Tan Kin Lian's Blog: CPF contribution rate for older workers

Thursday, February 09, 2012

CPF contribution rate for older workers

The Prime Minister has announced that the CPF contribution rate for older workers will be increased gradually. I suggest that the PM take a bold step and revert to a uniform contribution rate to all workers, regardless of age. Older workers who are not productive (due to age) has already suffered a wage cut, based on market forces. There is no need to further penalize them through a lower rate of CPF contribution, which upset their savings for retirement. Do you agree with this statement?

4 comments:

Anonymous said...: This issue on older workers are given a lower rate of CPF contribution always baffles me.

If one says is because old workers are slow and unproductive, why the government is encouraging us to retire later?
Note that many CEOs and Ministers are not that young, are they considered as old?

If one says old workers are as useful and productive as others, then why have this disparity in the CPF contributions?; February 09, 2012 8:50 PM
Anonymous said...: The lower contribution rate for older workers has never failed to sadden me. I'm in the workforce for more than 35 years and counting have undergone many rounds of CPF cut. The cut is usually bold and restoration is unusally slow. All these years, our government is urging is to continue to upgrade ourselves, continue to contribute to the society and to delay the drawdown of our CPF savings in order to stretch the funds but it will certainly help to have a common set of CPF contribution rate for all salaried workers regardless of age. Today, people are living longer coupled with low birth rate, we need to have enough savings for our retirement in order not to burden our future generation.; February 10, 2012 7:32 PM
C H Yak said...: Dear Mr Tan

I am glad something you had supported and highlighted during the PE would hopefully be implemented.

The SMEs & SNEF's argument against it is only from one angle and is flawed. When the economy was bad during crises from the 1997 Asian Financial Crisis through Sars Crisis etc, the PAP Govt conveniently cut CPF across the board to help SMEs. MNC also benefitted. Ordinary workers sacrified. Some ugly MNCs even benefited but did not "pay-back" when times were good. There was discrimination against lower educated and older workers. The CPF rates were cut across the board. As a result PMETs also suffered. Door was open to cheaper FTs. Mid-level managers salaries then got marginalised. As a result, there was stagnantion of pay throughout except perhaps Ministers' salaries but cost of living ever-rising with inflation exceeding 5% and little or no pay rise. The civil service knows how to hike mid-level salaries now. The private sector is still suffering especially in certain sectors. The CPF was a poor economic tool.

SMEs may need help when the economy is bad but not at the expense of lowering CPF which is meant for retirement for most Singaporeans. It should not be tampered again "out-of-syn" to cause more grave complications. Otherwise the Govt must take the future political price...if only things were debated in Parliament and taken in the right perspective as the late Dr Toh Chin Chye had argued against Medisave eating away CPF retirement savings when it was first debated in Parliament.

When CPF had to be cut, why PAP Ministers did not consider the "balance" that was tilted against ordinary wage earners who does have a salary benchmark that allows 12 months bonus, and not including 13th month AWS & 1.5 month AVC?

We should guard the good basic foundation of the CPF scheme and not use it as a blunt economic tool for sudden economic recovery contingency action plan.; February 10, 2012 9:35 PM
yujuan said...: The mandatory CPF system borne by both employer and employee may be seen as preferentially stacked against the local worker versus the foreign worker.
Foreigners could opt for salary payment without the CPF contributions, thus saving their employers the substantial CPF cost.
Would it affect the bossess' preference to select a foreigner over a local, granted they have to pay a levy to employ the former.; February 10, 2012 11:00 PM