Former prime minister and current Minister Mentor Lee Kuan Yew, 81, is pushing for the reforms and told a union forum on Monday the issue was discussed at the last Cabinet meeting.

Lee, who retired as prime minister at the age of 67, said his proposal was based on people being allowed to work past 62 but at a lower wage.

"I'm trying to work out a scheme, which I hope the Cabinet will eventually come round to, where you gradually tail off, you go down (in salary), but you continue working," the Straits Times quoted Lee as saying.

"The government has an interest in this because if you don't prolong the employment age, you will have a big problem dealing with medical costs."

Lee said one obstacle was the belief among employers that they would be "short changed" by having to keep on older staff but cited his own career as evidence people still had assets to offer past the age of 62.

"My father lived 'til 90-plus and I don't abuse my body unncessarily. So if I had to retire at 62, it's a dead loss, right?"

Lee retains strong influence in government with his position of minister mentor the third highest in the Cabinet, behind Prime Minister Lee Hsien Loong, who is his son, and Senior Minister Goh Chok Tong.

The government raised the mandatory retirement age from 60 to 62 in 1999.

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