By Naseema Banu Maideen, Joshua Joseph and Nicholas Lee
Now that the Budget buffet is out, what does it offer Singapore’s workers and businesses? We take a look at four of the key highlights.
CPF Rates
- Increase In Employers’ Contribution
• It will be raised by one percentage point across age bands, up to the salary ceiling of $5000 and channelled into the Medisave Account.
• The Government will provide employers with a 50 per cent offset through a one-year Temporary Employment Credit (TEC) to help them manage the increase.
• Both the CPF contribution rate change and the TEC will take effect from January 2015.
- For Older Workers
• CPF contribution rates for those aged 50 to 55 will go up by 1.5 percentage points – one percentage point from the employer and half a percentage point from the employee.
• The employer contribution rate for those aged 55 to 65 will also be raised by half a percentage point.
• All increases in employer contributions will go into the Special Account.
• As some workers may still be servicing mortgages, the 0.5 percentage point from the employees will go into the Ordinary Account.
• To help employers adjust, the Government will provide an increase in the Special Employment Credit (SEC) of up to 0.5 percentage point for one year to help offset some of the increases in older worker contribution rates.
• The higher contribution rates for older workers as well as the SEC enhancement will begin from January 2015.
Productivity – The Way Forward
The centre of the economic agenda is raising the productivity of companies, said DPM Tharman Shanmugaratnam in the Budget Statement. He stressed this is the only way to raise living standards in the coming years. Many more firms are taking advantage of schemes introduced over the years to invest in productivity, and Budget 2014 will continue to support significant efforts in business transformation and upgrading.
DPM Tharman unveiled the following extensions and enhancements to the Productivity and Innovation Credit (PIC) Scheme:
• Due to expire in Year of Assessment (YA) 2015, the scheme will now be extended for another three years until 2018 at a cost of $3.6 billion.
• Introduction of the “PIC+” scheme to help firms that make more substantial investments in transforming their businesses.
• Under the “PIC+” scheme, the expenditure cap will be raised to $600,000 from Year of Assessment 2015.
Up-skilling – A Funding Boost
Touching on the Continuing Education and Training (CET) system, DPM Tharman shared that the Government is undertaking a “major review” of the system “to support the up-skilling of our workers on a continuous basis and the transformation of our economy”. This review will be completed in the later part of 2014.
• The Ministry of Finance will top up the Lifelong Learning Endowment Fund (LLEF) by $500 million, bringing the total to $4.6 billion as more funds will be needed for the expansion of the system.
Pioneer Generation
A Special Package: Three Key Components
Who Qualifies?
The Pioneer Generation Package is for the first generation of Singaporeans who were living and working in Singapore after independence, that is those who were at least 16 years old in 1965. It includes those who became citizens before 1987. In total, about 450,000 Singaporeans will receive the Package, regardless of income.
- Outpatient Care
• Specialist Outpatient Clinics and Polyclinics: The Pioneer Generation will get a 75 to 85 per cent subsidy for treatment at Specialist Outpatient Clinics as well as an additional 50 per cent off their bills at polyclinics.
• Community Health Assistance Scheme (CHAS): Those who are not on CHAS will now qualify, while those already on it will enjoy additional subsidies similar to the enhancements at Special Outpatient Clinics and polyclinics.
• Pioneer Generation Disability Assistance Scheme: Those who have moderate to severe functional disabilities or their nominated caregivers will receive cash assistance of $1,200 a year.
• The subsidies for Specialist Outpatient Clinics and polyclinic services as well as the disability assistance will be implemented in September 2014. The additional CHAS benefits will take place in January 2015.
- Medisave Top-Ups
The Pioneer Generation will receive $200 to $800 worth of top-ups every year, with the older among them receiving more. They will also be able to use their Medisave more flexibly for a range of outpatient treatments.
- MediShield Life Subsidy
MediShield Life will cover all members with enhanced coverage for large hospital bills, including those with pre-existing conditions. They will also receive a special subsidy to ensure that MediShield Life premiums are highly affordable for them.
• Aged 80 and above in 2014: Government fully covers their MediShield Life premiums through a combination of MediShield Life premiums subsidies and Medisave top-ups.
• MediShield holders aged 70 and above in 2014: Government aims to pay about half of their premiums, and the rest can be covered through subsidies and Medisave top-ups.
• Those not on MediShield will be brought onto MediShield Life. They should still pay less than current premiums.
• The subsidies will be implemented at end-2015, when MediShield will be rolled out.
Click here to read more on Budget 2014.
