Sunday, February 19, 2012

The Facepalm of Increasing CPF Contribution Rates for Old Folks

Tolong, tolong, don't retrench me even though I very old, expensive and not productive hor!

Come on, give the government credit. They actually want to help out the old folks by pushing employers to give employees above 50 years a higher CPF contribution rate than now. Currently, those 50-55 have their employer CPF contribution rate at 12% (a drop from the 16% before 50 years) and those 56-60 at 9% and those above 60 years at 6.5%.

From September 2012, the new tongkat for the old folks is that employer CPF contribution rates would increase in the 51-55, 56-60 and above 60 bands by 2%, 1.5% and 0.5% respectively.

Anybody who has a brain would know that this increases costs for businesses. It would now be more expensive to retain older employees, and SMEs, the backbone of Singapore's family businesses, would be affected more than others.

The government has good intentions to try stock up the old folks' CPF piggy bank so that these old timers have more for retirement, or at least more for servicing their mortgage as many in Singapore still have a housing loan to pay right until they retire.

The cruel irony is that this do-good policy actually screws the old folks more than support them. Already, employers are reluctant to retain old folks - more expensive due to seniority in the company and must spend more on retraining them, and less productive as these people just are less efficient than before. Only McDonalds hires old folks but sometimes I'm scared that the aunty or uncle falls down breaks their hip when they rush to serve me french fries. I won't be able to sleep at night if that happens.

From the cushy swivel armchair I'm sitting, if they want to increase CPF contributions and keep old folks employed, what the government could have done is actually increase the CPF contributions rates of those 31-50 (so that these lot theoretically have more for retirement but if they want to squander away their retirement savings on mortgages, their problem) and lower the contribution rates even more for those above 50 (so that these lot theoretically have more chances of being retained despite having lower productivity because of their age). Am I a fucking CPF policy expert or what.