When questioned about the worsening state of retirement in Singapore, PAP MP Zainal Sapari told state media Straits Times he is pushing for elderly workers above the age of 55 to pay more money into CPF like the younger employees:
“We should level the playing field when it comes to Central Provident Fund (CPF) contribution rates from employers. Currently, those older than 55 have lower employer and employee rates, ranging from 12.5 per cent to 26 per cent, compared with 37 per cent for those younger.”
Currently, elderly workers pay between 12.5% to 36% to CPF depending on their age. Most of them earn S$1,100 a month on paper, but take-home less than S$900.
By making elderly workers pay more CPF, Temasek Holdings and GIC will however have an additional S$10 million a year to invest overseas.
The PAP MP who is also the assistant secretary general for NTUC also pushed for more tax rebates for businesses to “encourage hiring of elderly”:
“The Government could consider providing a higher Special Employment Credit or tax relief to encourage employment of older worker.”
According to the state media, Manpower Minister Josephine Teo has formed a government committee to raise the CPF payment rates for elderly workers.
The state media interviewed a member of the National Wage Council who also sits as the executive director of employer association, Singapore National Employers Federation (SNEF). Koh Juan Kiat resisted pay raise for low income workers:
“This would not be advisable. Wage management is a company-level challenge and wage interventions should not be mandatory, as companies operate under different conditions and face different competitive pressures. Wages have to be responsive and flexible to be in line with company performance and business prospects.”
A PAP academic who was featured as a “transport economist” in an earlier article by TodayOnline and now a “labour economist” by Straits Times, Walter Theseira, argued that depressing wages is important to keeping employment:
“Indeed, while everyone wants high wages, wages that are unsustainable lead to unemployment, which is worse than employment at lower wages.”
In the past 5 years, the median monthly salary for cleaners rose by only 4%.
The move to raise CPF contribution for elderly Singaporeans coincides with record losses posted by GIC and Temasek Holdings, where Lee Hsien Loong and his wife sits as Chairman and CEO respectively.
In July 2017, GIC posted undisclosed losses estimated at S$43 billion while Temasek Holdings, earlier this month in June 2018, announced that they need to borrow from the public.
In recent years, the Singapore government has raised mandatory taxes for MediShield Life, CareShield Life and CPF Life. Withdrawal limits were raised from 55 to the current 65, and the Minimum Sum was increased from S$80,000 to S$181,000.