Labour movement calls for review of CPF contribution rates
The labour movement has urged the government to raise the CPF contribution rate by 1 to 2 percentage points this year for older workers who are above the age of 50 to 55.
And it hopes to see this introduced in the upcoming Budget.
Anything less than that would not be "meaningful" - says National Trades Union Congress Deputy Secretary-General Heng Chee How.
Currently, CPF contribution rates for older workers hover at 32.5 per cent.
That's lower than that of younger workers, which stands at 36 per cent.
NTUC is pushing for this gap to be closed "as soon as possible" - so that workers will be able to cope with rising health-care and health insurance costs.
NTUC's Deputy Secretary-General Heng Chee How explains why it's timely to do so now.
"Is it more opportune to make such moves when the labour market is tight - where the orders are there and manpower is short - or is it to wait for the opposite to happen where you have a recession? All considered, it is better to do it in a tight labour market. Because businesses are factoring in the fact that in order to get the manpower, you've got to pay more. Therefore CPF cost is part of their overall wage cost, which will be under pressure in any way, in a tight labour market."
NTUC says employers should also be made to contribute more.
Mr Heng says it's only fair because workers are contributing more than employers right now.
This difference in contribution ranges from 0.5 percentage point to 4.5 percentage points.
Should workers be made to contribute more, the money should go into their Ordinary Account.
This allows them to use the money to service housing mortgages and fund their children's tertiary education.
In the long run, the labour movement wants parity in contribution rates across all age bands.
The CPF contribution rates was last reviewed in 2003.
Mr Heng says they're outdated.
"We are asking for such a review because it's been more than 10 years. Because the rates have either been reached or surpassed - we need updating. And we will have to continue to look at the new reality, what constitutes adequacy in this new reality and also, the business considerations of competitiveness."
-By Valerie Koh
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