Zero Employer CPF Rate
Miss Chua Lee Hoong suggested to have the employer CPF rate brought down to zero over the longer term to cut labour costs for companies. The recent CPF cut is a sensitive topic, especially in these tough times. I applaud Miss Chua for tackling this issue; it’s important that Singaporeans actively participate in the policy-making process as we restructure our economy.
Miss Chua said given that a Singapore worker is far more educated today than 40 years ago, the ability to plan and save for his own retirement should be there. Is this really true?
Older folks might not know how to manage their money efficiently, perhaps because they’re less educated; but they never spend above their means and always save for rainy days. It’s common to read about swindlers cheating tens of thousands of dollars from 70-year-olds. While I condemn this despicable act, how did these uneducated retirees manage to save so much? It’s simple: financial prudence and hard work.
Sad to say, these are 2 qualities that many young educated Singaporeans lacked. Often we spend more than we earn using credit cards, without even realising we’re unable to pay back the principle. The number of bankrupt individuals has been rising steadily; while the economic climate hasn’t helped, more have to do with our lifestyle.
Until recently, graduates still believe they should be getting a higher pay because they’re degree holders. They forgot that companies pay them not according to how educated they are, but how well they perform in their jobs. This message finally hit home these past few years as the economy worsens.
Miss Chua also criticised about how the CPF has morphed from a retirement scheme into a complex instrument of achieving a myriad of social-political objectives, from housing and health care to education to investment. It’s exactly because we Singaporeans can’t manage our own finances that the government has to relax the CPF rules to let us use our retirement fund for present expenses. Look what happened when the government implements the CPF Investment Scheme back in 1997.
Singapore needs a retirement scheme for its retirees, especially with an ageing population. Research shows that nearly one-fifth of Singaporeans have less than $10,000 in their CPF account by age 55. The situation will be worse if the employer CPF rate is reduced to zero. Who is going to support these financially dependent retirees then?
The CPF isn’t perfect, and changes must be made to it as we restructure our economy. However, it’s not in Singapore’s interests to cut the employer CPF rate to zero.