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No CPF advantage for PRs over S’poreans

  • The Straits Times (03 January 2009) :  No CPF advantage for PRs over S'poreans
  • The Straits Times (20 December 2008) : CPF Disadvantage


 

No CPF advantage for PRs over S'poreans
- The Straits Times, 03 January 2009

We refer to the letter by Mdm Lim Siew Imm (20 Dec 08) suggesting that the CPF contribution rates for permanent residents (PRs) be pegged to that of Singaporeans. The employer's CPF contribution rates for a PR are 4 percent and 9 percent in the first and second years respectively after obtaining permanent residency status. From the third year onwards, both the employee and the employer would have to pay the full CPF contribution rates.

2.   The phased increase in CPF contribution rates does not give the PR a competitive advantage. On the contrary, because of the employer CPF contribution, the employee may become more expensive to his employer when he becomes a PR. By phasing in the increase, the employer will have time to adjust to the additional CPF contribution to manage the impact on his overall wage cost. Likewise, the PR employee will also have time to adjust to the reduction in take-home pay as a result of his contribution to CPF.

3.   To help Singaporeans and companies manage the impact of the economic downturn, the Government has already introduced a range of measures, including the Tripartite Guidelines on Managing Excess Manpower and the Skills Programme for Upgrading and Resilience (SPUR). In this regard, there is no need to adjust the CPF contribution rates for PRs. We thank Mdm Lim for her suggestion.


 

CPF Disadvantage: 'The employer's CPF contribution for a Singapore worker is 14 per cent up front, compared to 4 and 9 per cent respectively for a PR in the first and second year.'
- The Straits Times, 20 December 2008

Most of us are worried about whether we will keep our jobs in the next few months. Naturally, employers will release employees who cost more to retain. In this regard, I wish to highlight the disadvantage faced by a Singaporean, compared to a permanent resident (PR), when both are equally qualified for a job. The employer's Central Provident Fund (CPF) contribution rate for a Singapore worker is 14 per cent up front, compared to 4 per cent and 9 per cent respectively for a PR in the first and second year of employment. The rate for PRs should be pegged to that for Singaporeans to ensure fairness.