employers may define their new jobs and their new

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pay conditions in re-employment. In particular, some will worry that some irresponsible employers may purposely put forth an offer that is so unattractive as to incentivise the workers to reject it and then the employers will say, "I have done my job." Therefore, I am very encouraged when the Minister mentioned that it would be according to reasonable factors and these factors would be performance, productivity, seniority-based structures, and so on. From the union movement, we are very, very clear. There is nothing automatic about this and where there are cuts, we then expect the employers to do so based on justifiable factors. We will continue to pursue this on behalf of our workers.

Sir, I would also hope that in comparison with other countries, for example in Japan, where they passed the law but in the exercise of their law, their mechanism lacked teeth, so they could not really take employers to task if they were to disregard the law and not re-employ their workers. So I am encouraged that in our provision, we do have this legal obligation and there will also be dispute resolution mechanisms present within the Ministry of Manpower (MOM) should the employee not be satisfied that he has been fairly treated.

I urge the Minister to ensure that this mechanism would have the requisite powers and the teeth and administrative wherewithal to do a good job because this is so essential to translate good intent into an effective practice for the benefit of our workers.

Finally, Sir, I hope that in this final year before implementation, MOM, together with the tripartite partners, can further step up their efforts to highlight the good practices amongst model companies, as well as to highlight companies that are not doing it because they are against the employment of older workers. I think it is time for us to take a

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firm stand so that everybody knows what is the right thing we expect to be done in Singapore and to offer help, as necessary, to all companies, especially to our SMEs, to do a good job in re-employment.

On this note, Sir, I support the Bill.

Mr Speaker: Yes, Mr Low?

Mr Low Thia Khiang: Thank you, Sir. The Member referred to our proposal that workers should be allowed to draw down on the CPF savings at the age of 60. He said that would affect the quality of life in retirement. I would like to seek clarification from him as to how he thinks allowing Singaporeans to draw down on their CPF at age 60 would affect their quality of life, with insufficient fund – that was what he is referring to. If this is so, perhaps the Member could explain why it is so. Is it that our workers are not being paid enough and thereby after working for 30-40 years when they reach the age of 60, they still have insufficient funds in their Retirement Account to enable them to have a proper retirement and to have a certain reasonable standard of living and quality of life which is the same as any other first world country?

Mr Heng Chee How: Mr Speaker, Sir, what I said was that we all recognise and agree based on the fact that Singaporeans on the whole are living longer. With more years of life, we would need more resources to provide for the more years of life. This Bill today is one way to help more workers extend their working life by making this a legal obligation on the part of employers. This is a good move, and those who can benefit from this will be able to earn more over more years, and therefore enjoy a better quality of life.

4.32 pm

Mr Laurence Wee Yoke Thong (Nominated Member): Mr Speaker, Sir, this Bill is very timely and commendable. This

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Bill seeks to facilitate older employees to work longer and their intention in re-employment.

In today’s world, people are living longer. As the Minister has just said, and according to demographic trends, it is no longer confined only to the developed countries but also the less developed countries. In the context of working beyond one’s retirement age, two important issues must naturally be considered among others from the worker perspective: first, the older person’s physical and psychological well-being; and second, their ability to continue to be well integrated in the family, community and overall society.

Age is no longer an important determinant in the work setting if one continues to be productive and competent. Nonetheless, there should be no compromise with regard to the quality of work or services rendered. To be fair, it should fall within the reasonable expectations of one’s supervisor or employer. And where the older worker’s expertise, experience and knowledge are being valued by his or her company, it is indeed a win-win situation.

One example I recall is that of a long-serving Eurasian waiter, past his 70s, working in an established hotel in the Orchard Road area. He knew most of the faces of regular customers, and would exchange niceties and ensure that their orders were delivered on time. With his positive attitude and personality, he will be a good service model for our younger people.

I had the opportunity of asking him about his retirement plans. He said that he would continue working for as long as the boss wanted him to, and health permitting. For him and for many of us too, work gave him a purpose and

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meaning to his life. This is what I call "positive ageing".

Nevertheless, older workers who are given the opportunity to continue in gainful employment should, if they choose to, be given the option to opt for a slower pace and also lower one’s remuneration expectation, so that they can enjoy working at their pace and do the things that they want to do without disruption to their work life.

Sir, many older people have many positive qualities, including being quite resilient in the face of adversity. This is often due to coping strategies from past experience in behaviour. They can be an important source of mentoring and encouragement to younger people in the workforce.

On a lighter vein, retirement means different things to different people. I refer to a news-cutting sometime ago by a popular Hong Kong singer and actress, and I am not naming her, and I quote: "The meaning of retirement is putting on weight and being able to eat my fill."

Sir, there will always be a group of people out there who are not ready to stop work suddenly, come mandatory retirement age. For some, it is not the money factor, but a feeling of loss of status, loneliness and social isolation. For this group who want to work longer, the best thing about this Bill is that it will enable them to do so.

Sir, there are also many others who may not be in favour of prolonging one’s work years. I quote one writer on the Straits Times' Forum 31st July: "Are Singaporeans working all their life and not enjoying the rest they require to savour their life’s toil? There is a time for everything, and they should not pressure citizens about losing out if they do not continue working." There is nothing wrong with that perspective. However,

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this should not be a problem at all, given the flexibility of the rule.

Sir, there are many advantages for prolonging the employment of older persons, not just the monetary factor and ensuring sustainability of income for as long as possible, but more importantly I see it as dignifying the lives of the elderly, providing the self-esteem factor and giving meaning to their life’s purposes.

