Budget 2022: What the measures mean for a worker in her 60s

SINGAPORE — For about eight hours a day, Madam Habsah Ahmat cooks and oversees the kitchen operations at a branch of Seoul Garden restaurant in Harbourfront Centre.

Having a relatively clean bill of health, the 61-year-old kitchen supervisor does get bogged down by the occasional minor ailments and aches that may be common among some people in her age group.

“I do experience a fair bit of ache on my knee and legs, so it does get in the way of my work in the kitchen a little, especially when I need to squat down to reach for things,” she said to TODAY in a mix of English and Malay. 

Naturally, she ponders about how much longer she can stay actively employed, particularly in the laborious food-and-beverage business sector where she has spent most of her working years.

And whenever she thinks about retirement, concerns about future medical costs are not too far from her mind, since she also has hypertension.

Among the plans announced by Finance Minister Lawrence Wong during his Budget statement on Friday (Feb 18) are support measures such as higher Central Provident Fund (CPF) contribution rates, which help to strengthen retirement plans for older workers such as Mdm Habsah.

Workers like her aged above 60 to 65, for example, will have 20.5 per cent of their wage going into her CPF account from Jan 2023, up from 18.5 per cent now.

Singapore citizens and permanent residents in the workforce have to contribute to CPF, a key part of the country’s social security system. This is to set aside savings for retirement and medical needs, with contributions from the workers and their employers.

The CPF contribution rate was already raised this year, following an earlier announcement in 2019 that it would be raised gradually over the decade for older workers.

The Government will continue with the second increase in employer and employee contribution rates for senior workers aged 55 to 70 in 2023.

Mdm Habsah told TODAY that having a slightly lower take-home pay after a higher amount goes into CPF does not really worry her.

“My two children are grown up. I’m working mainly to support my own expenses and save up for my later years,” the single mother of two said.

Her older child, a daughter, is married and has moved out, which leaves just Mdm Habsah and her 21-year-old son in their four-room flat in Punggol.

She describes the spending on her younger child as “not much”, since the bulk of his school fees for his polytechnic studies is covered by a scholarship. He will be graduating this year.

Besides, she will also downsize to a three-room flat in April. With her next flat fully paid for, it would be yet one less financial commitment she has to worry about, she said.

Another support measure announced at the Budget is an enhanced Workfare Income Supplement scheme, which tops up the salary of lower-wage workers.

Annual Workfare payouts will be raised across various age groups and eligible employees will receive higher payouts of up to S$4,200 a year, up from S$4,000.

Mdm Habsah is in the 60 and older age group that will get the highest payout of up to S$4,200.

Those aged 35 to 44 will receive up to S$3,000 and those aged 45 to 59 will get up to S$3,600.

Mdm Habsah, who draws a salary of about S$2,000 a month, now receives WorkFare payouts of about S$200 monthly — or S$2,400 a year — most of which goes into her CPF account.

Furthermore, as an employee in the food services sector, she may benefit from the Progressive Wage Model, which is intended to increase the salaries of lower-wage workers in tandem with them improving their skills and productivity.

The Government announced last year that the wage model will be expanded to cover the food services sector, though it may take two to three years.

The latest announcement on Friday was that it would be applied to the sector from March 2023.

Asked if the potential increase in income and the higher employer contribution to CPF would entice her to defer her retirement plans, Mdm Habsah chuckled.

“Right now, I occasionally feel too tired to work. But it depends on my health. If I’m able, maybe I’ll work until 65, maybe I’ll stop working earlier.”