“Are we ever going to be able to retire???"
On raising the retirement age, and the one overlooked but obvious reason people seem to forget.
Recently the government announced that retirement and re-employment ages are going to be raised again. (CNA)
As usual, some netizens are equal parts cynical and outraged about this.
This is a very sensitive topic for Singaporeans both old and young — the former might feel like they’re being shortchanged of their golden years, and the latter are sceptical that they’ll have any at all.
And so we’ve decided to write this article to address a huge misconception people seem to have about the raising of the retirement age in Singapore.
What does raising the retirement age really mean?
Employers can only ask employees to retire when they turn 64 years old (that’s one year more than before), starting 2026.
Employers must offer employees a re-employment contract until employees reach 69 years old. The re-employment contract should be at least 1 year, and is renewable every year.
What it does not mean:
You must keep working until you are 64 years old.
You need to stop working at 64.
The government is forcing everyone to work until they die.
Just to reiterate: Nobody is forcing you to continue working past the retirement age. You could retire anytime you want, whether it’s 40, 65, or 93 (like this doctor).
You can also see it as a good thing for older employees who want to continue working, because they would have an extra year before their employers can ask them to retire.
Sure, but why are retirement ages rising?
It’s a real simple answer: People are living longer, and living isn’t free.
Here’s an example:
In the 1990s, Mr Tan retired at 55. He lived until he was 75. His retirement lasted a total of 20 years.
Fast forward to 2020. Mr Tan’s son retires at 55, but he continues to live until his late 80s, past 85. Now, that’s 30 years. 10 more years of retirement than the elder Mr Tan.
Now here’s the thing. The money needed for a 20-year retirement and a 30-year one are dramatically different.
What are the options to make sure the younger Mr Tan has enough for retirement? Let’s look at it…
Die earlier (very unpopular option)Spend less money (also very unpopular. Also impossible, because of inflation)Work longer to shorten retirement years (i.e. years of unemployment)
We will likely live longer than our parents today, and our children (if any) might even be living to be 100 years old. (The Straits Times)
Does retirement age affect my CPF withdrawal?
Another concern that has been brought up is about the possibility of the CPF withdrawal age being raised eventually.
For now at least, the CPF payout eligibility age is not tied to the retirement or re-employment age. You can still get your CPF LIFE payouts when you’re 65, whether you’re retired or not. (CPF)
But this might change in the future. Increased longevity affects the financial sustainability of pension systems. Why? Same reason as above. As people live longer, they need more money.
Simply put, when a lot of people want to withdraw all their money at the same time, the pension system will not be able to cope. Hence, pension systems will often tighten rules regarding withdrawal to help the system cope.
In fact, Singapore switched from the Retirement Sum Scheme to CPF LIFE (an annuity that pays people little by little) to counter exactly this. People lose the freedom to withdraw all their retirement savings in return for constant payouts till they die.
Conclusion
No conclusion, we were just tired of reading conspiracy theories online.
Stay woke, salaryman.
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The fact is a company can ask any employee to go anytime without any compensation, as the Sg labour law is pro-capitalist. No difference to a company whether the retirement age increase or not, nonetheless it would definitely shift the general mindset on when should one retire. The mass public usually follow the statutory retirement age.
I think some are outrageous because some pension benefits or retirement incentives/rewards (the non statutory/compulsory kind on employers, e.g. gifting of x gram of gold in some banks or fat amount of cash in insurance companies) in the private sector are tied to statutory retirement age... This change would disappoint those who have been delaying their retirement aiming for these benefits. The sudden shifting of goalpost would, unfortunately, has an impact on this group of persons. While they may be a very small group of persons, for this reason, I think their frustration is not unjustifiable.