SINGAPORE – The labour movement has called on the Government to make two changes to the Central Provident Fund (CPF): Bump up contribution rates for older workers by one to two percentage points and relook rates for all workers.
The former is an immediate goal of the National Trades Union Congress (NTUC), said its deputy secretary-general Heng Chee How yesterday, while the latter is a long-term aim.
The unions, he added, hope to see CPF rates of workers aged above 50 to 55 going up from the current 32.5 per cent when the Government announces its national Budget in Parliament on Feb 21.
Employers should contribute the bulk of the hike, he said at a conference. For workers, their contributions should go to their Ordinary Accounts, which can be used to pay for home mortgages.
The labour movement’s recommendation is that bosses pay at least one percentage point of the increase, he added. It follows the spirit of the last hike, he said.
In 2012, when the rates for older workers were last adjusted from 30 per cent to 32.5 per cent, 2 per cent came from employers and 0.5 per cent from workers.
“We feel that it’s only fair that the employers should come out with more than whatever is asked of the employees,” he said.
This does not apply to the comprehensive CPF review, which should focus on parity between contribution rates by employers and workers, and possibly a review of the current contribution ceiling of $5,000, he said, without offering more details. The last major review was in 2003.
Wednesday’s call came after labour chief Lim Swee Say sent a similar message on Monday, urging that older workers’ CPF rates be on a par with younger workers’ 36 per cent. Mr Lim stressed that the 3.5 percentage-point gap need not be closed “in one go”.
The CPF rate for older workers was cut in 2003 during a recession.
But it was partly restored to the current level in 2012, with the Government promising to give this group the same CPF contributions as younger workers.
Mr Heng said the labour movement found it “logical” to push for a further closing of the gap since the Government had made a public commitment to do so.
It is also timely, he added, as older workers have more bargaining power in the current tight market conditions. “Do you want to wait for a time when the labour market is very weak and there are workers looking for jobs and you seek an increase in the CPF rate?” said Mr Heng.
The Singapore National Employers Federation said it welcomed the call, as it may attract more older workers to join the workforce. But it asked the Government to consider that economic growth might slow this year and suggested that the schemes to reduce the cost of hiring older people be expanded.
Older workers said higher CPF rates would be helpful for retirement but some were worried. Supermarket sales promoter May Lee, 53, said: “Not many bosses like to hire older workers. They may object even more now that the cost of hiring us will go up.”