May I urge employers to see the positive qualities of older workers and not to perceive them as slow, inefficient and unproductive. Some even said that once they reach the magic age of 50, we have some kind of arthritic condition or physical mobility that will hamper their work. So it is not true. In this respect, it is heartening to note that among others, NUH and PUB won the global award this year for promoting the employment and retention of older workers.

With this timely push to work a little longer, perhaps Government could also consider, at an opportune time, to do away with the mandatory retirement age altogether. This is to better address some of the current issues facing seniors, for example, the alleged discrimination against older people with regard to their credit worthiness. There is also the larger problem of those without proper financial planning and CPF savings as their only source of income which may not see them through their impending retirement years.

Sir, at this juncture, may I suggest that we should have a national body to represent the future retiree on a wider platform to meet their self-actualisation needs among other things. It will be a relevant body to address and care for the diversity of needs of the older persons to enable them to participate effectively in their daily living. This organisation will be largely run by the people for the people-kind of thing. I note that all these may not

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be within the scope of this Bill this afternoon.

In conclusion, Sir, this Bill will provide older workers with an opportunity to prolong their work years in a meaningful way, ensuring them to be financially independent whilst preparing for their retirement so as to age gracefully. I have every confidence that this Bill will be successfully implemented if the principles of care, fairness and objectivity are observed in handling individual cases that come within the purview of this Bill.

Sir, I rise fully supporting the Bill.

4.38 pm

Mr Hri Kumar Nair (Bishan-Toa Payoh): Mr Speaker, I rise in support of this Bill. If there is one thing I have learned from being in this House for the last five years, it is that too little of what is debated here is followed by many outside. There is sometimes misunderstanding over the reasoning behind a policy or law, or what it seeks to achieve. That, at times, arises because our efforts to reach out and explain are not as effective as what we would like. I fear that, if we are not careful, misunderstanding will happen with respect to this Bill.

Whenever a government is seen to be tinkering with the retirement age, it can be assured of some suspicion. But this Bill is not about prejudicing the employer or employee. It seeks to offer workers more options when they reach retirement age, and to provide a framework for both parties to reach a reasonable compromise on how the employee can continue to work, or receive financial assistance.

To better appreciate the Bill, we must first understand where we stand today. One of the questions I am often asked as a lawyer is whether an employee can be asked to leave his job although he has faithfully discharged his duties. The

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answer is "yes, he can", and without any compensation. Most contracts give the employer the right to terminate with notice without cause or reason. Sir, to impose on employers stringent obligations to keep an employee when he reaches retirement age, only encourages employers to let the employee go well before he reaches retirement age. How does that benefit Singaporeans? The reality is that despite our best intentions and the cleverest of drafting, it is next to impossible to force employers to hire people they do not want to hire. The reality again is an employer would likely keep an employee so long as he continues to have value or bring value to the company, and that will take into account amongst other things of what the employee earns.

Under this Bill, when an eligible employee hits retirement age, he can choose whether he wants to continue working. The Bill seeks to reduce discrimination based on age and provides an avenue for relief should an older worker feel he has been unfairly treated. This Bill therefore advances employees' rights. I hope that this Bill will not be portrayed as forcing Singaporeans to work longer or on inequitable terms or an attempt to delay or deny them their benefits.

But with most other laws, the difficulties will be in its interpretation and implementation. In that regard, I would be grateful if the Minister could clarify some issues.

Firstly, the Bill provides that employers are not obliged to re-hire if the employee is assessed by the employer to have performed less than satisfactorily. An employee is allowed to file a challenge to the Commissioner against an unfavourable assessment. But many companies do not maintain regular and documented

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performance reviews, so how is this issue going to be determined? Is MOM going to examine the work of the employee and decide what is satisfactory for that company, when expectations may vary from company to company? How will it do so? Or will it be the case that the employer’s assessment will be accepted, unless clearly rebutted by the employee?

Secondly, where there is a dispute between the employer and employee, the Bill places the onus on the employee to lodge a complaint with the Commissioner within a specific deadline. Presumably, if he fails to do so, he will be barred from seeking relief. This raises some concern as older employees, particularly those less educated, may not know their rights or be aware of these deadlines. Why can the obligation not be placed on the employer to refer all disputes to the Commissioner? The employer would be well placed to do so. If the burden is to remain with the employee, what steps will the Ministry take to ensure that all employees are aware of their rights under this Bill, particularly the need to file on a timely basis? Will the Commissioner accept complaints filed out of time, even if the only excuse is ignorance of the law?

Thirdy, even if an employee is successful in his complaint, the remedy he gets is that the employer will be compelled to do what he should have done in the first place. Only a failure to comply with the Minister’s order results in punishment. In short, the employer has no incentive to be reasonable from the outset. The employer can therefore take the chance, at no risk to himself, that the employee may not complain, or may not do so in time, or may just give up. There should be some compensation to the employee for being forced to prosecute a meritorious complaint.

Finally, one of the remedies the Minister can impose is to compel the employer to re-hire the employee. I

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question whether this is wise. The relationship between the employer and employee is likely to be strained. Indeed, the Courts have long recognised that it is unproductive to compel two parties to work together if the relationship has broken down, which is why they will not order an employer to hire someone. Hence, compensation is the answer. I submit that this Bill should take the same approach.

In conclusion, while the Bill has noble intentions, it would be highly detrimental if we ended up creating unrealistic or impractical expectations. I therefore hope the Minister will ensure that the reasons and rationale for this Bill, including its limitations, will be explained clearly to all Singaporeans.

With that, I support the Bill.

