Singapore Government Media Release
Media Division, Ministry of Information and The Arts,
140 Hill Street #02-02 MITA Building, Singapore 179369.
Tel: 837 9666
___________________________________________________________
Introduction
In January 1999, the employer�s CPF contribution rate was reduced by 10%-points to 10% of wages as part of the cost cutting package to cushion the impact of the Asian economic crisis on businesses. With the quick economic rebound, the employer�s CPF contribution rate was partially restored by 2%-points to 12% of wages in April 2000.
The Government had indicated that a second adjustment would be made to the CPF rate in January 2001 and the specific quantum would be announced in October 2000 when prospects for the year are clearer.
Labour Market
The advance GDP estimate for the third quarter 2000, which was released yesterday (10 Oct 00), confirms that our economic recovery has gathered strength. The GDP growth in the first half of 2000 has been revised upwards from 8.8% to 9.2%, and the third quarter is estimated to have grown by 10.2%. In view of the strong economic performance, MTI has revised its GDP forecast for 2000 from 7.5-8.5% to around 9%. The growth forecast for 2001 is 5-7%.
In line with the strong economic growth, job creation has recovered to pre-crisis levels. Employment expanded strongly by 29,700 in the second quarter, bringing the total employment gain in the first half of this year to 43,400. Retrenchments have also eased from 6,000 in the first quarter to 1,900 in the second quarter this year. A flash estimate of the seasonally-adjusted unemployment rate in September 2000 was 2.5%, down sharply from 3.5% in June 2000. This is the lowest unemployment rate in two years since it reached 4.3% in December 1998 at the height of the economic crisis.
Labour costs have picked up in line with the economic recovery and the tightening labour market. Nominal earnings have been trending up from an increase of 0.4% in the first half of 1999 to 7.6% in the first half of this year. Wages are likely to increase further with the strong economic performance and continued demand for manpower.
Quantum of CPF Restoration
In view of the strong economic growth and rising wage pressures, a higher quantum of the employers� CPF contribution rate should be restored. This is in line with Government�s commitment to fully restore the CPF contribution rates as soon as possible, at a pace which the economy can bear. It will also enable more of the wage increase to be channelled to the CPF component. In the absence of a higher CPF increase now, wages would increase by a larger amount, making it difficult to restore the CPF rate in subsequent years.
After consulting employers and the unions, the Government has decided to raise the employers� CPF contribution rate by 4%-points, from 12% of wages currently to 16% with effect from 1 January 2001. Workers and employers should take this significant CPF restoration into account in their wage settlements.
Allocation Between Ordinary, Special and Medisave Accounts
As the Government has announced, the CPF restoration will be used to build up, in order of priority, the Special Account (SA), Ordinary Account (OA) and Medisave Account (MA) to their respective target contribution rates for the various age-groups. Accordingly, the 4%-point restoration will be applied to the different accounts as follows:
Table 1 : CPF Contribution Rates from 1 January 2001
|
Age-Group |
OA |
SA |
MA |
Total |
|
<=35 years old |
24% + 2% |
2% + 2% |
6% |
32% + 4% |
|
36-45 years old |
23% |
2% + 4% |
7% |
32% + 4% |
|
46-55 years old |
22% |
2% + 4% |
8% |
32% + 4% |
|
56-60 years old |
9% + 1.5% |
0% |
8% |
17% + 1.5% |
|
61-65 years old |
2% + 0.5% |
0% |
8% + 0.5% |
10% + 1% |
|
>65 years old |
0% |
0% |
7.5% + 1% |
7.5% + 1% |
For CPF members who have obtained their Singapore Permanent Resident status within the last two years, the CPF contribution rates from 1 January 2001 are given in Annex.
The CPF Board will send the revised CPF contribution rate tables to all employers in December 2000. To reflect the change, employers who are submitting payment details electronically are reminded to update their payroll systems using the new rates. Employers using the payment advice are also reminded to use the new rates.
Assistance Measures
All the Government and CPF assistance measures currently in place to help members who had been affected by the CPF cut will continue and will remain so till the CPF cut is fully restored. These include the Government Bridging Loan Scheme and the use of the Special Account to help members meet their housing installment shortfall arising from the cut. As at 30 September 2000, 89,279 members have used their Special Account to help pay the housing installments
and 161 members have qualified for the Government Bridging loan.
Public Enquiries
Members with enquiries may call the CPF Employer Call Centre on 1800-226 3877.
Media Enquiries
For clarification of this news release, please contact:
CPF Board
Mrs Eugenie Tan
Tel: 229 3261
Pgr: 9522 8570
Email: eugenie.tan@cpf.gov.sg
Mr Ronald Chong
Tel: 229 3275
Pgr: 9596 4590
Email: ronald.chong@cpf.gov.sg
CPF Contribution Rates for Permanent Residents (PRs)
During 1st Year of Obtaining PR Status (from 1 January 2001)
|
Age-Group |
OA |
SA |
MA |
Total |
|
<=35 years old |
6.5% |
1% |
1.5% |
9% |
|
36-45 years old |
5.75% |
1.5% |
1.75% |
9% |
|
46-55 years old |
5.5% |
1.5% |
2% |
9% |
|
56-60 years old |
5.1% |
0% |
3.9% |
9% |
|
61-65 years old |
1.9% |
0% |
6.6% |
8.5% |
|
>65 years old |
0% |
0% |
8.5% |
8.5% |
CPF Contribution Rates for Permanent Residents (PRs)
During 2nd Year of Obtaining PR Status (from 1 January 2001)
|
Age-Group |
OA |
SA |
MA |
Total |
|
<=35 years old |
19.5% |
3% |
4.5% |
27% |
|
36-45 years old |
17.25% |
4.5% |
5.25% |
27% |
|
46-55 years old |
16.5% |
4.5% |
6% |
27% |
|
56-60 years old |
10.5% |
0% |
8% |
18.5% |
|
61-65 years old |
2.5% |
0% |
8.5% |
11% |
|
>65 years old |
0% |
0% |
8.5% |
8.5% |