Retirement and Re-employment (Amendment) Bill
Mr Louis Ng Kok Kwang (Nee Soon): Sir, CPF is an important institution to help Singaporeans prepare for their retirement. It affects Singaporeans in a direct and tangible way.
I support the Central Provident Fund (Amendment) Bill, which grants greater flexibility in CPF rules and simplifies various CPF processes. This will allow CPF to better support Singaporeans at various milestones in their lives.
That said, I have three points of clarification to make.
First, I seek clarification on what will be considered a "significant condition", particularly in relation to auto-immune diseases.
The new section 15AA allows withdrawals to be made by members who have not reached 55 years of age but are suffering from a significant condition. Additionally, the amended section 77 will provide that the Minister may make regulations, including to provide that a condition is a significant condition only if approved by the Minister and causes disability of a description or to an extent specified by the Minister.
Can the Minister confirm that this is not intended to limit all significant conditions to only conditions that cause disability and that the Minister retains broad discretion in determining what conditions are deemed significant conditions?
Can the Minister also clarify if serious auto-immune diseases, such as those included under the Chronic Diseases Management Programme (CDMP), will be considered and included as significant conditions?
Early withdrawals will ease the burdens on these patients by giving greater liquidity to manage their finances. The increased financial support and flexibility by allowing CPF withdrawals before reaching 55 years of age would be immensely helpful to patients of auto-immune diseases.
My second clarification relates to the reimbursement of funeral expenses on the death of a member with no CPF nomination.
The new section 25A provides for the reimbursement of reasonable funeral expenses but only to a beneficiary, which would be persons entitled to the CPF monies under various rules.
In reality, funerals are often arranged expediently upon a person's death. Loved ones may not know how much CPF funds are available, how much they can use and, indeed, whether they are even beneficiaries at all. This may lead to confusion and stress over funeral arrangements.
I have three suggestions that would help.
One, can the Ministry publish guidelines or a framework to help beneficiaries understand how much funeral expenses will the CPF Public Trustee typically agree to defray?
Two, can the Ministry expedite the process of informing beneficiaries of their nomination and of the CPF funds available upon a member's death?
Three, can the Ministry allow the Public Trustee to reimburse reasonable funeral expenses to a wider class of beneficiaries who have incurred these expenses in good faith?
The death of a loved one is always painful. I am glad this Bill helps soften the blow and I hope the CPF Board will consider my suggestions to take further steps in that direction.
My third clarification relates to the option to apply for a refund of money transferred to top up Retirement Accounts before 1 November 2008.
Currently, I understand that Retirement Account top-ups before November 2008 are returned to the giver when the recipient passes away. The repeal of section 19A changes this and such top ups are no longer returned to the giver.
What are the reasons for this change?
Members who made top ups before 1 November 2008 would have done so based on their understanding of the rules at that time. Certainty of the rules is important for members to have confidence in our CPF system. By changing the rules and allowing a period for refunds, could this lead to a risk of an exodus of funds from Retirement Accounts as members choose to exercise this option?
Will exceptions be made to allow for the prior rules to apply to members with valid reasons?
Next, the Retirement and Re-employment (Amendment) Bill proposes to give our older workers the option to work longer if they choose to do so. Our older workers are treasure troves of experience and our younger workforce has much to learn from them.
I support this legislative move to allow them the flexibility to work longer should they wish to do so.
In line with this short Bill, I have three short points of clarification to make.
My first point is about the minimum retirement age.
Section 4 of the Act is being amended to constrain the minimum retirement age the Minister can prescribe. Currently, the Minister can prescribe a minimum retirement age of anywhere between 62 and 67 years. With the new amendment, that range shrinks to between 62 and 65 years.
Can the Minister clarify why this range has been reduced? I understand the Government's current plans are only to raise the minimum retirement age to 65 by 2030. Is the amendment merely to align the new law with the Government's stated plans or is there some other reason for legislatively tying the Minister's hands on this matter?
My second point is about differentiated retirement and re-employment ages.
The Bill appears to tweak the Minister's power to specify retirement and re-employment ages.
The Bill empowers the Minister to prescribe each age to "any class of employees". This is new language not present in the current Act. The term "class of employee" is not defined in the Act or in the Bill.