4.44 pm

Mr Ang Mong Seng (Hong Kah): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, our population is ageing rapidly. By 2012, about 20,000 people will hit the retirement age of 62 years every year. Of course, our quality of living has improved tremendously. Most citizens can get access to better healthcare so their longevity has also increased. The average man can live up to 80 years old; the average woman 85 years old. Because most people do have access to better healthcare even after they have hit 62 years of age, they will still be very healthy. The body continues to function well and they are full of vitality. The elderly worker has a rich working experience. If he can continue to be part of the workforce, he will be able to put that vitality and working experience to use, allowing them to continue contributing to society. It is good that elderly workers continue to work because it will make their lives more fulfilling; it will also ensure they have a more stable

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income and lower their reliance on the society and their families.

So, I feel that this Retirement Age (Amendment) Bill proposed by the Manpower Minister is very timely because it allows the employers to re-employ those who reach 62 years old. Just as we are always talking about letting people age in a place they belong, this is about letting them be employed in a place they work. This is a new measure that will work well with current and future generations. As such, I support this Bill but have a few suggestions here that I would like to share with Members.

According to page 7 of the Bill, those who reach the retirement age of 62 years old can be re-employed if they have good work performance and are healthy. In assessing their work performance, the employers have to look not just at the employees' past one year's work duties and performance but also take into account their work experience and contribution to the company in the past.

As for the health requirement, the key question is: what kind of health standards will disqualify employees from continuing to work? Every industry has different demands and everybody's health is different. I would like to ask the Minister if this health standard is established by MOM or by the different companies. I fear that if we leave it to the individual companies to establish this health standard, there are some companies who may intentionally raise the threshold to make it difficult for elderly workers to meet this health requirement.

With regard to the criteria for re-employing workers, I would like to ask MOM if there are policies in place to ensure that the elderly workers can continue to work without their employers making unreasonable demands on them, such as having them master the latest computer working procedures. If so, with

*Cols. 2343-2346.

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such harsh criteria, these elderly workers may not be able to be re-employed.

With regard to employers who flout the rules, I would like to ask the Minister if the employee meets all the requirements but is refused reemployment by the employer, are there any measures in place to prevent such a thing from happening? If the employers do not follow regulations, what kind of penalties will they get?

In accordance with the current Retirement Age Act, employers who continue to employ those between 60 and 62 years can reduce their wages by no more than 10%. Elderly Singaporeans are concerned that if they are re-employed after they reach 62 years old, they will have to face another wage cut. By the time they reach 50 years old, the employer's CPF rate will fall progressively lower. By the time they reach 60, the employer's CPF has fallen to 5%. This wage cut, again and again, is unfair to them because they continue to work as they have been and they continue to have the same duties. The employer should decide based on the company's situation and that of the employee's performance instead of a fixed mentality that all elderly workers' wages should be cut.

Now, I would like to bring Member's attention to a newspaper article in the Lianhe Zaobao on 16th December last year. NUH will employ those retired workers and their salary package will be the same as before. These workers will not only not have their wages cut, they will also continue to enjoy the health benefits, leave and welfare that they have been enjoying in the past. If they perform well, they will get a pay raise and even a promotion. The hospital believes that age is not a determining factor for performance and that work attitude is the most important factor. The hospital believes and recognises that these elderly

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workers can still contribute. By continuing to work in the hospital, they can impart their knowledge to their younger colleagues.

I see the NUH as a role model in this regard. Hopefully, both the public and private sectors can look to NUH and support the new policy of re-employing elderly workers. I hope that the Minister will consider my suggestions.

I support this Amendment Bill.

4.50 pm

Mr Terry Lee (Nominated Member): Mr Speaker, Sir, since 2005, the tripartite partners have embarked on a mission with the future in mind. We are faced with the certainty of a greying population while our birth rate lingers below expectation. These conditions define what we need to do today.

Let us be clear that we are not introducing these changes as an austerity measure to combat budget deficits like in other European countries. But we are doing this when our employment rate is at the highest and unemployment is at the lowest. Therefore, our intention is clearly to help fellow Singaporeans better prepare for retirement and our companies to remain competitive. So let us not cast any doubt on the motivation, but let us also know that this is no silver bullet.

For re-employment to work well, the perceptions and mindsets of both employers and employees are essential. The Labour Movement has been proactively engaging our unionised companies on re-employment over the last five years. Today, we have more than 1,000 unionised companies committed to re-employing about 9,800 employees. Five hundred of these companies have HR policies aligned to the tripartite guidelines. Our unionised companies and members are in a better position today with these experiences.

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Mr Terry Lee (Nominated Member): Most employees will have some form of anxiety before they turn 62. Many of them understand that if they stop working it means no income but they may have many good years ahead and bills to pay. Companies need to engage their employees early before they turn 62, give them peace of mind and help them move on. They must have a fair chance to be re-employed. And they should be paid according to their contribution and not blatantly by age.

Some may be tempted to think it is their last lap when they reach 62, but we should discourage that thought. They need to keep upgrading and upskilling and do their best at work. They need to appreciate the importance of re-employment for their retirement.

Mr Deputy Speaker, Sir, I rise in support of this Amendment Bill but, at the same time, I urge that we remain vigilant and nimble in our approaches and policies. Though we are seeing hopeful signs in re-employment now, we must be careful that there are other challenges threatening its relevance. For example, we need to pay special attention to those who may not re-employed at 62. At the rate our population is greying, this possibility is further amplified.

The United Nations reported that we have one of the fastest ageing populations. It was projected we will be the world's fourth oldest country in 2050. Re-employment is necessary because older employees are a precious resource to the Singapore workforce, especially in a tight labour market. The worst for anyone is to have no job, no money and poor health. Therefore, we must ensure that the majority of fellow Singaporeans can and will be re-employed.

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4.54 pm

Assoc. Prof. Fatimah Lateef (Marine Parade): Mr Deputy Speaker, it is very timely to introduce this Amendment Bill now. Why so? Firstly, it is at a time when our life expectancy is the highest it has ever been. Secondly, a significant portion of our seniors continue to stay active, both physically and economically.

