RETIREMENT AGE

RETIREMENT AGE: 8.

Mr Laurence Wee Yoke Thong asked the Prime Minister whether the Government will consider doing away with retirement age and, if so, what measures will the Government take to change mindsets and promote continuing education among the different cohorts of older people.

9.

Mdm Ho Geok Choo asked the Prime Minister what is the Ministry's position on doing away with retirement age.

The Minister, Prime Minister's Office (Mr Lim Boon Heng) (for the Prime: Column: 863

Minister): Mr Speaker, may I take Question Nos. 8 and 9 together?

Mr Speaker: Yes, please.

Mr Lim Boon Heng: Mdm Ho Geok Choo and Mr Laurence Wee asked about Government's position on the retirement age and whether we should remove it. Prior to 1st July 1993, we did not have legislation defining the retirement age. The generally accepted retirement age was 55 years because that was the age when employees could withdraw their Central Provident Fund (CPF) savings, and this was similar to most countries where the age for drawing down on pensions defined the retirement age. In 1987, we introduced the Minimum Sum concept into CPF. Account holders could withdraw all of their savings above the Minimum Sum and draw down on the Minimum Sum only when they reach 60 years. Trade unions negotiated with their employers to raise the generally accepted retirement age to 60 years and were successful. However, this was not the case for non-unionised companies. Government then introduced

the Retirement Age Bill which Parliament passed with effect on 1st July 1993. On 1st January 1999, the retirement age was raised to 62 years. With increasing life expectancy, we are encouraging older people to work for as long as they can and for as long as they want. When I first raised this prospect in the 1980s, many workers were unhappy with me. They felt they deserved to enjoy their retirement. They were also unhappy with the pay cut as our wage system was too much seniority-based. But gradually, there has been a change. By the early 1990s, some older workers were appealing to me to help them continue working, and they even volunteered to take a pay cut. They knew they did not have enough savings to maintain their quality of life. Today, many older workers want to work as reflected

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by the steady rise in the employment rate of workers in the 55-64 years age group. Now the question arises as to whether we should do away with the retirement age.

The United States is the only country I know that has specifically legislated to disallow discrimination in employment on account of age. While this sends a signal that people should be allowed to work for as long as they want, the reality is that people do leave the workforce. Some retire because they feel they have enough to retire on. Others found themselves involuntarily unemployed because their employers terminated their services on legally acceptable grounds. Some years ago, I asked US unionists whether there was age discrimination in their country as their legislation specifically forbade it. I was given an emphatic "Yes". Are more older Americans employed than Singaporeans? The employment rate in the 54-65 years age group was 61% in the US in 2009; higher than the 57% in Singapore. But this is due to the relatively lower female employment rate in Singapore. The male employment rate for the same age group was 74% in Singapore, much higher than the 65% in the US. The overall employment rate of those age 65 and above was 16% in Singapore, comparable to the 16% in the US. This shows that our approach works well, even though it is different from the US. Experience tells us that we cannot merely mandate or legislate labour issues without making sure the ground is ready. Therefore, just doing away with the retirement age will not bring about more employment opportunities and higher employment rates for older workers. We have therefore decided to adopt a practical step-by-step approach to move beyond the current minimum statutory retirement age. It is not enough to send a signal. We must make it happen through a higher employment rate. The work started years ago. We first moved away from the seniority-based wage system. We also developed a flexible wage

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system. These measures not only make businesses competitive, they also make older workers more competitive and attractive to employers in good times and in bad. We are now working on the next significant step, which is re-employment beyond the current retirement age of 62.

