Employer CPF contribution rate to go up 1%

Increase goes to Medisave and Special Accounts to help workers build up medical and retirement savings.

At the May Day Rally on Monday morning, Prime Minister Lee Hsien Loong announced that the Government will raise the employers' CPF contribution rate by 1 percentage point. The increase will be done gradually in two steps to moderate the impact on employers.

The first 0.5 percentage point increase will be implemented on 1 September 2010, and be made into the Medisave Account (MA). The remaining 0.5 percentage point increase will be effective 6 months later on 1 March 2011, and will be made to the Special Account (SA), according to a Ministry of Manpower release.

Currently, self-employed persons (SEPs) with annual net trade income exceeding $6,000 are required to contribute to their MA. With the 0.5% increase in employer CPF contribution to MA, the Medisave contribution rates for SEPs will also be increased by 0.5% with effect from 1 September 2010.

Minister for Manpower Mr Gan Kim Yong said, "The 1% increase in employer's CPF contribution is timely. The increase, which will go to the Medisave and Special Accounts, will help Singaporeans save more for their medical and retirement needs. The Government's phased approach also takes into account NTUC's call as well as employers' feedback. I am heartened that employers have given their support for the move. Both employers and workers should see the CPF increase as part of the total wage package, while balancing overall competitiveness."

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