DEFAULT IN CENTRAL PROVIDENT FUND CONTRIBUTIONS

Mr Cyrille Tan asked the Minister for Manpower (a) whether there has been an increase in employers defaulting on both their and their employees' Central Provident Fund contributions and (b) what steps are being taken by the CPF Board to safeguard workers' CPF contribution.

Encik Othman Bin Haron Eusofe (for the Minister of Manpower): There had been a slight increase in the default cases for 1998 as compared to 1997. In 1998, an average of 1,389 employers per month did not pay their employees' CPF contributions continuously for 2 months. In 1997, the average number of defaulting employers was 1,326. The average two-month default rate (ie, the percentage of employers who have not paid CPF contributions for their employees for 2 months) was 1.47% for 1998, as compared with 1.39% for 1997.

I agree with the Member that CPF contributions form an integral part of employees' wages and workers depend on these savings to service their housing loans and to meet medical and retirement needs. The CPF Board, as trustee of CPF members' savings, takes a serious view of such default cases. It was for this reason that the Board amended the CPF Act in 1998 to expedite the recovery of CPF arrears and to ensure that the CPF Board could deal effectively and promptly with employers who failed to pay CPF contributions for their employees within the prescribed periods, and to recover these contributions which were due.

Having said that, however, my Ministry is aware that many employers are facing financial difficulty in this economic downturn and the CPF Board will assist them wherever possible. In enforcing CPF payments from employers, the CPF Board will balance the need for quick action to recover employees' CPF contribution with the flexibility to allow employers to overcome their temporary cash flow difficulties to survive this downturn and to save jobs. For example, the CPF Board will allow employers who are taken to court for defaulting CPF contributions to pay their arrears by monthly instalments if their current contributions are paid on time, on the condition that they must produce evidence of their ability to pay the arrears.

The CPF Board also compounds the offences of employers who are able to settle their CPF arrears before the court hearing so that they do not have to appear in court and pay heavier fines.

Sir, I would like to assure the Member that the CPF Board will continue to monitor default cases closely, exercise flexibility where arrears could be paid by monthly instalments and take quick action to recover the arrears through Court action if the need arises.