CENTRAL PROVIDENT FUND (Exemption from contributions for employees over 55 years old)

[Mr Speaker in the Chair]

Mr Ang Nam Piau asked the Minister for Labour whether he will consider exempting both employer and employee from Central Provident Fund contributions if the employee is employed after he or she is 55 years old.

The Acting Minister for Labour (Mr S. Dhanabalan): Mr Speaker, Sir, under the Central Provident Fund Act a worker who reaches 55 years of age can withdraw his CPF savings, irrespective of whether he continues working or not. If he continues to be employed, CPF contributions must be paid for him. An employee who has withdrawn his CPF savings at the age of 55 and who continues to work after that age can withdraw the additional CPF savings once every five years. He can also withdraw this additional savings earlier if he has stopped work for six months.

We do not yet have sufficient data to enable us to know whether CPF contributions are an obstacle or a disincentive to the employment of older workers. The Ministry is gathering information on the matter.

If the evidence shows that CPF contributions are a hindrance to the employment of older workers, the Ministry will consider reducing or abolishing CPF contributions for such workers.

Mr Ho See Beng (Khe Bong): Sir, this is not a supplementary question but a point of clarification. I would like to know whether the additional CPF contributions can be withdrawn only six months after the member ceases working.

Mr S. Dhanabalan: I confirm what I have said - that after the contributor has reached the age of 55 he can withdraw his savings whether or not he is working. Subsequent to that, he can withdraw once in every five years. But if he stops work, then he can withdraw six months after he has stopped work. I thought that is clear enough.

Mr Ho See Beng: What happens after the five years? Can he withdraw as and when he wants?

Mr S. Dhanabalan: After five years if he continues working he can withdraw once every five years. If he reaches the age of 55 and he continues working, then at 60 he can withdraw once; at 65 he can withdraw another time; and at 70; and so on. But if he stops work at any time, then six months after he stops work he can withdraw whatever additional savings he has.

Dr Augustine H.H. Tan (Whampoa): Sir, a supplementary question. What sort of evidence is the Acting Minister considering gathering in respect of people older than 55 years? He was mentioning the possible penalty effect of having to pay CPF in deterring employers from engaging such workers. So what sort of evidence is he thinking of gathering?

Mr S. Dhanabalan: Sir, evidence to prove that in fact CPF contributions are a hindrance. This would involve studies of CPF data as well as representations or interviews with employers and employees' unions; all kinds of evidence that can support a conclusion either way, whether CPF in fact is a hindrance, whether it is a disincentive to older people working. If the Member can suggest other ways in which this can be proved, he is welcome to do so.

Dr Augustine Tan: Sir, is the Minister not aware that if a simple question were to be put to employers that, "Is the CPF a hindrance to your employing a person older than 55 years?" the answer is going to be yes? Would he then take that as evidence that there is a penalising effect of CPF on the employment of such workers?

Mr S. Dhanabalan: Sir, obviously the matter is not so simple. I said "various kinds of evidence". That example will be just one type of evidence which has to be weighed against other types of evidence that can be obtained.