Yes, Sir, it is all about keeping people, who are economically active and capable gainfully employed till a ripe age, well into their golden years. This is also a platform for companies to maintain what I would call the 3Es: Experience, Expertise and Education, which can be shared with others. I do, however, feel that a worker should have the flexibility to retire when he feels so.

This Bill is also necessary to help reduce any abuse by employers, especially pertaining to matters of keeping the seniors employed, their re-employment and comparative remuneration. As MPs, many of us have heard our fair share of the challenges facing our seniors in their job maintenance or job hunt. This Bill, together with the Industrial Relations Bill which we have just debated recently, will certainly help and offer various options to employees to seek recourse for employment disputes. The Ministry of Manpower and the NTUC have been very strong advocates of hiring seniors and older workers. The passing of this Bill, Sir, will help drive the message home even further amongst all relevant stakeholders.

This Bill will, no doubt, act as one of the signals to help increase compliance amongst employers. But it also means companies will now have to think of how best to utilise the skills of the seniors with an appropriate range and types of jobs. Sir, I do have three areas of concern I wish to highlight.

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Firstly, it pertains to some of the SMEs, especially the smaller ones, those with few employees and those dealing with specific types of trades. Currently we do see some from this group already facing a variety of challenges such as those pertaining to manpower and quota issues, that is foreign workers versus local workers. With this new Bill, Sir, I do hope MOM will give this group of companies some due considerations and, perhaps, some flexibility on a case-by-case basis. Perhaps there can be a targeted advisory task force set up to assist these SMEs with the variety of challenges they may face. They can assist these employers and companies to think out of the box and circumvent their options to facilitate their compliance with this Bill.

Next, with regard to section 7 pertaining to the issue of re-employment and where a new contract of service is to be drawn up, will MOM be coming up with some suggested generic guidelines for employers? This I feel may be helpful to reduce or prevent unnecessary discrimination which has the potential to arise.

Thirdly, pertaining to the new section 7C, Sir, on the offer of employment assistance payment to the eligible employees, can I again ask if there will be some guidelines from the Ministry? It is mentioned in the Bill that the tripartite guidelines must be referred to in these cases. Can I please enquire if the Ministry feels these current guidelines are sufficient and whether some revisions, edits and fine-tuning would have to be added on?

Finally, Sir, one issue which I think is very crucial is that as we continue to retain our seniors and employ them right into their ripe old age, how do we promote health at the workplace and healthy lifestyle as well? After all, a majority of our working adults and seniors

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spend a significant portion of their day at their workplace. I would like to call upon MOM to work even more closely and further with MOH to come up with certain good health practices at work and, perhaps, even adopting some very good practices from overseas, such as the Japanese examples, to ensure that our workers stay healthy and have a good worklife balance right into their old age.

After all, I strongly believe that work is good for us. Studies have shown that keeping active way into our senior and golden years delays the onset of Alzheimer's disease, dementia and cerebral atrophy. It also helps to maintain our brain neural networks for a longer period. Perhaps this is one of the reasons why the healthcare sector has a very high re-employment rate overall.

There was a philosopher who said that if you love your job and you are passionate about it, you do not have to work a single day of your life.

So, with that, Sir, I support the Bill.

4.59 pm

Ms Jessica Tan Soon Neo (East Coast): Mr Deputy Speaker, given our tight labour market and the fact that our resident workforce in Singapore is ageing and life expectancy is increasing, the re-employment recommendation proposed will support and enable workers to work longer if they wish to and to organisations to be able to continue to benefit from the value of the more experienced employees.

I am supportive of the amendments proposed and having gone through the details of the proposed amendments, I must say that much thought has been given to the details of the Bill to ensure that a balanced approach is taken. It takes into account the interests of employees who are eligible for re-employment whilst ensures viability and

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flexibility for employers. The hon. Member, Mr Hri Kumar had mentioned, it really looks into giving more rights to the workers and giving assurance to workers of re-employment.

The Bill actually provides quite great clarity on the eligibility criteria for re-employment, the re-employment obligations of employers, guidelines or timelines in terms of engaging employees and notifying them of eligibility for re-employment and the terms of contract. It also ensures that employees are provided an Employment Assistance Payment if the employers are unable to find suitable jobs for the employees. There are also clear avenues for employees to seek recourse and remedies for re-employment disputes through the Ministry of Manpower or the Commissioner for Labour. There is also flexibility for employers and employees to make necessary adjustments to wage and employment benefits. The guidelines also encourage employers to exercise fairness in making adjustment to wages and employment benefits for older workers.

It is this last point of fairness and the spirit of re-employment that I would like to touch on. As mentioned, the amendments proposed in the Bill and the clarity of the guidelines thus help in providing a framework for fairness for both employers and employees. However, as is often highlighted, the effectiveness and impact of any policy is really in the implementation and the actual execution of these policies. For example, before making downward wage adjustments, when employees reach the minimum statutory retirement age, I do hope that employers will review their wage and benefit policies and not just make automatic downward adjustments. The Retirement Act, as it stands today, has already given employers the legal right to adjust wages downwards for workers who reach the retirement age. However, as many companies have moved or are moving to the performance-based wage

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system, adjusting workers' pay downwards when they reach retirement age may not be fair if they meet the criteria of at least satisfactory work performance and are medically fit to continue to work. I think MOM has reiterated this point about the fact that it should not be automatic in terms of wage adjustments downwards.

