Raise CPF rates for older workers in 2022 as planned: NTUC

THE National Trades Union Congress (NTUC) is calling for increases to Central Provident Fund (CPF) contribution rates for senior workers to take effect from Jan 1, 2022 - as planned. NTUC also recommends following through on plans to raise the statutory retirement age from 62 to 63 and the re-employment age ceiling from 67 to 68. Both changes are planned for July 1, 2022.

These changes were first announced in 2019, on the recommendation of a tripartite workgroup on older workers. To help businesses manage costs amid Covid-19, the government deferred the increases in CPF contribution rates (initially planned for Jan 1, 2021) by one year. Now, NTUC is calling on the government to follow through on this revised timeline without further delay.

Heng Chee How, NTUC's deputy secretary-general, stated NTUC's position after visiting older healthcare workers at the National University Hospital on Thursday. "From the labour movement at NTUC, our call is for us to continue with (the agreed) pace of implementation," said Mr Heng.

The CPF contribution rates are to rise 2 percentage points to 28 per cent for workers aged 55 to 60. Rates will also rise by 2 percentage points to 18.5 per cent for workers aged 60 to 65. The increases in rates for both age bands will be split between employers and employees, with both groups' contributions rising by 1 percentage point each.

Rates will rise by 1.5 percentage points to 14 per cent for workers aged 65 to 70, with employee contributions rising by 1 percentage point and employer contributions rising by 0.5 per cent. There are no changes planned to the 12.5 per cent rate for workers above 70 years of age.

Under the CPF Transition Offset scheme, the government will provide employers with a one-year offset of 50 per cent of the increases in employers' CPF contributions.

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These moves are the first steps of a longer-term plan agreed upon at 2019's tripartite discussions. By around 2030, the government intends to have increased CPF contribution rates for workers aged 55 to 60 by 11 percentage points - to 37 per cent. This would put rates for workers in this age group on par with younger workers, with rates tapering only after the age of 60. The retirement age will be raised to 65 years, and the re-employment age to 70 years.

Changes will be made incrementally, and be completed within 10 years if possible, with the pace of CPF contribution rate increases depending on economic conditions.

On Friday, a blog post by Mr Heng noted "encouraging" data from the Ministry of Manpower. The employment rate of workers aged 65 and above had risen by 0.9 percentage points - from 27.6 per cent in June 2019 to 28.5 per cent in June 2020.

The Labour Movement, he wrote, had supported the earlier delay of increases to CPF contribution rates so as to help older workers keep their jobs amid the pandemic. "Yet, we must be careful to keep pace with our original intent and purpose of helping older workers enhance their retirement adequacy, given the longer lifespans," he added.

He called for the raising of the statutory retirement and re-employment ages, as well as the increases to CPF contributions, to proceed "without further delay". He also urged the government to help employers defray part of the costs, as planned.

Responding to queries from The Business Times, Sim Gim Guan, executive director of the Singapore National Employers Federation (SNEF), said the economic situation is improving, with Singapore's economy projected to grow by 4 to 6 per cent in 2021. He also said the CPF Transition Offset scheme would cushion the impact of the increases on employers.

"As the tripartite partners have agreed on a schedule until 2030 to increase CPF contributions of older workers, a gradual increase with government support would help employers to cope with any cost increase better," said Mr Sim. "However, SNEF recognises that the economic growth this year would be uneven across sectors. Hence, the government may want to look at other measures for sectors which are still under distress to further help them to manage their costs."