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Singapore Budget 2014- Increase in CPF Contribution Rate
Like all other development country, Singapore also experience ageing problem and this bring health care system is the bigger challenge to tackle.
To solve ageing problem, increase in Central Provident Fund (CPF) contribution rate had been implement in Singapore Budget 2014.
Singapore CPF system consist of 3 different accounts :
a)Ordinary account which allow used to purchase for their 1st dream home,CPF insurance, investment and education
b)Special Account is mainly for old age used in retirement related financial products
c)Medisave Account is saving used for hospitalisation expense and any other approved medical expenses
Authorities have introduce 2 new structured approach :
*Increase in Medisave Contribution Rate
*Increase in CPF Contribution Rate for older worker
A) INCREASE IN MEDISAVE CONTRIBUTION RATE
All Employer contribution rate to their employee's Medisave account will be increase by 1% regardless what is their age group is.
B) INCREASE IN CPF CONTRIBUTION RATE FOR OLDER WORKERS GROUP
Contribution rate for older worker group will be increase.
The increase amount from Employer will allocated to their Special account and increase portion from employee will allocated to Ordinary Account.
The main reason is to encourage older group worker stay at workforce and at the same time can reduce dependency level to foreign worker
Of course with the proceed of new implementation, operation cost for all entrepreneur will increase .
To help Singapore company mitigate cost pressure, Special Employment Credit (SEC) and Temporary Employment Credit (TEC) had been introduced at the same period.
Every company which affected by this new increase of CPF contribution rate, will eligible to apply for SEC or TEC.
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