The Singapore government has decided not to increase the employer central provident fund (CPF) contribution rate to 20% at the end of this year.
The announcement was made by trade and industry minister George Yeo. The government’s 1998 package cut employers’ CPF contribution by 10 percentage points to help companies reduce costs and save jobs. It was progressively restored by six percentage points as the economy recovered in 1999 and 2000.
“The Government would like to restore the remaining four percentage points as soon as possible since the CPF is essentially a retirement savings plan,” said Yeo.
Yeo said that in the present difficult conditions, government’s first priority is to save jobs by helping companies to keep wage costs down.
“The Government has therefore decided not to increase the employer CPF contribution rate at the end of this year,” said Yeo.
“We will review the situation again in the middle of next year. This translates to a saving of $920m for employers for the first half of next year.”
Yeo added that some businessmen have suggested to the trade and industry ministry that the CPF should be cut again.
“We do not believe that such a major move is justified at this stage,” he said.
“However, if the global economy continues to deteriorate, we may have to consider all possibilities.”
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