Can the Minister share whether this change is meant to give the Minister the power to apply a differentiated retirement age and re-employment age to different types of employee?
Can the Minister share if the Ministry has plans to apply differentiated retirement and re-employment ages to employees in different sectors?
My last point is close to my heart.
Today's Bill is about senior workers but I would also like to emphasise the importance of senior volunteers, which I know is outside the scope of the Bill. Specifically, I would like to emphasise the importance of not discriminating against seniors who serve in volunteer roles.
We have made a strong stand on discrimination at workplaces based on age. We are now proposing to increase the retirement and re-employment ages to give people the opportunity to work longer.
Can we also ensure that there is no discrimination based on age when it comes to volunteerism? It seems contradictory to say that someone is not too old to work but is too old to volunteer.
Volunteers may start their community involvement only late in their lives. They should be given the opportunities to serve for an appropriate amount of time. I do agree in leadership renewal but restrictions on leadership tenure should be based on time served and not age.
It is clear that volunteers help to shape our society and country into a better place. They make time, despite their busy schedules and out of the goodness of their heart, to help others. If a senior volunteer's age does not hinder his or her performance in any way, there is no reason why they should be discouraged from continuing their good work.
We should be rewarding them instead for their kindness and desire to give back to our society. In the same spirit of this Bill, senior volunteers should not be discriminated against and we should similarly take a strong stand on this.
Notwithstanding these clarifications, Sir, I stand in support of both Bills.
Dr Tan See Leng (The Minister for Manpower): Mr Speaker, Sir, let me begin by thanking Members for their suggestions and support for the Retirement and Re-employment (Amendment) Bill and the CPF (Amendment) Bill.
There were many points raised, reflecting the wide spectrum of views and the common interest we share in supporting our senior workers and fellow Singaporeans. Allow me to make a few general points before I address specific comments from Members on the Bills.
I thank Members for their various suggestions on CPF, as well as our retirement and re-employment policies. We constantly and continually review our policies and we will take Members’ suggestions into consideration.
Members recognise that legislation is not everything. The speeches have touched on the need to adjust our culture and our mindsets, both as a society and as businesses. Members also touched on important questions, which the Tripartite Workgroup on Older Workers had deliberated on extensively. In doing so, they considered the many perspectives which emerged from their public engagements, before arriving at their very balanced recommendations.
On the issue of whether a statutory retirement age is still needed, as highlighted by Mr Yip Hon Weng, Ms Sylvia Lim and Assoc Prof Jamus Lim, the Workgroup had considered this very carefully.
It looked at the experiences of other countries and found that countries without the equivalent of a statutory retirement age do not necessarily have better employment rates for senior workers, despite some of them having anti-discrimination legislation already in place. Some progressive employers may take the initiative to abolish their internal retirement age and allow workers to work for as long as they wish, and we wholeheartedly applaud them.
But as Mr Heng Chee How emphasised, the statutory retirement and re-employment age is still important as a floor and safeguard against employers who might not be as progressive. The continued relevance of this approach is borne out by facts. Singapore’s average effective retirement age has risen faster than the OECD average. These considerations, and the data that support them, are captured in the Workgroup’s comprehensive report. I encourage all Members to study the report.
On pace of implementation, the tripartite partners negotiated this very carefully before arriving at a consensus. The plan to raise the retirement age and re-employment age to 65 and 70 respectively by the end of this decade is ambitious, but it is achievable.
The first increase will take place on 1 July 2022 and it is on schedule. The timing of future adjustments will depend on prevailing economic conditions, but the resolve to stay the course is clear.
Mr Louis Ng asked why the range of retirement age that the Manpower Minister can prescribe in the law is being reduced from 62 to 67 years to 62 to 65 years.
Members of the House, before 2012, the concept of re-employment had not been introduced yet, so the only lever we had was the retirement age. But since then, we have seen how the concept of retirement age and re-employment age works well in combination. After consultation with stakeholders, the tripartite partners have agreed to continue with this strategy and, beyond raising the retirement age to 65 by 2030, they have also agreed to raise the re-employment age to 70.
The proposed legislative amendments thus fully reflect the tripartite consensus on this roadmap. This is our model: tripartite consultation with stakeholders, tripartite consensus and then tripartite implementation, with legal changes to reflect the plan.