A positive example is the Singapore Airport Terminal Services (SATS) as many Members have mentioned. This was reported in the Straits Times on 5th January 2011, where SATS made a decision to move away from an automatic 10% cut to determine wage adjustments for their workers who turned 60 years of age to ensure a fair remuneration and benefits policy based on performance. I hope that the example of SATS and companies which have adopted similar practices with regard to the criteria used for fair wages for older workers helps to highlight that just because a worker turns a year older, it does not necessarily mean that his or her value and contributions to the organisation decrease.

On the part of employees though, I also hope that there will be a recognition that there may be situations for them to be open and flexible to changes in their jobs. These changes may not be due to the fact that they are not performing, according to the criteria we talked about, but these are the criteria for productivity. It could mean that the market conditions have changed and, therefore, job scopes may need to change. So, re-training may be required, jobs may need to change and then re-deployment may need to happen and, therefore, adjustments and flexibility on the part of the employees are also necessary.

There is one more point that I would like to touch on. I think the hon. Members, Mr Low Thia Khiang and Ms Sylvia Lim, have touched on this point. They had concerns about re-employability and they talked about the CPF and the

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ability for workers to draw on the CPF. The point is that we all recognise that there is a need for workers to have sufficient funds. So whether the workers are allowed to draw on the CPF or not, I think the point is about re-employability. What is the Member's recommendation if he is not supportive of re-employability? What if a worker wants to work? What options does he have for re-employability? What framework and assurance does he have that he can be re-employed if these recommendations are not adopted? I would like to hear the Members' views on this and the recommendations.

One other group that I feel that is not addressed in this Bill – and probably it is a much bigger discussion – is the contract workers. It is important for us to recognise that as companies increasingly move to contract work, this Bill and this Act does not cover that group. There are also older workers in this group. How do we help them if they choose and want to work beyond 62 or the retirement age? What framework is there for them to be able to also get some re-assurance that there will be re-employability?

I believe that the amendments proposed in this Bill and the objective of encouraging and enabling the re-employability of older workers are also beneficial for employers as they provide them access to that pool of valuable labour. At the same time, it will provide the option for employees who wish to work and want to work and are able to work beyond the retirement age, the ability and the framework to be able to be re-employed. But I also point out that it is important to ensure that this spirit is realised in the actual implementation of the policy as I believe that it will encourage greater trust and confidence between employers and employees.

With that, Mr Deputy Speaker, I support the Bill.

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Mr Low Thia Khiang: Mr Deputy Speaker, I wish to make a clarification. What we said was not so much of opposing the Bill as a framework for re-employment after the retirement age. But we noted that the Bill also empowers the Minister to, via Gazette , increase the retirement age from 62 to 67, which means that that will also affect the draw-down age for CPF savings. We simply asked if this Bill is not something which provides job security for workers who have reached the retirement age. If this is the case, we asked whether it was fair to deny Singaporeans from drawing their CPF savings. So, it is not that we object.

Ms Sylvia Lim: Sir, further to clarify – I am sorry I did not hear completely the Member's point because I was out for part of the session – but also to highlight that in other countries where they have allowed different draw-down ages or for members to choose when to draw down the CPF, they have also stipulated that the amount be stretched out over a period of time. I believe that this can be accommodated within the concerns of the regime.

5.08 pm

Mr Gan Kim Yong: Mr Deputy Speaker, Sir, I would like to thank Members for their support of the Bill. It was good to hear views from both the employers as well as union leaders and from different points of view. These comments underscore the need for us to adopt a balanced approach in re-employment. Sir, let me now address the comments and questions raised by Members. First, let me start with some clarifications.

Mr Hri Kumar has mentioned that employers can terminate employment without any cause and that there is no obligation for employers to employ his employees until retirement. I would like to clarify that employees who are dismissed

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unfairly may appeal to the Minister for Manpower under section 14(2) of the Employment Act. In addition, section 8 of the RAA protects employees from being dismissed on grounds of age before the age of 62.

Mr Low Thia Khiang has also asked whether we intend to raise the retirement age to 67 and, at the same time, raise the draw-down age of CPF to 67. As I have mentioned in my main speech, currently, our plan is to introduce re-employment to allow our workers to continue to work from the age 62 to 65. The Act does provide for the extension of re-employment to 67, but that is at a later stage. Let us focus on implementing re-employment to allow our workers to work up to 65. We will deal with 67 as our lifespan continues to extend. We will need to maintain that flexibility.

Mr Laurence Wee has also suggested that we should do away with retirement age at some point in time. As I have explained in my main speech, to improve the employment rate of older workers, both employers and employees will need to have the flexibility to make necessary adjustments to employment terms and conditions. This is why we have adopted the re-employment approach instead of raising or removing the retirement age altogether.

Assoc. Prof. Fatimah Lateef has suggested coming up with guidelines on re-employment contracts and the EAP. As I have mentioned earlier, the set of revised Tripartite Guidelines on Re-employment of Older Employees will be released today.

Assoc. Prof. Paulin Straughan, Mr Hri Kumar and Ms Sylvia Lim have asked about the definition of "satisfactory work performance" and how we go about assessing that. Sir, in general, this refers to the minimum level of performance any

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employee is expected to maintain in discharging his duties. I agree with Mr Ang Mong Seng that employees need not be assessed on just one year of work performance. The assessment could be based on the past two or three years, if appropriate. We will continue to encourage employers to introduce proper appraisal systems so that they can provide a fair and objective assessment of their employees' work performance for re-employment purposes. Employees who feel that they have been unfairly assessed and denied of re-employment opportunities, as a result, may approach my Ministry for assistance.

