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Increase In CPF Contribution Rate For Older Workers

The recent Budget 2014 announced an increase in CPF Contribution Rate for Older Workers. Achieve Group CEO Joshua Yim shares his opinion on how this new measure will impact older workers and the business community, and whether the CPF scheme should be revised:

“The Increase in CPF Contribution Rates for Older Workers of 1% to 2% by employers is a good measure because they should not be discriminated against due to the fact that they are older.

As a human resource expert providing HR consulting services, I understand from many of my clients that a lot of companies feel that these older workers can still contribute and shouldn’t be penalised by having a lower CPF contribution rate compared with younger workers.

On the other hand, there is another group of employers who feel these older workers may be slow and less productive, not technologically-savvy, and not easy to train. Now with this CPF increase, it gives such employers even more reason not to hire these older workers.

Additionally, this increase comes against the backdrop of escalating business operating costs that are putting a lot of pressure and burden on companies in Singapore, especially the SMEs.

Thus my observation is that if the government really wants to help the older workers have a higher CPF rate, it would be good for the government to take the initiative to fund this increase so as to not aggravate the situation of making these older workers even less employable.

So far, the government has announced a one-year increase in the Special Employment Credit of up to 0.5 percentage points to help employers adjust to this increase. It would be better if this assistance were not just temporary. What would be ideal is for the government to find a way to fully fund this additional cost to help the business community, which is already feeling a lot of pain from the economic restructuring of recent years.

At this point in time, I don’t think there is a need to revise the CPF scheme upwards to increase the employer’s contribution to 20%, to match what it was in the past, for instance. This would create an even greater strain for employers, as there are still a lot of adjustments to be made in the restructuring of Singapore’s economy. Perhaps when everything is stabilised, the authorities can look into this but certainly not in the short-term.”