We do not rule out future changes to our approach. This model of constructive tripartism will ensure that we are able to adapt and respond to such needs in the decades to come.
Mr Sharael Taha, Mr Yip Hon Weng, Ms Ng Ling Ling, Ms Joan Pereira and Ms Mariam Jaafar have spoken on the need to ensure that employers fulfil their re-employment obligations and that re-employment offers are fair. I agree. The system has worked well thus far. Tripartite partners have agreed upon a reasonable set of guidelines, laying out employers’ and employees’ responsibilities.
I will just highlight a few guidelines that are more relevant to the situations that Members have raised.
First, early communication and discussion are critical to ensure that re-employment offers are reasonable to both parties. The Tripartite Guidelines on the Re-employment of Older Employees make clear that employers should engage employees at least six months before they reach retirement age.
Second, on the issue of medical fitness, they should offer re-employment to eligible workers who are medically fit to perform any job within the company, not just the existing job role. Employers are also advised to presume that their senior employees are medically fit, unless there are clear reasons to believe otherwise. To Ms Ng Ling Ling’s concern, having chronic conditions alone cannot be used to justify denial of re-employment, if it does not affect their ability to perform the job.
The re-employment framework is designed to balance the need to enable senior workers to continue working, while giving employers sufficient flexibility so that businesses can remain nimble and sustainable. Different businesses may also face different challenges. So, we must strike a very careful balance.
I thank Ms Janet Ang for sharing her journey and her views towards retirement as a senior executive. Indeed, different individuals have different needs and expectations as they approach retirement. While some may want to stay on in their current roles, others may desire a job role with reduced work intensity or see themselves trying out new roles. This is why the tripartite partners have agreed that employers and employees should be given the flexibility to negotiate adjustments to the job roles, wages and benefits, as long as they are reasonable and based on factors like productivity, responsibilities, skills and the employer’s wage system.
Notwithstanding this, the vast majority of re-employed workers continue on their existing contract or a new contract in the same job. More than 95% of workers re-employed in the same job did not experience any cuts to their wages and benefits.
If an employer has considered all available re-employment options within the organisation and is unable to identify a suitable job for the senior worker, the firm may offer him or her an Employment Assistance Payment, or EAP, as a last resort. Let me reiterate – this is as a last resort, to help the worker tide over while he or she seeks alternative employment.
To Ms Nadia Samdin and Mr Patrick Tay’s queries about the sufficiency of the EAP amount, a fine balance was struck by the Tripartite Workgroup. If the EAP is too high, it may deter employers from hiring jobseekers who are approaching retirement age. If the EAP is too low, employers may too readily offer to pay the EAP. Nevertheless, the tripartite partners agreed to increase the minimum and maximum EAP amounts from 1 July 2022 onwards. This is in tandem with the growth in general wage levels.
Ms Ng Ling Ling also asked about the success rate for conciliation of re-employment disputes. After more than 10 years of implementation, we find that the majority of cases are often resolved expeditiously at mediation. This leaves a few cases that need to be surfaced to the Employment Claims Tribunal (ECT) for adjudication.
Mr Sharael Taha, Ms Janet Ang, Mr Liang Eng Hwa, Mr Henry Kwek, Ms Yeo Wan Ling, Mr Gan Thiam Poh, Ms Joan Pereira, Mr Yip Hon Weng and Ms Nadia Samdin also highlighted ageism and discriminatory employment practices as a concern. We agree that ageism and workplace discrimination of any form have no place in Singapore. As Members have noted in their speeches, the Tripartite Committee on Workplace Fairness, which I co-chair, is deliberating on the scope of legislation to address workplace discrimination. We are making progress in the discussions and we hope to finalise our recommendations by the first half of 2022.
I am glad that Members’ speeches in this House over the past two days also recognise that legislation is not a silver bullet nor a panacea. In this regard, I agree with Mr Heng Chee How, who has very wisely pointed out that strengthening the employability of our senior workers cannot start only when they are near retirement age. There is a need to invest in retraining and employment facilitation not only for our senior workers, but also for the future cohorts of senior workers. As Mr Patrick Tay has highlighted, employers play an instrumental role in this. And we are committed to providing the necessary assistance, including funding support. To Ms Nadia Samdin’s query on the extension of the Senior Employment Credit beyond 2022, we will also study it and update in due course.
