Workers can expect a small boost to their Central Provident Fund (CPF) savings from Jan 1. The employers' CPF contribution rates will go up by 1 percentage point for all workers from next month, with the entire increase going into workers' Medisave accounts.
As a result of the rate hike, a 40-year-old worker earning $4,000 a month will get $20,800 more in his Medisave account when he retires at age 65, said the CPF Board in a statement yesterday. The increase was first announced in the annual Budget speech in February.
The move also affects self-employed workers earning $18,000 and more annually. They will have to contribute 1 percentage point more to their Medisave accounts from next month.
On top of the higher Medisave contribution rates, the CPF contribution rates for older workers will also go up from next month.
The rates will rise by 1.5 percentage points for those aged 50 to 55, with 1 percentage point of the increase to come from the company and the remaining 0.5 percentage point from the worker.
The contribution rate paid by companies for workers aged 55 to 65 will also be raised by 0.5 percentage point.
The higher employer contributions will go to the Special Account, while the higher employee levy is for the Ordinary Account.
Employers will get more help on two fronts to cope with the higher Medisave and CPF contribution rates.
Companies that hire Singaporean and permanent resident workers earning up to $5,000 a month will get a Temporary Employment Credit of 0.5 per cent of their wages. This partially offsets the 1 percentage point increase in Medisave contribution rates.
Those who hire Singaporean workers aged above 50 earning up to $4,000 a month will get a Special Employment Credit of up to 8.5 per cent of wages, up from 8 per cent currently. Both employer credit schemes will last for one year.
This article was first published on December 27, 2014. Get a copy of The Straits Times or go to straitstimes.com for more stories.