Mr Ang Mong Seng, Mdm Halimah Yacob and Ms Sylvia Lim have asked about the criterion of medical fitness. In general, an employee should be considered medically fit to continue working as long as his health will not affect his performance on the job. Section 7(2) places the onus on employers to prove that the worker is medically unfit to continue working. Given that an employee has been working with the employer for the past years, it is reasonable to presume that the employee is medically fit to continue working beyond his retirement age unless the employer has evidence to prove otherwise. This may include sending the employee for medical examination, if necessary, as pointed out by Mdm Halimah.

Mdm Halimah has also asked for an update on the review of the employees exempted under the Retirement Age Act (RAA). Sir, certain groups of employees are currently exempted from the minimum retirement age under section 11 of the Retirement Age Act. Apart from foreign employees holding work passes, it consists mainly of employees in uniformed services such as firemen, police officers and SAF officers, whose job requirements are physically demanding and employees who, before the enactment of the RAA in

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1993, are covered under retirement benefit or pension schemes that are linked to a contractual retirement age lower than the statutory minimum retirement age of 62. There is also a small number of employees who are exempted under other categories.

We have been reviewing these exemptions in consultation with the relevant employers and unions to examine whether the exemptions are still required. Some of the exemptions may be outdated or are no longer relevant and will be removed from the exemption list. These include public officers in the Economist Service, medical practitioners or dentists in any hospital who are under fixed-term contracts. However, I expect some employees will continue to be exempted from the RRA for a variety of reasons. For example, foreign employees holding work passes and employees in the uniformed services, whose job requirements are physically demanding, will be exempted under the new Act. Nevertheless, many of these employees, especially those in the uniformed services, continue to work after they retire as their employers would facilitate their move to take up a second career in the Civil Service or in the private sector.

For those who are covered by retirement benefits or pension schemes introduced before 1993 which are linked to a contractual retirement age that is lower than 62 years, we would allow them to retire at a lower contractual retirement age. However, to extend re-employment opportunities to this group of employees, we are looking at requiring the employers to re-employ them upon their earlier retirement and up to the age of 65.

Mdm Halimah also asked whether employers could get around the law by employing contract workers. Ms Jessica Tan also mentioned the same concern.

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Employees whose employment contract is tied to a specific project, for example, a consultancy project which will take three years to complete, will be exempted from the law. However, employees who are on a fixed-term contract that is not tied to any specific project will be covered by the law as long as the contract is more than two years, including any renewals. This means that employers cannot deny these employees from the coverage of the law by repeatedly renewing fixed-term contracts unless there is at least a six-month break between renewals. We will continue to work with the relevant unions and employers and complete the current review before the implementation of the RRA.

Mdm Halimah has asked whether there is a need to retain section 5 on salary adjustments at 60.

Ms Sylvia Lim was also concerned about the same issue. This provision was introduced to provide flexibility for companies to adjust wages, taking into account reasonable factors such as any seniority element in the wage structure, employees' duties and responsibilities, productivity and work performance. Let me stress that wage adjustment, whether at 60 or for re-employment, should be based on reasonable factors as I mentioned earlier. Removing this flexibility would add rigidity to the labour market and affect the employability of older workers. The number of establishments practising automatic salary reduction at 60 is small. Hence, let us keep this flexibility, but work together to encourage companies and unions to move towards rewarding workers based on their performance and productivity.

An employee who does not agree with the reduction of his wages at 60 because the reduction was not based on reasonable factors, as I have mentioned, may lodge a complaint with the Commissioner for Labour (COL) under section 115 of the Employment Act on

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salary disputes, if they are covered by the Act. Alternatively, if the worker is represented by his trade union, his union can also raise the disagreement over salary reduction to the Industrial Arbitration Court.

Assoc. Prof. Straughan asked about the implications to employment benefits when an employer and an employee enter into a new re-employment contract. Employers and employees may re-negotiate employment benefits for re-employment, subject to meeting the minimum prescribed benefits under the Employment Act.

Mrs Mildred Tan has suggested making medical insurance more accessible and portable for older employees as employers may be concerned with the medical costs of re-employing their older employees. Employees who are covered by approved MediShield schemes or private integrated shield plans, would already have portable medical insurance. Where medical costs are a concern, employers could consider various forms of arrangements with their re-employed workers, such as co-payment of medical benefits, introducing appropriate caps on medical benefits claimable, or providing additional Medisave contributions for employees to help pay their MediShield premiums or other medical expenses.

Mr Ang Mong Seng has asked how retrenchment benefits will be computed for re-employed workers. Where a new contract is entered into after retirement and the years of service before that has been disregarded, the tripartite partners have agreed that employers may offer financial assistance using the Employment Assistance Payment (EAP) as a reference to help these retrenched employees.

Mr Teo Siong Seng is concerned that employers may be required to offer EAP to employees with poor performance. I would like to clarify that only employees

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who have at least satisfactory performance will be eligible for re-employment and, hence, eligible for the EAP, if they are not offered re-employment.

Mr Low Thia Khiang was concerned that employers may simply offer EAP, instead of offering re-employment opportunities. And that is why we have set a minimum EAP quantum in the guidelines and we stress that this EAP payment should be used as a last resort. The high employment rate of older workers and the low unemployment rate go to show that employers, by and large, are responsible and older workers, by and large, are able to find jobs.

Mdm Halimah, Mr Heng and Mr Teo and Assoc. Prof. Fatimah Lateef suggested stepping up our efforts to reach out to companies, especially the SMEs, to help them put in place re-employment policies and processes. Employers can tap on the ADVANTAGE! Scheme and obtain up to $400,000 in grants to re-design their job processes as well as develop good HR practices for re-employment. Moving forward, we will be reviewing these schemes to ensure that they remain relevant and we will also be exploring new initiatives to further enhance the employability of our older workers.

