Govt aware of business cost of hiking CPF rates, Latest Business News - The New Paper

Govt aware of business cost of hiking CPF rates

This article is more than 12 months old

The Government is aware of business cost pressures posed by an upcoming hike in Central Provident Fund (CPF) contribution rates for older workers, as well as a rise in the retirement and re-employment ages, said Trade and Industry Minister Chan Chun Sing yesterday.

But he stressed the changes will be implemented gradually, over a period of 10 years or so, while taking into account business conditions at every step of the way.

Speaking on the sidelines of a visit to wholesale distributor Hai Sia Seafood, he added that consultations are ongoing with business partners to understand their challenges, both on business costs and in the larger external environment.

His comments come after Prime Minister Lee Hsien Loong said at the National Day Rally that CPF contribution rates for workers aged 55 to 70 will be raised gradually from 2021. The hike will see both employers and employees contributing more.

There will also be a rise in the statutory retirement age from 62 to 63 in 2022, and to 65 by 2030, and the re- employment age will go up from 67 now to 68 in 2022, and 70 by 2030.

"We are of course very cognisant of the business cost pressures... but we think that it is the correct thing to do to ensure that our workers have sufficient retirement savings," said Mr Chan.

"By lengthening careers, it also allows people who live longer the chance to contribute meaningfully to society."

More details on measures to help smaller companies cope will be unveiled closer to next year's Budget, he said, adding that there is a need to increase businesses' revenue.

He also highlighted the roles that firms and workers have to play in a changing employment landscape.

Companies such as Hai Sia have helped older workers stay employed by redesigning jobs, said Mr Chan. The hope is other companies will do so too.

Workers, too, need to continue retraining and preparing for their next job, he said. - THE STRAITS TIMES