- POSTED: 12 Feb 2014 12:37
The labour movement has proposed CPF contribution rates for older workers, aged above 50 to 55, be raised by between 1 and 2 percentage points this year. That would bring the rates closer to that of younger workers.
SINGAPORE: The labour movement has proposed CPF contribution rates for older workers, aged above 50 to 55, be raised by between 1 and 2 percentage points this year.
That would bring the rates closer to that of younger workers.
In its Budget wish list revealed on Wednesday, the National Trades Union Congress (NTUC) said employers should bear a larger proportion of the increase.
Mdm Annie Ng, 53, would be among the 200,000 or so workers who stand to benefit, should the government heed the labour movement's call, when it reveals the nation's Budget next week.
Currently, the CPF contribution rate for workers like Mdm Ng is 32.5 per cent.
This is a 3.5 percentage point lower compared to that for workers aged 50 and below, whose contribution rate is 36 per cent.
The labour movement wants to see the gap halved.
It said with Singaporeans living and working longer, there is an urgent need to help workers save more for retirement and healthcare.
Mdm Ng, a cashier with Ya Kun Cafe, said: "Yes, it will help us. Because we're older, we will need that Medisave account, and wouldn't have to give our children too much (financial) pressure."
The labour movement expects employers to contribute at least 1 percentage point more into their workers' CPF account.
Anything below that, it says would be "meaningless".
On employers' concerns over wage pressures, NTUC said now is as good a time as ever to move.
Mr Heng Chee How, Deputy Secretary-General of NTUC, said: "Is it more opportune to make such moves when the labour market is tight, where the orders are there and the manpower is short? Or is it (better) to wait for the opposite to happen when you have a recession?
"Our view and from experience, all considered, it is better to do it in a tight labour market. Because in a tight labour market, the businesses are already factoring the fact that in order to get the manpower, you have got to pay more in one way or the other.
"And therefore CPF cost is part of their overall wage cost which will be under pressure in any case, in a tight labour market."
Mr Heng said any increase in employees' CPF contribution rates should go into the Ordinary Account, which many Singaporeans use to pay their housing mortgages.
In the long term, the labour movement wants to see a review of CPF contribution rates and ceiling.
This could be in the area of adequacy - looking at just how much a worker needs to save for retirement.
Another area is to look at greater parity in contribution rates, between employer and employees, across all age bands.
The last time CPF rates were reviewed was more than 10 years ago, in 2003.
Since then, contribution rates have either met or surpassed the targets set, across all age bands.
For example, the target set in 2003 was between 30 and 36 per cent for workers aged 50 and below. Today, it's at 36 per cent.
For workers between 51 and 55 years or age, the target was between 24 and 30 per cent. That has since risen to 32.5 per cent.
The employer's contribution rates have also remained below that of employees, with the widest gap also seen in the above 50 to 55 age group.
Mr Heng added: "We will have to continue to look at the new reality, what constitutes adequacy in this new reality and also the business considerations of competitiveness.
"We note that in the past, subject to those considerations, one-to-one contributions by employers and employees was possible in certain periods... but not always.
"So again we would want to discuss whether or not it's possible to contribute on par, where the considerations allow for it."
The last time employer and employee CPF contribution rates were equal, at 20 per cent each, was in 1997/98.
To lessen the burden on businesses, employer contributions were reduced, following the Asian financial crisis.