Mdm Halimah has asked whether an officer from the NTUC could be allowed to represent a member of their affiliated union in hearings before the Commissioner for Labour. Sir, to maintain a balance of representation, we would continue to allow NTUC officers to be present and provide advice but not to represent the employee, who should really be represented by his own union officials.

Mr Hri Kumar has asked whether employers, instead of employees, should be required to report re-employment disputes to the Ministry, given that employees may not be aware of the time

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bar for lodging of appeals and claims. Sir, it may not be practical to do so, as reporting of disputes should be by the aggrieved party, who is likely to be the employee. We will work closely with the unions to raise the awareness of employees on the RRA, including the time bar requirement, and encourage employees to notify the Commissioner of their disputes early.

Mr Low Thia Khiang and Ms Sylvia Lim were also concerned whether employers may take advantage of the flexibility and make unreasonable offers in order to escape their obligations under re-employment. Sir, employees who are unfairly denied of re-employment can approach the Ministry and the Minister may order the employer to offer re-employment or pay compensation. The amount of compensation may be enhanced, depending on the circumstances of the case, including whether the employer has made reasonable attempts to re-employ the worker at the onset.

Mr Heng Chee How asked whether employees who will attain the specified age on or after 1st January 2012, can approach my Ministry for mediation if they encounter any dispute before 1st January 2012. While the Act will take effect from 1st January 2012, employers and employees who encounter difficulties on re-employment before then can still approach MOM for advice and assistance.

Mr Heng has also asked why the law will only come into effect a year later, on 1st January 2012, and whether there is anything MOM could do for those who are retiring this year. Sir, it will take time for employers to put in place systems and processes to support the implementation of re-employment. Employees would also need time to discuss possible re-employment options with their employers and make adjustments, where necessary.

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We have announced earlier that the law will take effect in 2012. But we have presented the Bill ahead of time so that employers and employees will have early knowledge of what to expect, come 1st January 2012, and will start to prepare for re-employment. For employees who are retiring in 2011, the tripartite partners will continue to encourage companies and workers to implement re-employment early.

Mr Low Thia Khiang and Ms Sylvia Lim also asked why the CPF Draw-Down Age should be raised to 65. Sir, in 2007, when Parliament debated on the decision to raise CPF Draw-Down Age from 62 to 65, we explained then that even with the CPF reforms which we were introducing at that time, many members would still run out of savings if we start the Draw-Down Age at 62. This is because 60% of members will live longer than 82 years, which Mr Low also pointed out; that lifespan is extending. By the time they reach 82, most will not be able to work. It is therefore better to work longer earlier and to draw-down later, than to draw-down now and when savings run out, workers will be older and will find it more difficult to find jobs. I am sure this is not what Mr Low and Ms Lim would like to see.

Mdm Ho also asked whether we can provide incentives to help older workers work longer. Sir, the Workfare Income Supplement serves to do just that, with more for older workers, up to $2,800 a year, including a CPF component. Sir, rather than drawing down CPF early, it is better for us to help workers find jobs. Given the flexibility that the RRA provides and that the majority of older employees continue to work beyond 62, we expect a large majority of the employees would be able to be re-employed come 2012. For those who are not re-employed by their existing employer, they are encouraged to look for alternative employment so that they can continue to earn a regular

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income to improve their financial adequacy. And we will help them. Employees can approach e2i or WDA's career centres for employment assistance. Better for us to help them find a job than to bring forward the Draw-Down Age of CPF; better to help them fish than to ask them to eat the fish they are saving up for old age.

Sir, I believe I have addressed Members' concerns and queries. As highlighted by several of our Members, the Bill balances the objectives of providing opportunities for more employees to work beyond retirement, with the need to maintain the flexibility in implementation to allow employers to continue to tap on the pool of experienced and skilled older workers. With the continued support of the unions and employers, we will press on with our efforts to ensure an effective and smooth implementation of the re-employment law.

Mr Hri Kumar Nair: Mr Deputy Speaker, may I just clarify the Minister's clarification on my speech.

The Minister mentioned that those who have been unfairly dismissed will have recourse. I was not talking about or referring to unfair dismissal. The vast majority of full-time contracts and almost everyone I have seen, allows an employer to terminate a contract with notice or with payment in lieu of notice, without assigning a reason or without cause. And because the contract allows you to do that, that is not deemed unfair termination. The only reason why I raised this is because there are many people out there who assume that just because they faithfully discharge their obligations under a contract, they will be entitled to keep their employment until they reach retirement. And I think that is a dangerous assumption. I wanted to make that clear.

Mr Gan Kim Yong: Sir, Mr Hri Kumar is right in that employment contract allows

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flexibility for the employer to exercise contractual termination based on their business needs. However, as the worker approaches the retirement age of 62, the employers will have to ensure that even if they terminate the worker contractually, it is not on the basis of age. So, the Member is right that there is flexibility in the market, the labour market has to be able to respond to economic changes and the employers must have the flexibility to be able to hire and terminate as provided in the employment contracts. But we will examine the circumstances leading to the termination of the employment contract, whether it is done on the grounds of age, and if it is so, the Minister can order a reinstatement of the job. As Mr Hri Kumar also pointed out earlier, it is not so easy to reinstate the job because the relationship would have soured and we will look at other alternatives, including compensation. It is an issue that we will continue to have to work with employers to ensure that more opportunities will be given to the older workers and to protect their employment rights.

Mr Low Thia Khiang: Sir, the Minister disagreed to allowing Singaporeans to draw down the CPF earlier. I would like to seek clarification from the Minister, whether he thinks that it is fair for the Government to hold on to the CPF of Singaporeans whilst not being able to assure Singaporeans of job security between the ages of 62 and 65, or up to 67.

