NTUC calls to delay cut in employer’s CPF contribution rate
The cut in employers’ Central Provident Fund (CPF) contribution rate for workers at the age of 50 should be pushed back further, the National Trade Union Congress (NTUC) said.
Leading this call is its secretary-general Lim Swee Say, who said at the National Delegates’ Conference on Thursday that a review of CPF rates is needed because the life spans of people are now longer and they require savings for their retirement needs and other services, Today reported.
Under the current practice, employer CPF contribution rates are cut when a worker reaches the age of 50, 55, 60 and 65. This was started in 1988 to increase their employability after a major recession.
When a worker reaches the age of 50, the employer contribution rate is reduced from 16 per cent to 12 per cent. The rate is further cut to 9 per cent and 6.5 per cent when the worker turns 55 and 60, respectively.
On the other hand, it has been reported that employers are hesitant to increase their CPF contribution rates owing to the possible slowdown in the global economy next year.
In addition, they are also anticipating the financial impact of a mandatory employment law due to take effect in January next year which requires employers to offer re-employment to workers who reach 62.
Deputy Prime Minister Tharman Shanmugaratnam said in October that the government is reviewing CPF rates to ensure that older workers remain employable.
Tharman, who is also the Minister for Finance and Minister for Manpower, then said that the government will also consult both employers and unionists for their views.
Supporting the NTUC’s suggestion is general-secretary of the Singapore Port Workers Union Ameer Hamzah, who said it is timely to review this policy considering the retirement age for older workers will be pushed back to 65 and later to 67.
The new re-employment law to take effect next year aims to allow workers to work past the current retirement age of 62, up to 65 in the first instance and, later, up to 67. This means that the retirement age has also been pushed further but the statutory retirement age would remain at 62.
Speaking to Yahoo! Singapore, he noted that delaying the cut in employers CPF contribution rate will allow workers starting from the age of 50 to build up their savings by the time they reach that retirement age.
“The call is timely because retirement age is pushed further and your work life is much longer,” he said.
However, he pointed out that this review should be a tripartite process between the government, employers and the labour union.
With an uncertain economic outlook, employers too are affected, he said, therefore their views should also be taken into account to reach a win-win situation for all parties.
