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MPs, NMPs react to NDR announcement of higher CPF contribution rates for older workers

MP Heng Chee How said that due to two “realities,” these changes are welcome—the fact that Singaporeans are living longer, as well as labour constraints

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Singapore — One significant part of Prime Minister Lee Hsien Loong’s National Day Rally speech was the announcement that from 2021, CPF contribution rates for workers older than 55 will be increased, and that after these changes are made, employees ages 60 and below will benefit from the full CPF rate.

This announcement elicited a positive response from Members of Parliament (MPs) from the labour movement, Patrick Tay, Zainal Sapari and Heng Chee How, even though they admitted that companies would possibly have concerns about higher costs due to these adjustments.

However, certain Nominated Members of Parliament (NMPs) are pushing for even more changes to the CPF programme—such as extending higher rates of contribution to individuals up to the age of 65, as well as an earlier implementation of the increase.

Additionally, the Prime Minister also said on Sunday, August 18, that rates for CPF will begin to decrease after workers are aged 60, and will level off after they turn 70. Depending on the country’s economic conditions, the total increment for this age group will take around a decade to complete.

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At present, those employed are paying a 37 percent CPF contribution are until they are 55 years of age, and then from ages 55 to 60, the percentage of contribution decreases to 26 percent. For individuals aged 60 to 65, CPF contribution goes down to 16.5 percent, and for workers over 65, to 12.5 percent.

Channel NewsAsia (CNA) reports labour movement MP Heng Chee How as saying that due to two “realities,” these change are welcome—the fact that Singaproeans are living longer, as well as labour constraints.

He said that Singaporeans’ longevity necessitates finding ways to help older employees work longer if they choose to do so, as well as ensure that their retirement needs are taken care of.

MP Tay, the chairman of the Government Parliamentary Committee (GPC) for Manpower, said, “There’s always a sense of concern that the older workers may be less productive. I think businesses have to leave it to technology. We have seen companies that have succeeded in using technology to redesign their jobs.”

According to MP Sapari, We in the labour movement understand what some of the concerns are and that is the reason we do not have a very fixed schedule (for the changes),” and he encouraged employees to stay healthy and keep adding new skills so that they can continue to look forward to employment.

However, according to some Nominated Members of Parloament, more can be done for older workers. CNA quotes NMP Walter Theseira as saying, “There is no reason why we shouldn’t aim to get the CPF contribution rates to be the same all the way up to the eligibility age to withdraw CPF, which is 65.”

He added, “The fact is, if you are not required to retire yet, then shouldn’t you be treated the same as other workers?”

NMP Anthea Ong asked that the increase in CPF rates be accomplished faster as this would give workers an incentive to work even longer. “We want them to work longer, we should also provide for them more in terms of the CPF contributions.”

NMP Theseira brought up the present wage structure as a problem, since it may make it hard for employers to adopt the increase in the cut-off of ages as well as increased CPF contributions for older workers.

Since the present wage structure is done in such a way that many employees get their increases over the years until they reach their peak wages at an older age, this may present a problem for employers since older workers are not as productive as younger ones.

He said, ”The employer will think: ‘I’ve committed to paying this guy more and more money every year, but he’s getting less productive, so I’m looking at a black hole’.”

The NMP believes that peak salary should be given earlier, and lessened as workers become less productive as they age, and that the country should have a a more flexible wage structure, CNA reports.

“If you look at many people, if you ask them, when do you really need your wages to be high? When do you need your income to come in? They will say it is when they are in their late 30s, early 40s, early 50s, when they have a young kid, when they are paying for (their children’s) education.” -/TISG

Read related: PM Lee to tackle how Singapore can fight global warming in National Day Rally speech

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