You are here
NTUC: Raise CPF rate for workers aged 50-55 by 1-2 points
THE labour movement is seeking a 1-2 percentage-point hike in the Central Provident Fund (CPF) rate for workers aged 50-55 in next Friday's Budget, and reminding Deputy Prime Minister Tharman Shanmugaratnam to keep his promise to bring the CPF contribution rate for these workers more in line with that for younger workers.
Although Mr Tharman, who is also Finance Minister, did not set a time frame for doing this when he made the commitment in his Budget speech two years ago, the labour movement feels the time is right to ask for "another significant step" to be taken to narrow the gap.
The current CPF contribution rate for those aged 50-55 is 32.5 per cent, and 36 per cent for younger workers, leaving a gap of 3.5 percentage points to fill if the rates of the two age groups are to be equalised.
Workers aged 50-55 contribute 18.5 per cent, and their employers, 14 per cent; younger workers contribute 20 per cent of their salaries, and their employers, 16 per cent.
Heng Chee How, deputy secretary-general of the National Trades Union Congress (NTUC), said at a press conference yesterday that employers are aware of the government's commitment to narrow the gap, so "they know it will happen at some point in time".
And it is better for that to happen now, he said, when the labour market is strong; with the labour market tight and the economy growing, employers can factor in the CPF rate hike as part of the market pressures on pay to increase.
Employers alerted to NTUC's move have already moaned that the hike will raise their operating costs, though they also see that a higher employer contribution rate may help those facing a labour crunch to attract and retain workers.
In a statement yesterday, the Singapore National Employers Federation (SNEF) backed a gradual increase in the employer's CPF contribution rate for older workers, but cautioned that other costs and the employability of workers must also be considered before making the move.
It also asked the government to take into account "the prevailing economic conditions and give adequate notice as to the timing of any increase".
The rate for older workers was cut in 2003, along with other CPF tweaks, because of an economic downturn.
NTUC does not want to burden employers by pushing for a full restoration of the rate for older workers, but Mr Heng indicated that the hike the labour movement is seeking for older workers should fall more on the employer's contribution rate rather than the worker's.
After all, he pointed out, the employer's contribution rate, at 14 per cent, has farther to go to catch up with that for younger workers (16 per cent).
Mr Heng said the employer's CPF rate for older workers should rise by at least one percentage point to be "meaningful".
And if the worker's rate is to be increased at all, the money should go into the CPF Ordinary Account so that it can be withdrawn to meet these workers' housing mortgages and children's university education costs.
"Older workers still have ongoing commitments," Mr Heng said.
In a statement, NTUC had asked the government to "halve the gap" in the contribution rate. This means a hike of 1.75 percentage points (half of the 3.5 percentage-point difference). At yesterday's press conference, however, Mr Heng said the increase could be 1-2 percentage points.
Yesterday, the labour movement also called on the government to update the long-term targeted CPF rates to ensure that these will build up enough funds for workers' medical and retirement needs.
Mr Heng noted that the long- term rates for the various age bands were last set in 2003 - and many of these have already been exceeded today.
In reviewing the long-term rates, NTUC said the government could also move the contributions by employers and employees "progressively towards parity within each age band".