CPF rates for older workers ‘may go up’

Older Singaporean workers face the pleasant prospect of seeing a rise in their Central Provident Fund (CPF) contributions.

The labour movement yesterday called on the Government to raise the CPF rates of those aged above 50 to 55 so that they are on a par with younger workers.

But it need not be done “in one go”, said labour chief Lim Swee Say, who is also Minister in the Prime Minister’s Office.

Union leaders, he said, are not pushing for the 3.5 per cent gap to be closed “in one go, because we do understand it should be done progressively”, he told reporters after an official visit to restaurant chain Eighteen Chefs.

The CPF rate of these older workers is 32.5 per cent compared to 36 per cent for younger workers.

It had been cut in 2003, along with other tweaks to the CPF scheme, when Singapore suffered a recession because of Sars.

But during Budget 2012, it was partially restored to the current level. At the same time, the Government had promised to give this group the same CPF contributions as younger workers.

“However, we cannot make this major move in one step,” Deputy Prime Minister Tharman Shanmugaratnam, who is also the Finance Minister, had said then.

Yesterday, Mr Lim gave a broad hint that another step towards parity could be taken as early as next week, on Budget Day.

Mr Tharman is scheduled to present the national Budget in Parliament on Feb 21 and Mr Lim said these older workers hope to hear “some good news from the Finance Minister”.

The National Trades Union Congress (NTUC) is also expected to make known this week its plans to push for CPF rates to be tweaked to help Singaporeans save for medical and other financial commitments in their old age.

Besides the CPF rates, Mr Lim also commented on the newly announced Pioneer Generation Package, saying union leaders are “very positive” about it.

The package of health-care subsidies is for Singaporeans who are 65 and older by the end of this year, in recognition of their contributions to nation-building.

Mr Lim said younger workers who miss the cut-off age also hope to see their CPF accounts grow.

“They hope more can be done to strengthen their Special Account savings because it goes into CPF Life,” said Mr Lim, referring to the annuity scheme for retirement.

Some businesses, however, are worried at the prospect of a CPF rate increase.

Mr Luke Pang, group manager of dessert and pastry chain Canele, said: “We may have to increase prices.”

Mr Kurt Wee, president of the Association of Small and Medium Enterprises (ASME),asked for early notice of any rate increase “because many employers are already in a tight and difficult situation”.

He was referring to the tight labour market and rising rents.

MP Zainudin Nordin, who chairs the Government Parliamentary Committee for Manpower, feels that since “the economy is doing fine, we should just do it”.

“There is never a good time to increase… Any further wait will affect the workers’ ability to save for retirement.”

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