Members of the House, I have already spoken extensively on the various ways that the Government is supporting upskilling and employment opportunities for senior workers in my response to several Parliamentary Questions last month. So, today, I will just highlight the critical roles that our tripartite partners NTUC and SNEF play in this endeavour. The Company Training Committees, or CTCs, established by NTUC early this year, are making their impact felt. The CTCs bring together the employers, HR and employee representatives to identify gaps and opportunities and develop the necessary training plans to align a company’s workforce to its business transformation roadmap. This ensures that our senior workers’ training needs are correctly identified, to enable them to contribute productively for many more years to come.
As highlighted by Mr Sharael Taha, Mr Abdul Samad and Ms Janet Ang, it is also important for companies to have structured career planning conversations with their employees, especially for those in their 40s or 50s. This allows training needs and suitable job roles to be identified early. Employees will also be more motivated to pick up new skills if they have a clearer picture of how they fit into their companies’ future plans. We are working with both SNEF and NTUC to encourage more employers to do so.
There are many other areas where the tripartite partners have been working closely on, including encouraging job redesign and flexible working arrangements, which Mr Yip Hon Weng, Mr Sharael Taha, Mr Henry Kwek, Mr Liang Eng Hwa, Mr Patrick Tay, Mr Ang Wei Neng and Ms Nadia Samdin have raised. We encourage the tripartite partners to do more and we will continue to give our fullest support.
Even as we make these legislative changes today, we will also continue to work with the tripartite partners to study best practices and review our framework where necessary to ensure its continued relevance. As mentioned by Mr Shawn Huang and Ms Yeo Wan Ling, it is also important for our workers to adopt a lifelong learning mindset. Continuing Education and Training, or CET, is just as important as pre-employment training (PET), as a means for our workers to upgrade their skills, remain relevant and keep pace with global trends and developments.
Let me now address Members’ points on the CPF (Amendment) Bill.
First, in response to points made by Mr Yip Hon Weng, Mr Liang Eng Hwa, Miss Cheryl Chan and Mr Gan Thiam Poh, let me reiterate that the proposed amendments to the CPF Act will not change the rules for CPF lump sum withdrawals or other social support schemes like Silver Support.
On CPF withdrawals, Mr Abdul Samad and Assoc Prof Jamus Lim suggested to allow members to start their CPF monthly payouts earlier, while on the other hand, Mr Saktiandi Supaat suggested to start later.
First, let me reassure everyone that the Government has not suggested changing the Payout Eligibility Age. The Payout Eligibility Age, or PEA, is not linked to the retirement or re-employment age. The current PEA of 65 strikes a balance between timely access to retirement income and providing a sufficient runway for members to build up savings for retirement, especially as Singaporeans are expected to live longer. Members continue to have the option to defer the payouts for higher monthly payouts. In fact, yesterday, I shared that for every year that they defer after 65, the increase could be up to 7% more per annum.
Members will also continue to have the flexibility to make lump sum withdrawals from age 55, years before they start their monthly CPF payouts. The banker friend that Assoc Prof Jamus Lim has, and I believe is likely to be as successful as Assoc Prof Lim himself, will be able to withdraw amounts well above the retirement sum at 55. This includes the $5,000 that he can withdraw unconditionally and the amounts in excess of his Basic Retirement Sum, given that he will likely own a property.
Similarly, the amendments to section 15 of the CPF Act are only intended to simplify it, and not alter the underlying policies and operational flexibilities.
Mr Louis Ng, Ms Ng Ling Ling, Mr Saktiandi Supaat, Miss Cheryl Chan and Ms Yeo Wan Ling asked what constitutes a “significant condition” in the Bill. Today, Members with conditions of any kind, including auto-immune or neurological diseases, can qualify for early withdrawal of CPF savings if they are certified by a doctor as having a reduced life expectancy or being permanently unfit to work, or lacking mental capacity. These are now collectively referred to as “significant conditions”. The Bill provides for these same grounds to be prescribed in the Regulations. Therefore, there are no changes to the qualifying rules for early CPF withdrawal.
