Budget: CPF contribution rates for older workers to be raised
The CPF contribution rates for older workers will be raised. In addition, the Special Employment Credit, introduced in the Budget last year to encourage employers to hire older workers, will provide further support.
SINGAPORE: The CPF contribution rates for older workers will be raised.
It's a good time to do so with the re-employment legislation now in place, said Finance Minister Tharman Shanmugaratnam when delivering the Budget Statement in Parliament on Friday.
In addition, the Special Employment Credit (SEC) introduced in the Budget last year to encourage employers to hire older workers will provide further support.
Mr Tharman said the government had good consultations with its tripartite partners and reached a consensus that those aged between 50 and 55 will receive the same CPF contributions as younger workers.
Therefore, the contribution rates for this group of older workers will be increased by six percentage points – 4 percentage points from the employer and 2 percentage points from the employee – to reach the full CPF contribution rate of 36%.
"However, we cannot make this major move in one step, and particularly with an economic slowdown at hand," said Mr Tharman.
For the first step, from September this year, CPF contributions rates for those aged 50 and 55 will be raised by 2.5 percentage points - 2 percentage points from the employer and 0.5 percentage points from the employee. This will bring their total CPF contributions up from 30% to 32.5%.
For workers aged between 55 and 60, their contribution rates will be increased by two percentage points - 1.5 percentage points will come from the employer and 0.5 percentage points from the employee.
Additionally, for workers aged between 60 and 65, their employer contribution rate will increase by 0.5 percentage points. There will be no increase in their employee contribution rate.
UWEEI president Francis Lim said: "Most of the workers have been calling for this, especially, after the age of 50, they have a reduction (in CPF contribution). Now, if we start to restore back, I think it's ideal."
Mr Tharman said the government will watch how the employment market develops before making any further moves.
Member of Parliament (MP) for Holland-Bukit Timah Group Representation Constituency (GRC) Liang Eng Hwa said: "The raising of the CPF rates has the intention to enhance the financial security of our retirees.
"Our citizens are all living longer and so on, and the expenses, especially the healthcare expenses, are expected to go up.
"Of course, this will come with some increased costs to our businesses, and therefore, we need this other part to it, which is the Special Employment Credit to assist the companies and to give them the offsets.
MP for Marine Parade GRC Tin Pei Ling said: "The increase in CPF contributions for older workers not only encourages older workers to continue working, but also sends a very clear signal that older workers should be seen as equals to the younger workers out there.
"This SEC will serve to tear down whatever barriers employers might feel in terms of rehiring them."
The government will also allocate more of the increased contribution rates to the Special Account, with a smaller portion going to the Ordinary Account and Medisave accounts.
For older self-employed persons, contribution rates for their Medisave accounts will be raised.
The Medisave contribution rates for those aged 50 and above will be raised from nine per cent to 9.5 per cent, from January next year.
Some Singaporeans have welcomed the move to increase CPF contribution rates for older workers.
One said: "It's a benefit for both parties. I mean, as I'm getting older, to get a better or increase in CPF contribution from the employer or even from myself, I don't mind. I think it's a good thing."
"I think it's good because if you work, then it saves a bit more for you," said another.