Singapore’s Central Provident Fund (CPF) Board has just increased the CPF Retirement Sum (previously known as the Minimum Sum, name was changed due to negative connotations) to S$166,000 as of 1 Jan 2017. The S$5,000 from the previous year is a 3.1% increase – higher than the 1.3% core inflation rate as of November 2016.
At the same time, re-employment age has been increased from 65 to 67. This move will likely increase the CPF Life annuity payout age from 65 to 67, delaying Singaporeans’ retirement age by a further 2 years. Since the re-employment age was raised from 55, the CPF payout age always increase and follow suit.
During Parliament’s session on Monday (Jan 9), all ruling party MPs expressed support for the increase in re-employment age.
Raising the re-employment age however is at best a public relation stunt as employers reserve the rights to retrench older employees indirectly via lowering of salaries, placing them on short-term contracts and increasing of workload. According Nominated MP Randolph Tan, more employers are circumventing the re-employment law by introducing term contracts.
“In June 2007, 25 per cent of resident employees aged 60 and over were on term contracts. Almost a decade later, in June 2015, we still have 21 per cent of resident employees aged 60 and above (who) were on term contracts. The regulatory burden of the new legislation may drive more employers to place older employees on term contracts.”
Opposition NCMP Daniel Goh outright rejected and dismissed the re-employment age law:
“The one-year term contract, or a three-year contract, to be reviewed yearly, sustains a sense of insecurity (around) contract review and renewal, which is not the right way to treat a senior employee and colleague.”
Most elderly in Singapore work in low income jobs like cleaners and security guards, taking home around S$9,00 a month after CPF tax deductions.
The Singapore government is currently delaying withdrawal age, withdrawal limit and depressing interest rates of the CPF sum for undisclosed reasons. Public speculations are however rife that the two sovereign wealth fund companies, Temasek Holdings headed by the Prime Minister’s wife, and GIC, headed by Prime Minister Lee Hsien Loong, are losing billions in overseas investments.