TL;DR – Not that you must, but if you want to, you can.
We are living longer lives. That’s a good thing. But that brings with it two issues. First, people will need more money for their retirement. Second, they need to be able to be actively and meaningfully engaged for more years.
One way to resolve these two issues is to provide people with the option to work longer. That is what the Retirement and Re-employment Act (RRA) aims to do. The RRA takes effect on 1 July 2017.
Heng Chee How, Deputy Secretary-General of NTUC, published a blog post about the RRA recently.
Here are 3 key points about the RRA he highlighted:
1. You don’t have to work till 67. But if you want to, employers MUST do their best to help you
The RRA is not a law that mandates that people have to work till they are 67.
It’s a law that raises the re-employment age ceiling from 65 to 67. This makes it mandatory for companies to continue employing workers who are able and willing to work until they are 67 years old.
This means that workers who are able and willing to continue to work until 67 get to earn another two years’ of salary.
2. Employers cannot suka suka reduce your salary when you reach 60
In the original RRA, there was a section that allowed employers to reduce the pay of workers when they turn 60. The section was there to balance the negative effect a tenure-based wage system has on the employment of older workers.
Given that wages have become much more performance-based over the years, that section is no longer relevant. Consequently, it has been repealed. This means that the salary of mature worker depends solely on an objective measure of his performance.
3. It takes into account of the concerns of employers too
Some employers, despite their best effort, may not be able to find suitable jobs within their companies for their workers who have reached the age of 62. Such employers now have an additional way to comply with the law. They can now source for positions with another employer.
If the mature worker accepts the job offer with the new employer (it has to be in writing), the transfer of employment can take place, and the original employer is deemed to have fulfilled its obligation under the RRA.
The new employer then takes on the full obligations as if it was the original employer. This enlarges the potential pool of jobs for our mature workers and is particularly useful when job growth slows.
Beyond the RRA, there are other things that can be done
The RRA will certainly help our mature workers continue to work for more years if they are able and willing to. But it is not enough. More can be done to help more mature workers be able and willing to work longer.
Here are three areas that Heng highlighted that we need to focus on:
- 1. Continuous skills upgrading
First, we need to encourage and enable mature workers to pursue continuous skills upgrading and adaptation within the same or different job types or even industries. Helping mature workers make the most of SkillsFuture will make a big difference to their confidence, resilience and prospects.
- 2. Work redesign
Second, we need to nudge and help employers reshape their job designs, work processes and workplaces to be more age-universal. With progressive mindsets and availability of much better technology, this is increasingly practical.
The Government’s WorkPro Programme is full of incentives to catalyse and ease such efforts.
- 3. Workplace health & safety
Lastly, we need to promote workplace health and safety for older workers, especially through occupation-specific customisation. In the face of an ageing local workforce, such efforts will lower health costs for both workers and companies, and raise work effectiveness and quality. This is a basic ingredient in the endless quest for higher productivity, competitiveness, employability and morale.
Will it really work?
According to Heng, 90% of unionised companies are clearly ready to re-employ to at least age 67. The remaining 10 per cent are basically those whose workforces are relatively young and would not require re-employment in the near future.
That sounds good. But it will take at least a few years before we know whether mature workers really benefit from the RRA and other efforts to help make them more able and willing to work longer.
We certainly hope these efforts will bear fruit.