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The first shifts of the Retirement Age to 63 and Re-Employment Age to 68 will take effect from 1 July 2022. Meanwhile, CPF members can look forward to simplified processes beginning Q1 of 2022.
This week in Parliament (week of 1 November 2021), Singapore's Minister for Manpower Dr Tan See Leng covered two key Bills under the Ministry of Manpower's (MOM) purview — the Retirement and Re-Employment (Amendment) Bill 2021 and the CPF (Amendment) Bill 2021.
In his speech on Tuesday (2 November), Dr Tan highlighted three key ways the two Bills would help Singaporeans:
- First, by providing them 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, by making it easier for members to receive retirement payouts.
The Bills were passed in Parliament on Tuesday.
What are these changes, and what do they entail?
Change: Increasing the retirement age to 65, and re-employment age to 70, by 2030
The Retirement and Re-employment Act has been amended to establish the maximum possible statutory retirement and re-employment ages at 65 and 70. Currently, these stand at 62 and 67 respectively.
What this entails: In 2019, the Government accepted the Tripartite Workgroup on Older Workers’ recommendations to raise the Retirement and Re-Employment Ages to 65 and 70 respectively by 2030.
This move, it was noted, will support older workers to continue working for longer if they wish to do so and improve their retirement adequacy.
In line with this, as agreed by the Workgroup, the first shifts of the Retirement Age to 63 and Re-Employment Age to 68 will take effect from 1 July 2022, while the timing of subsequent shifts will be subject to the tripartite partners’ agreement.
There are no changes made to CPF withdrawal ages. Dr Tan stressed: "The current payout eligibility age of 65 strikes a balance between timely access to retirement income, and provides sufficient a 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 payouts for higher monthly payouts."
Dr Tan also added that the Government will increase CPF contribution rates by up to 2 percentage points with effect from 1 January 2022, for senior workers aged above 55 to 70.
The rate increases will go to the CPF Special Account to maximise the interest earned, and boost the retirement adequacy of senior workers, he shared.
For employees earningmore than S$750 a month, this means:
The revised CPF contribution rates from 1 January 2022 will be as follows:
Change: Making it easier for CPF members to receive retirement payouts
Currently, Retirement Sum Scheme (RSS) members who have depleted their Retirement Account (RA) savings can only continue receiving payouts if they apply to transfer their Ordinary Account (OA) or Special Account (SA) monies (if any) to their RA.
What this entails: To ensure no disruption to their payouts, the Government will automatically disburse OA and SA savings to members when they have used up their RA savings instead. This will benefit 83,000 RSS members upon implementation in the first quarter of 2022.
There are no changes to current CPF withdrawal rules.
Change: Simplifying rules of the Retirement Sum Topping-Up and Voluntary Contributions to MediSave Account schemes
What this entails: From 1 January 2022, to align rules for both schemes, tax relief for the Voluntary Contributions to MediSave Account (VC-MA) will be provided to givers, instead of recipients.
At the same time, a higher combined tax relief cap will be set, at S$8,000, for the VC-MA and Retirement Sum Topping-Up (RSTU) schemes.
Last, effective the same date, CPF members will be able to refer to the Basic Healthcare Sum to determine the VC-MA top-up limit, and will no longer have to check the Annual Limit.
Change: Streamlining the CPF system
The administration of CPF schemes will be streamlined for increased efficiency.
What this entails: For example, the CPF Act will be amended to allow rightful claimants to receive CPF bequests more easily and quickly. The duration of retention of unclaimed CPF monies will be shortened from seven years, to six months after the CPF Board is notified of the member's death.
Dr Tan shared in the second reading of the Bill on Monday: "This timeframe should be more than sufficient for beneficiaries to make arrangements to claim nominated monies from the CPF Board. Should a nominee choose not to make claims within six months, the monies will be transferred out of the deceased member’s CPF accounts, and no interest will be payable from then.
"However, nominees continue to have the right to claim the nominated monies at any time."
View the full updates in Dr Tan's speech (2 November) here, and full illustrations on the CPF changes here.
Lead image / Provided
Tables / CPF
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