Acting Manpower Minister Tan Chuan-Jin has urged caution on recent calls to raise workers' Central Provident Fund (CPF) contribution rates.
To make his point, he referred to a 2003 statement made by then Prime Minister Goh Chok Tong, who said the Government would not be restoring CPF rates to 40 per cent, with equal contributions from employers and employees.
Doing so would hurt Singapore's economic competitiveness and cause job losses, Mr Goh added, and "these considerations remain valid today", Mr Tan said in his reply to Nominated MP Eugene Tan yesterday.
NMP Tan wants the employer's contribution to be put on par with that of the employee.
The CPF rates for workers younger than 50 is 36 per cent, with employees paying 20 per cent and employers, 16 per cent.
The minister's remarks yesterday were also his first comments on the issue of raising CPF rates since the National Trades Union Congress began lobbying last week for the rates to be reviewed so that workers can save more for medical costs and retirement.
It began with its secretary-general Lim Swee Say calling for a rise in the CPF rates for workers aged above 50 to 55. It is currently at 32.5 per cent.
Mr Lim wants it to be brought on par with younger workers but the gap need not be closed "in one go", he added.
His call was made on Monday.
Two days later, his deputy Heng Chee How urged the Government to do a comprehensive review of the CPF rates, including relooking the rates of all workers.
The CPF Board is a statutory board under the Manpower Ministry, which Mr Tan Chuan-Jin helms.
Yesterday, the minister acknowledged that increasing the CPF rates above the current 36 per cent will help workers in their retirement, but it will also affect business costs and workers' employability.
"Further increases in our CPF contribution rates will have to be carefully considered, together with tripartite partners, and we need to do it in a calibrated and gradual manner," he added.
The Government has made several improvements in the CPF system to help workers save for retirement, he noted, citing the extra 1 per cent paid on the first $60,000 of CPF balances, Workfare for low-wage workers and Government top-ups.
It is "important to look at retirement adequacy as a whole entity" and not "address it purely by raising employers' contribution", said the minister.
Although he did not drop any hint on where the CPF rates might go, there is wide expectation that some form of CPF-related announcement will be made on Budget Day this Friday.
