Singapore Budget 2014: MPs question impact of older workers' CPF rate on jobs, housing

An elderly worker sweeping the common areas of a HDB two-room flat in Toa Payoh. Workers' Party MP Pritam Singh (Aljunied GRC) worries that higher CPF rates for older workers may cost them their jobs but People's Action Party MP David Ong (Juron
An elderly worker sweeping the common areas of a HDB two-room flat in Toa Payoh. Workers' Party MP Pritam Singh (Aljunied GRC) worries that higher CPF rates for older workers may cost them their jobs but People's Action Party MP David Ong (Jurong GRC) wants rates to rise even more, to ensure seniors have enough for housing and retirement. -- ST FILE PHOTO: ASHLEIGH SIM

Workers' Party MP Pritam Singh (Aljunied GRC) worries that higher CPF rates for older workers may cost them their jobs but People's Action Party MP David Ong (Jurong GRC) wants rates to rise even more, to ensure seniors have enough for housing and retirement.

Mr Ong believes the crux to keeping older workers in the workforce is not cost, but mindsets.

He said on the second day of debate on Budget 2014: "Singaporeans must move away from viewing people in their 50s, 60s as 'over the hill'....our seniors today are more active, healthier and fitter than before and they can remain productive into their 60s and beyond."

Mr Ong welcomed the announcement in the Budget that employers' CPF contributions to workers aged above 50 to 55 will go up by two percentage points.

He wants more done for workers aged over 55 and those over 60. Observing that people have been marrying and starting families later, Mr Ong said it was worrying that workers' CPF rates fall from from 35 per cent to 25 per cent when they turn 55, and then to 16 per cent when they turn 60.

"This means the older they get, they will face a wider gulf in their financial ability to shore up CPF savings as well as use their CPF ordinary account for housing mortgage," he said.

He called on the Government to narrow the gap in contribution rates for older and younger workers.

But Mr Singh takes a different view. He said media reports suggest higher CPF rates will put a "tighter squeeze on profits," not least those of local small and medium enterprises that "proportionally hire more older workers".

"I hope employers do not resort to selectively shedding older workers" because of the higher contribution rates, he said.

He cited the 2003 Economic Review Committee report that had suggested reducing older workers' CPF rates in the first place, to make them more employable.

It is important for the government to monitor the reaction on the ground "so that our most vulnerable workers are not priced out of the workforce," concluded Mr Singh.

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