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Oral Answer by Mr Tan Chuan-Jin, Minister for Manpower, to Parliamentary Question on Measures to Help Middle-Income Workers Above 50 Years Old Who Will See Reduced Personal CPF Contributions That May Result in Higher Personal Income Tax

Notice Paper No. 16 of 2015 For The Sitting On 29 January 2015 Question No. 444 For Oral Answer

MP: Mr Zaqy Mohamad

To ask the Minister for Manpower (a) what are the measures to help middle-income, middle-aged workers above 50 years old who will see reduced personal CPF contributions that will result in higher personal income tax and inability to earn a higher interest on their retirement savings through CPF; and (b) whether the Ministry will consider enabling such persons to voluntarily contribute more into their CPF to reduce their personal income tax liabilities and enhance their retirement income.


  1. CPF contribution rates for older workers above 50 were lowered in the past to enhance their employability. Seniority-based wage systems were common then, which discouraged employers from retaining and hiring older workers. The employment rates of older workers have since improved considerably, with good progress made by tripartite partners in wage restructuring and other efforts to enhance their employability.
  2. We had consulted our tripartite partners and reached a consensus that the CPF contribution rate for workers aged 50 to 55 should be restored to the same level as younger workers. The increase in contribution rates has been phased in gradually to moderate the impact on business costs and take-home pay of the employees. Since September 2012, we have made two increments in CPF contribution rates for older workers aged 50 to 65, with the latest increase effective from 1st January this year. In particular, the CPF contribution rate for workers aged 50 to 55 has been raised by 5 percentage points since 2012 and is now 2 percentage points lower than for workers below the age of 50. We are studying when to take the next step increase in CPF contribution rates for older workers.
  3. CPF members who wish to voluntarily contribute more to their CPF can do so through the Minimum Sum Topping Up Scheme (MSTU) to build up their CPF savings for retirement. Members who top up their own Special or Retirement Account using cash can enjoy tax relief of up to $7,000 per calendar year.