Singapore - Costs a worry if employers' CPF rate raised

SINGAPORE: Employers in Singapore say any hike in their CPF contributions for older workers would result in higher business cost. This in turn may affect the employability of older workers. 

The Central Provident Fund or CPF is a compulsory savings scheme for Singapore workers.

The employers' CPF contribution rate is cut from 16 percent to 12 percent of a worker's pay when he turns 50. It falls to 9 percent when he turns 55, and is cut again to 6.5 percent at the age of 60.

As Singaporeans live and work longer, there is a need to help them save more for retirement. That is why the labour movement has called on the government to raise employers' CPF contributions for older workers.

But for employers, cost is naturally the biggest gripe. 

Mr Stephen Lee, president of Singapore National Employers Federation, said: "The overall cost of retaining older workers adds to the overall cost of doing business. It's possibly, I think, the number one concern of SMEs (small- and medium-sized enterprises) today."

Others said it's not the right time for a hike in employers' CPF contributions. 

Mr Chan Chong Beng, president of Association of Small & Medium Enterprises, said: "A lot of people are not hiring, and not expecting to (do so). A lot of people are already complaining about rising business costs. I think we should postpone it (till) when times are better. And if there's a need to, then the increase should be very marginal." 

And that, Mr Chan said, should be less than one percent.

Bosses said raising the employers' CPF contribution rates will disadvantage older workers. 

Dr Randolph Tan, SIM University's business programme head, said: "If you actually price the older worker beyond what the employer can afford, that's not actually going to end up helping them."

Mr Ho Meng Kit, CEO of Singapore Business Federation, said: "The global situation is so volatile...and if we do have a recession and wages are high, you (older workers) could be the first to go...It'll be more difficult for you to be re-employed."

In a closed-door dialogue with the National Trades Union Congress (NTUC), Prime Minister Lee Hsien Loong had said employers' CPF contributions for workers above 50 years old will go up. 

The question now is: at what age should they cut CPF contribution rates? 

Mr Inderjit Singh, MP for Ang Mo Kio GRC, said: "I want to say 60, but I think the government is never so bold. 55 may be a good place to start, and be more gradual in the reduction."

If a hike in employers' CPF contribution rates for older workers is inevitable, some bosses Channel NewsAsia spoke to suggest that the employee's CPF contribution should be increased as well. This would help build up a worker's nest egg for retirement.

- CNA/ir


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