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When Should You Consider Working Past 62 in Singapore?

November 11th, 2014

In a Young NTUC survey, 70% of participants said they wanted the option to work past 62. If you know Singaporeans, that’s not a surprise – this country’s so workaholic, some of us play golf at night. So when the re-employment act kicked in, most of us signed the re-hiring contracts before our bosses even reached the “r” in “Are you staying?” But why are people working longer? It all depends:

How does the Retirement and Re-employment (RRA) benefit workers?

The new Retirement and Re-employment Act (RRA) was lobbied by the NTUC and implemented to allow Singaporeans the option of working past 62. The act was implemented because many senior employees still enjoy the challenge of steering projects, mentoring younger colleagues, or contributing to the economy.

Prior to the RRA, this was not possible in some companies, which insisted on retiring their employees after 62.

Under the RRA, employers must now offer re-employment contracts of at least one year, to employees who have reached the age of 62. This offer will be renewed each year, up to the age of 65 (although the government has advised employers to simply offer a three-year contract at one go).

If an employer cannot offer re-employment, they will instead provide an Employment Assistance Payment (EAP) of at least three months income.

At present there are ongoing talks to extend the re-employment age to 67. This is on the principle that, as long as we are medically fit and can do the job, our retirement age should be our own choice.

But this does lead one to wonder, why do workers choose to stay on after the age of 62?

There are a host of financial as well as psychological reasons that would make the prospect of re-employment attractive:

  • To pay off outstanding debts (even if your retirement funds could cover it)
  • If you are low on savings
  • It can help if you want to run a retirement business
  • To ease into a different way of life
  • Just because there isn’t a “correct” age for retirement

1. To pay off outstanding debts (even if your retirement funds could cover it)

Most of us will not have outstanding loans at 62. However, some of us may have a few debts to clear up, be it to the bank or to personal acquaintances. In such cases, our pension or personal retirement funds may be sufficient to cover the loan, but still leave us on a tight budget.

In such cases, do consider that living on a tight budget can be much more stressful than three extra years of work.

For example, say you need to set aside an extra $200 a month, to pay off debts. To make up that extra $200, you might have to:

  • Remove subscription to a favourite cable channel (save around $50 a month)
  • Watch one less movie every month (save about $8, after concessions)
  • Miss four different occasions to eat out every month (save maybe $80, at $20 per meal)
  • Skip buying a present to spoil the grandkids every month (save about $20)

And more. The above sacrifices still only tally up to around $158 saved per month.

So consider which makes you happier: the free time from retirement, or freedom from the strict discipline needed to budget. If it’s the latter, well, three more years will pass in a breeze!

2. If you are low on savings

Beyond your CPF or fixed deposits, it is advisable to have additional savings that you can access immediately.

Some situations can cause severe distress if you don’t have the funds to deal with them right away (e.g. needing medical tests not under Medisave, having to replace a lost mobile phone, or unexpected home maintenance costs like replacing a broken bed)

If circumstances have stopped you building up a savings fund by 62, you may want to spend the extra three years diligently building one.

3. You might want to run a retirement business

Many senior employees enjoy running their own small business upon retirement. If you have previously held a management position, or have specialised skill sets, you may also find it quite lucrative to run your own consultancy, or to do freelance projects. It’s also a great way to keep the mind and body sharp!

However, there are some complications in such ventures. These can range from a lack of administrative know-how (e.g. how will you invoice clients?) to a lack of technical knowledge (e.g. setting up a website to advertise your services).

Your current office might be the best place to find help.

Use the next three years to make enquiries among colleagues. Ask the IT people out to lunch, and interrogate them on web design. Talk to the people in accounts, and copy their invoicing system.

Above all, be sure to grab any subsidised or free training from your company, for skills you may need in your retirement business.

4. To ease into a different pace of life

Retirement has different psychological effects on each of us. Some retirees are used to the structure provided by a job, and might feel a little lost with nothing to do at home.

An extra three years can provide invaluable time to mentally “shift gears”. You can develop new goals and plans, while still enjoying the companionship of your colleagues.

If your work responsibilities are being reduced, treat it as an opportunity to get used to a slower pace of life.

5. Just because there isn’t a “correct” age for retirement

Work for as long as it makes you feel fulfilled.

If you believe that your work is improving the world, or that you are leaving a legacy to be proud of, then what better way to spend your later years? Consider the following survey by Young NTUC. If you want to work past 62, you’re in the majority!

Singaporeans' view on Re-employment Act

Do you intend to work past 62? Comment below, or contact us and let us know!

How does Singapore really stack up against the rest of the world?

October 3rd, 2014

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We previously looked at the figures offered in the Singstat report and it suggests that all is well and that the economy is constantly improving in the country. This article will look at figures from around the world to examine how good the numbers for key income trends really are when compared to the rest of the world.

1. Singapore’s Median Household income is higher than most countries.

The increase in the amount of the median household income for household where at least one person is working has increased from S$7,570 (6,050 USD) in 2012 to S$7,870 (6,290 USD) monthly in 2013 according to the report. This means the median household income is 75,480 USD annually. According to Gallup, the median annual household income worldwide is 9,733 USD, and the median per-capita household income is 2,920 USD. The figure for median per-capita household income in Singapore is S$2,247 per month (21,480 USD annually), up from S$2,127 (20,400 USD annually). So, according to the report, both the figures for household income and per capita income show that Singapore are far ahead of the respective worldwide medians. Gallup’s polls put Norway at the top of the figures with median household income at USD 51,489 and per capita income at USD 19,308. Benin, Rwanda and Liberia are among the lowest earning countries and you can see how ridiculously unequal income distribution is across the world.

