- Towards Equalisation and Fairness in CPF Contributions -
The National Trades Union Congress (NTUC) Secretary-General Lim Swee Say called on behalf of the Labour Movement for Central Provident Fund (CPF) rates to be enhanced. This is to help workers save more for retirement and for healthcare expenditures. Specifically, he urged the Government to:
a. increase employer contribution to the Medisave Account in anticipation of rising healthcare and health insurance costs;
b. strengthen Special Account savings for older workers who are aged 55 and above so that they have more retirement savings;
c. work towards aligning the total CPF contribution rates of those who are in the age group of >50 to 55 years old, with those who are aged 50 and below.
Equalisation of CPF Contribution Rates
Deputy Prime Minister Tharman Shanmugaratnam made a public commitment two years ago to equalise the CPF contribution rates for workers who are aged above 50 to 55 over the long term. Following a 2.5 percentage point enhancement in 2012, there remains a 3.5 percentage point difference in the current contribution rates between the >50 to 55 age band and those who are below 50 years old. NTUC calls on the Government to take another significant step in the upcoming Budget toward realising that goal, and half the gap in the contribution rate.
At the same time, the long term contribution target rates set in 2003 by the Government have been reached or surpassed. The needs in society have also evolved since then. It is therefore appropriate to review the contribution rates and ceiling, and put in place a new set of long term targets. NTUC hopes that as the target CPF rates are reviewed for long run adequacy, the contributions by employers and employees could move progressively toward parity within each age band.
Fairness in CPF Contributions
Current employer contribution rates are lower than employee across all age bands. It would be fair for employers’ contributions to increase more than those of employees in any enhancements to total contribution.
Workers use the money in their CPF Ordinary Accounts and their private savings to service housing mortgages and help fund their children’s tertiary education. To ensure that any prospective increase in employees’ CPF contributions would not adversely affect the cash flow and ability of families to meet these obligations, any increase in employees’ CPF contributions should go into their Ordinary Accounts.
Ms Diana Chia Mr Heng Chee How
President Deputy Secretary-General
National Trades Union Congress National Trades Union Congress
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