Mr Gan Kim Yong: Sir, let me clarify that the purpose of raising the Draw-Down Age for CPF is to ensure that the savings will last longer. As Ms Sylvia Lim also pointed out, we have to ensure that there are enough savings for them as their life expectancy increases. We introduced CPF LIFE for that reason to ensure that the savings are able to last a lifetime. For workers who are unable to find jobs, what is more important for us is to explore

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opportunities and ways to help them find jobs. We have put in place Workfare Income Supplement (WIS) to ensure that those who are working will get a top-up if they are among the low-wage, low-skilled workers. If they are older, in fact, the WIS has an additional payment for them. We also introduced the Workfare Training Scheme last year, targeted at these workers to help them acquire the necessary skills so that they are able to find job opportunities.

So, instead of encouraging them to draw down their CPF savings, and as a result run out of savings when they grow old, it is better to encourage them to work while they are still young or while they are still able to work.

And for those who are medically unable to work – some of them unfortunately might have met with an accident or might have suffered a medical illness – we have provisions for them to draw down their CPF savings earlier to support their living expenses. So the scheme is already in place.

Ms Sylvia Lim: A clarification for the Minister. The Minister earlier mentioned that attempts will be made to find work for people above 62, and certainly we would support such job placement efforts. Our concerns would be about the workers who are unable to be placed in jobs and the criteria for special CPF drawdowns. As he mentioned, I think these are very strict medical criteria which many people would not be able to meet.

So, my question for the Minister is: why is it not possible to allow a member to draw his own CPF savings at an earlier date while stretching the payments out for a longer period?

Mr Gan Kim Yong: Sir, to answer the second question first: to stretch out the payment period so that it lasts longer with the same amount of savings would just

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mean that they would have less every year and that may not be enough for them. So, with the same amount of savings, it is either that the savings will last longer with a lower amount or the savings will last a shorter time. The better solution is to continue to add on to the savings. That is why the Workfare Income Supplement has a CPF component to help top up the CPF savings and if the worker continues to work, he will then be able to accumulate more savings. If he starts to draw down later, his savings would then last longer.

Ms Lim also mentioned about those who really cannot work. There will be a small minority of older workers who may be medically fit but unable to work for a variety of reasons. But this remains a small minority. As I mentioned, the unemployment rate for the older workers remains very small – it is about 3% today. So, rather than re-design the CPF scheme to cater to this small group of minorities which might have difficulties, it is better for us to deal with these cases on a case-by-case basis. And we should not label them as "unemployable" and therefore allow them to draw down from the CPF. It is better for us to continue to encourage them to look for work and if they have problems dealing with their living expenses and so on, we still have many other social safety nets to help to support them including ComCare fund. So, it is better for us to design the scheme based on the needs of the majority, and that is those who are able to work will continue to work. Let us encourage them to continue to work and draw down their CPF savings later so that it will last longer. For that reason, we are putting in place the CPF LIFE.

Mr Teo Siong Seng: Thank you, Minister, for the explanation. Our concern is that smaller companies may not have jobs for the older workers and they have to pay the EAP of $4,500 to $10,000. To some small companies, that is quite a

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burden. How does the Minister feel about that?

Mr Gan Kim Yong: We have to start from the point that this older worker has been with this company before he reaches 62. So, the company has a job for him at 62. The vast majority of the companies will continue to have a job for him when he goes beyond 62. But there may be some necessity to make some adjustments to the job scope, remuneration, or the terms of the employment that are provided within the re-employment legislation.

Rather than focusing on EAP which, I want to stress again, should be viewed as a last resort, it is better for us to focus on creating opportunities for them to work. Our tripartite partners will work with these companies, including the SMEs, to re-design the job processes, to create more opportunities by making their job processes more age-friendly. Given the high employment rate of older workers and the fact that the vast majority are able to continue to be re-employed by the same employer, I am quite confident that most of the companies would be able to find solutions to provide employment opportunities for our older workers.

Mr Low Thia Khiang: The Minister earlier on said that he will focus his effort on re-employment within the age range of 62 and 65, and to raise the retirement age to 65. But the Bill also provided for raising the retirement age to 67. I would like to ask him when he intends to raise the retirement age to 67. Is it during the next term of Government?

Mr Gan Kim Yong: Mr Deputy Speaker, Sir, let me just clarify. I have mentioned in my speech quite categorically that the retirement age will stay at 62. We allow workers to retire at 62 and continue to be employed under re-employment legislation from 62 to 65. Eventually, we may think

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about extending the re-employment to 67. I also said in my speech that for the time being, let us focus on implementing re-employment up to 65. We have the intention of raising it to 67. But when that would happen, it would depend on the economic environment and on the average life span of Singaporeans. It depends on many other factors. Therefore, it is better for us to focus on implementing the legislation, that is, put it in place, ensure that we work with employers and unions, and make sure there is smooth implementation and address some of the misunderstanding, difficulties and the friction in implementing it. This is the more immediate task than to discuss when re-employment would be extended to 67.

Mr Low Thia Khiang: I take it that the Minister has no intention to raise the retirement age which will affect the Draw-Down Age of the CPF.

Mr Gan Kim Yong: The retirement age today, let me explain again, is 62. The CPF Draw-Down Age would be 65. So they are not linked. We have introduced re-employment to allow our workers to work from 62 to 65. But the retirement age remains at 62. The Draw-Down Age would be gradually moved to 65 based on a schedule which we have announced in 2007.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Gan Kim Yong].

Bill considered in Committee.

Mr Gan Kim Yong:

The Chairman: The citation year "2010" will be changed to "2011", as indicated in the Order Paper Supplement.

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Clauses 1 to 20 inclusive ordered to stand part of the Bill.

Bill reported without amendment; read a Third time and passed.