Income figures for various countries

However, we need to note the figures in the Singstat report are tabulated only for households where at least one person works and do not take into account households where no one is working. The government puts the amount of households where at least one person works at 91 percent of all households with 9 percent of households comprising of “retirees” (households made up of non-working people aged 60 and over). These non-working households may have income from non-work sources, e.g. income from rental, investment, contribution from relatives/friends, social welfare grants, etc.

2. GINI coefficient decreased.

The GINI coefficient stood at 0.463 in 2013 in Singapore before taxes and transfers, and 0.412 after taxes and transfers. However, Singapore calculates the GINI coefficient based on household income from work per household member, unlike OECD which uses a “square root scale” to take into account the fact that households may enjoy certain economies of scale because they can share the income between the members of the household. By any measure, Singapore does have one of the worst income inequalities in the group of economically developed OECD countries. Singapore’s GINI coefficient was the highest in 2012. It went down in 2013.

Since the 2013 figures for other countries are not widely available, we will compare 2012 figures. Doing so will still give us a general idea of how income distribution in Singapore stacks up against the other countries.

Gini coefficient for various countries

In 2012, according to OECD, Singapore had the highest GINI coefficient among OECD countries at 0.414, with the United States second at 0.378, and Denmark the most equal at 0.248. However, the report indicates that government schemes have increased redistribution of income. This is the reason why we are witnessing a decrease in Singapore’s GINI coefficient in 2013.

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Choosing A Car Insurance Policy

September 17th, 2014

Motor insurance policy terms can be confusing for most people and you may end up paying for features you do not need or worse, be stuck in a situation where you are put at great financial liability. So, make sure that you know exactly what you are paying for and what you are getting in return.

How are rates calculated?

Policy premium rates will most likely depend on the model of your car, your current driving record, you history with insurance as well as the features of the policy that you sign up for. Always research every aspect of the plan that you intend to sign up for and enlist some help if you have trouble with some features.

Car Insurance

Who is covered?

While most policies will assume that you are the sole driver of the car when you sign up, you should take the time to check it and include all other drivers that may be likely to use it. This will save you a lot of money if you lend your car to your wife and she ends up in an expensive accident. Premiums will rise when more drivers are added, but if your car is used by others regularly, this will be worth the increase. Some policies may also allow addition of a few drivers without cost, so look into that.

What is the excess?

The excess is the amount of money that you are personally responsible for if you get into an accident. The insurance company handles the rest.

What are some extra protections?

Here are a few less known protections you can pay for if you think you need them. Car Rental Extension allows you a courtesy car when your car is being repaired. Additional Personal Accident cover will let you increase the amount covered under the insurance for personal injuries. No Claim Discount protector will mean that if you get in an accident your NCD will not be affected (the number of accidents this applies to each year will be set in the agreement.)

This will help you understand some of the policy terms and hopefully make a better choice.

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FCF Shows Its Bite As Jobs Bank Listings Spike

September 5th, 2014

The Ministry of Manpower’s Fair Consideration Framework (FCF) seems to be having its desired impact as more than 56,000 jobs have been listed on the National Jobs Bank, the final piece of the FCF rollout since it was announced in September 2013. This compares to over 51,000 jobs listed on commercial site Jobstreet.com.sg and 26,000 [...]

Read the full article at FCF Shows Its Bite As Jobs Bank Listings Spike

Compare Your Annual Income 2014

September 2nd, 2014

This is the 2014 version of the most popular income benchmarking tool on Salary.sg. It uses the latest data from IRAS’s just-released Annual Report 2013/2014. To benchmark/compare your annual income – including all commissions, bonuses, part-time salaries, director’s fees, rental income – simply enter your IRAS assessable income below and see how well you stack [...]

Read the full article at Compare Your Annual Income 2014

Benchmark Your Monthly Pay By Age & Gender 2014

August 18th, 2014

Our extremely popular income comparison tool has been updated with the latest data from Ministry of Manpower’s Report on Labour Force in Singapore 2013 (released in 2014). This income comparison calculator lets you compare your gross monthly income against other Singapore residents in your age group AND gender group. You may also compare with all [...]

Read the full article at Benchmark Your Monthly Pay By Age & Gender 2014

More Jobs For Locals At The New National Jobs Bank

July 29th, 2014

Keeping an eye out for better employment? Salarymen (and women) who are used to surfing through the various job portals available in Singapore will be interested to hear about the newly-launched National Jobs Bank at www.jobsbank.gov.sg, which boasts over 16,000 jobs available only to Singapore Citizens and Permanent Residents. The National Jobs Bank launched on [...]

Read the full article at More Jobs For Locals At The New National Jobs Bank

5 Easy Ways To Save Money

July 9th, 2014

Young professionals are always on their way to a big spend, whether it is a new car, a wedding or a home. It may seem that you are no closer to your goal that you were a few months ago but this is only because you are not saving money in all the ways that [...]

Read the full article at 5 Easy Ways To Save Money

How Does CPF Compare With Other Countries’ Retirement Plans

July 1st, 2014

Hong Kong’s MPF and Australia’s MySuper are designed as retirement funds while Singapore’s CPF and Malaysia’s EPF allow parts of it to be used for Housing. In Singapore’s case, it can also be used for Healthcare and Education. Singapore’s CPF also allows for members to invest their funds through the CPF Investment Scheme (CPFIS). With [...]

Read the full article at How Does CPF Compare With Other Countries’ Retirement Plans

Civil Service Bonus Mid-2014

June 14th, 2014

The Public Service Division (PSD) has just announced that the civil service mid-year bonus will be 0.5 month. This mid-year bonus, known as Annual Variable Component (AVC), will be paid out in July 2014. Besides this, Division III and IV officers will respectively receive additional wage increments of $30 and $70 per month, over and above their [...]

Read the full article at Civil Service Bonus Mid-2014