Re-employment provides greater flexibility for both businesses and workers than a straightforward mandated rise in the retirement age. Employers have real concerns about cost burdens. More so, if they do not have the flexibility to re-deploy older workers to jobs more suitable for them as they age, or adjust salaries and benefits in line with individual workers' productivity and contributions. Older workers need to be flexible in their attitudes, and be willing and able to take on modified jobs and go for skills upgrading or retraining as necessary. When the law comes into effect in 2012, employers will be obligated to re-employ their older employees from the existing retirement age of 62-65, and later, to 67 years and beyond. Both employer and employees will be able to work out a re-employment offer that is agreeable to both parties, taking into account the companies' requirements and needs of older workers. Unions will play their part to ensure that the agreements reached are fair to older workers, even as wages and benefits are adjusted to reflect the value of the jobs and the contributions of their employees. In this way, companies remain competitive and employees can continue to earn a regular income. The re-employment obligation is only up to the age of 65 but employers are encouraged to continue to retain their older employees beyond 65 as long as the employees can continue to contribute to their organisations. To see re-employment materialise, we must address what Mr Laurence Wee has raised, namely, measures to change mindsets and promote continuing education among different cohorts of older people. These are crucial points. We are putting in place several measures

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to reinforce positive attitudes towards re-employment. First, the Tripartite Committee on Employability of Older Workers has launched a re-employment ready campaign to reach out to employers and employees, in the lead-up to re-employment legislation. The tripartite partners have also implemented the tripartite guidelines on re-employment of older employees. There is also the ADVANTAGE! Scheme to incentivise companies to modify job specifications and operations or redesign work for older employees. Workers must do their part to prepare for re-employment including continuing education. Last month, we introduced the Workfare Training Support (WTS) for older low-wage workers. They must keep their skills relevant to maintain their performance so as to benefit from re-employment.

Apart from employers and older workers, we are beginning to look at co-workers and supervisors. The Tripartite Alliance for Fair Employment Practices (TAFEP) released the "Harnessing the Potential of Singapore's Multi-generation Workforce" report this year. The good news is that all generations in the workforce hold a common belief that a diverse workforce comprising different generations has a positive effect on the overall performance of the company. However, the report pointed to the different communication styles needed to gel a multi-generational workforce. We need to take steps to address this. All I have said so far are laudable and necessary measures at the workplace to make employment of seniors a reality. But the mindset change needs to extend beyond the employment sphere and also goes beyond what the Government alone can do. In the 2005 National Survey on senior citizens conducted by the Ministry of Community Development, Youth and Sports (MCYS), the single largest problem faced by older workers was health and strength related issues. Sixteen percent did not feel as strong as before, while another 15% cited feeling tired easily. This is why we have launched the

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wellness programme at the constituency level to encourage older persons to have a health and wellness orientation, go for medical check-ups and exercise regularly.

We have also promoted three major exercise platforms for older persons namely, brisk walking, taichi and qigong through the Seniors for Physical Activity programme. All these exercises have been proven to have health and strength benefits for older persons. We can only provide the platforms. We now need older people themselves to respond. As a society, we also need to change our mindsets. Many well-meaning grown-up children want to see their parents put up their feet and enjoy a happy retirement. However, for many of us, work gives meaning to our lives and a sense of self-esteem and worth. A Japanese study found that the elderly attained greater sense of well-being and social engagement through employment. A 2008 Council for the Third Age survey found that respondents aged 55 years and above cited the median retirement age of 65 years old as ideal – this is for Singaporeans. In the same survey, half the respondents, 51%, indicated they wanted to continue to work either part-time or full-time beyond 62 years old. Therefore, more and more older people themselves want to work and we should support them.

Mdm Ho Geok Choo (West:

Coast): Thank you, Minister, for the comprehensive response. Sir, newspapers reported that the Head of the Civil Service and Permanent Secretary of the Ministry of Foreign Affairs (MFA) will be retiring at the age of 56. In many countries, many careers are launched at this age or even later. Benjamin Franklin at 70 helped to draft the Declaration of Independence; Albert Einstein at the age of 59 advanced major achievements in the General Theory of Relativity. Sir, how do we ensure that

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these capable and knowledgeable people stay past this artificial expiry date to contribute to the nation especially in the private sector? How can the Government facilitate such germination in the private sector?

Mr Lim Boon Heng: The Public Service leadership programme is aimed at enabling younger people to take up senior positions. When the senior civil servants retire, they can be deployed to do other things, as many of them have done. We continue to tap on their knowledge and experience in performing other duties.