SINGAPORE - The planned increase in Central Provident Fund contribution rates for senior workers will be deferred by one year to Jan 1, 2022.
This is to help employers manage costs amid the Covid-19 pandemic, said Deputy Prime Minister Heng Swee Keat on Tuesday (May 26).
The increase, which was initially to take place on Jan 1 next year, will see employers and workers contribute either 0.5 percentage point or one percentage point more for workers aged 55 to 70, based on the worker's age.
CPF contribution rates of those aged 55 to 70 will be gradually raised during this decade until those aged 60 and younger enjoy the full CPF rates. Currently, the rates begin to taper down from 37 per cent after workers turn 55.
The CPF Transition Offset scheme, announced in this year's Budget speech in February, will similarly be deferred until the higher contribution rates take effect, Mr Heng told the House.
The offset scheme covers half of the increase in employer CPF contribution rates for one year, and will be calculated based on employees' incomes paid up to the CPF salary ceiling of $6,000 per month in 2022.
In his speech on the fourth Covid-19 support package, Mr Heng thanked the National Trades Union Congress (NTUC) and the Singapore National Employers Federation for supporting the one-year deferment.
NTUC deputy secretary-general Heng Chee How said in a Facebook post after the announcement that the labour movement supports the move as it will help more older workers keep their jobs.
"The clear timeline also makes clear to older workers that their longer-term interests remain the joint commitment of the tripartite partners," he said.
Pointing to how the Ministry of Trade and Industry had downgraded Singapore's 2020 growth forecast to minus 7 to minus 4 per cent on Tuesday morning, Mr Heng Chee How said many will find it very difficult to keep their livelihoods in the months ahead.
Workers will also find it harder to maintain their take-home pay because of the poor business environment, he added. The ministry had earlier predicted that the economy would shrink by 4 to 1 per cent this year.
"In this situation, we must strenuously avoid adding cost from a particular segment of workers who are already vulnerable to businesses as it would only increase their risk of retrenchment. We must also avoid reducing their take-home pay in this hard time through the increase in employee contribution rates.
"Saving jobs for older workers is the imperative," he said.