I thank Ms Yeo Wan Ling for her observations on how decisions could be communicated to CPF members and would like to assure that CPF Board will certainly be mindful of her concerns. To Ms He Ting Ru's point, I would like to clarify that members with reduced life expectancy will, indeed, be able to benefit from the automatic disbursement of Ordinary and Special Account monies that I mentioned in my speech yesterday.
On Ms Ng Ling Ling’s suggestion to allow waiver of loan repayments under the CPF Education Loan Scheme for such members, I am happy to confirm that CPF Board already does so today on a case-by-case basis.
In simplifying the CPF system, CPF Board will also ensure that implementation is smooth for its members. On the top-up rules and the position of givers, CPF Board will take into account Mr Louis Ng and Ms Joan Pereira’s suggestions. I do believe that Singaporeans top up their loved ones’ CPF accounts out of the generosity of their hearts and to help boost their loved ones' retirement adequacy. This simplification should, therefore, not discourage top-ups. The objective is to simplify things for members, in response to feedback that the existing rules can be confusing.
Some top-ups are refunded to givers when their recipients exit the CPF system, while, as Mr Saktiandi Supaat observed, other top-ups are treated as gifts to recipients and not refunded, including cash top-ups made after 2008.
Mr Louis Ng, Mr Saktiandi Supaat, Ms Mariam Jaafar and Ms Hany Soh spoke about facilitating the disbursement of nominated monies. CPF Board already reaches out to nominees, including those overseas, once it is notified of a member's death and it disburses the monies within a month, having allowed time for medical institutions to deduct any medical bills from the deceased member's MediSave Account.
Nonetheless, CPF Board has plans to continuously streamline the disbursement process for nominated CPF monies and I thank Ms Hany Soh for her suggestion on this.
Beyond simplifying policies and streamlining processes, CPF Board will also continue to strengthen its public education and outreach efforts, as Mr Melvin Yong and Miss Cheryl Chan highlighted.
This will include educating members on the benefits of CPF top-ups to self and loved ones; nudging members to make nominations; making clear that nominations, like wills, are, indeed, revoked upon marriage; and clarifying the treatment of CPF monies upon members' passing, as alluded to by Mr Gan Thiam Poh, Mr Saktiandi Supaat, Ms Hany Soh and Ms He Ting Ru, as well as Ms Joan Pereira respectively.
We will also explore Ms Hany Soh's suggestion to send notifications to divorcees to prompt them to review their nominations.
Several Members of the House have provided feedback on policies which are not quite within the scope of today's Bill.
For example, Ms Ng Ling Ling and Miss Cheryl Chan on the allocation of monies across CPF accounts, Mr Yip Hon Weng on the Basic Retirement Sum, Mr Ang Wei Neng and Mr Gan Thiam Poh on housing issues, Mr Patrick Tay and Miss Cheryl Chan on self-employed persons, as well as Mr Saktiandi Supaat on tax-approved group corporate retirement plans.
The Government will take all these into consideration as we review our policies from time to time.
Finally, on the raising of CPF contribution rates for senior workers, I thank Mr Henry Kwek, Mr Ang Wei Neng and Mr Edward Chia for their support for our longer-term plans, including the eventual full contribution rates for workers aged between 55 and 60.
The Government will support employers through the CPF Transition Offset, which Mr Heng Chee How, Mr Melvin Yong, Mr Gan Thiam Poh and Ms Nadia Ahmad Samdin have all touched on. This will be implemented on 1 January 2022 as part of the Senior Worker Support Package. This is in tandem with the first increase in CPF contribution rates for senior workers.
In closing, I would like to thank Members of the House for their support of the Bills.
The two Bills will help our members in three main ways: first, by providing members the flexibility to work longer if they wish to; second, by making it easier for members to build up their retirement nest egg; and third, just as important, by making it easier for members to receive their retirement payouts.
Together, the Bills will help our members better prepare for and enjoy their retirement. But the work does not stop here. We are confident that further progress on senior worker employment will be made. We will continue to simplify rules; we will continue to improve communications to our CPF members.
With the support of Members of the House, businesses, unions and, most importantly, fellow Singaporeans, we will be a more inclusive economy and society. Mr Speaker, Sir, I beg to move.
