Singapore Budget 2014: Employers' CPF contribution rate to go up by 1 percentage point
Companies will have to contribute more to their employees' Central Provident Fund (CPF) accounts from January next year, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said in his Budget speech on Friday.
The 1 percentage point rise in the employers' CPF contribution rate will apply to all workers, with the entire increase going to workers' Medisave accounts.
The initiative will help Singaporeans with their health-care costs, including expected higher premiums for the upcoming MediShield Life universal health-care scheme.
"It is important for employers to play a role too in this national effort to provide for the future health-care needs of Singaporeans," said Mr Tharman.
With this move, CPF contribution rates for workers up to 50 years old will rise to 37 per cent, of which 17 per cent will come from employers and 20 per cent from workers.
The Government does not expect to make further changes soon to total CPF contribution rates, Mr Tharman added.
He also said the Government will help employers by offsetting half of the increase for the first year.
Companies will receive an offset of 0.5 percentage point of wages, up to the CPF salary ceiling of $5,000. This support will cost the Government $330 million.
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