Three years ago, Singaporeans were subject 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 our older workers that they will remain meaningfully employed after they turn 62.
Let me elaborate by going into the specific provisions.
Retirement Age Not Changed
The name of the Act is being amended to Retirement and Re-employment Act (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 amends S 4, does not increase the national retirement age, which remains at 62 years. The new S 4 merely enables the Minister the discretion to change the retirement age by gazette to up to 67 years.
Re-employment Obligations and Hurdles
Clause 9 of this Bill provides for re-employment of workers beyond 62. It sets out three hurdles for workers before re-employment is confirmed.
The first hurdle concerns who is eligible for re-employment.
Under the new S 7A, the employee qualifies for re-employment if he has obtained a 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. If a worker has some medical condition, will medical opinion be conclusive as to fitness for work, or can the employer make his own subjective assessment?
The second hurdle arises if the employer says that there is no vacancy to justify re-employment (S 7C). Though there are Tripartite Guidelines on the Re-employment of Older Employees, the Guidelines I read simply said 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 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 S 7A that the employer is free to re-invent the wheel by 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 of shorter duration by agreement. The new S 7B makes clear that previous years of service will not be counted for benefits except for entitlement to annual and sick leave.
With so many `if’s and `but’s, 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 was reported that this was common even in unionized companies, and present in the public sector (ST 16 May 2010). With this new re-employment legislation giving employers a virtually free hand at 62, are we exposing our senior workers to being short-changed further when they reach 62?
In addition, the Bill gives employers the option of not offering re-employment but to pay the Employment Assistance Payment under the new S 7C.
In summary, this Bill does not ensure employment till 65. In fact, it subjects our senior workers to a stressful re-employment process at 62.
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 55-64 was about 57% (Speech of Manpower Minister, 26 Apr 2010). The rates for those 60 and above would be lower. Even for those working, what kind of employment they had, and whether there was under-employment, is not clear, since a person is counted as employed as long as he works at least one hour in a week.
If the government wants to delay Singaporeans their CPF draw downs till 65, it should at least correspondingly provide for a more seamless transition of employment from 62 to 65.
Finally, Workers’ Party is still of the view that the CPF Draw Down Age should not be linked to the retirement age or re-employment age limit. Not everyone can work till then, and some may need to have an easier pace of life. Minister himself acknowledged in his Second Reading speech that workers in that age group needed choices.
I believe that Singaporeans should be able to commence drawing down their CPF balances at 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.