CENTRAL PROVIDENT FUND (Default in payment of contributions by employers)

Mdm Halimah Yacob asked the Minister for Manpower for the period from 1st January 2002 to 31st December 2002, (a) how many employers had defaulted in the payment of Central Provident Fund (CPF) contributions and what was the total amount of the arrears; (b) how many employers were prosecuted for such defaults; and (c) whether the CPF Board was able to recover the arrears on behalf of the workers.

Dr Lee Boon Yang: Mr Speaker, Sir, from 1st January to 31st December 2002, there were about 6,500 cases of employers defaulting on their employees' CPF contributions. This translated into a default rate of 0.6% for 2002. The Board's stringent and effective enforcement actions have helped to keep the default rate low.

The amount of arrears involved for 2002 was $17 million (or 0.1% of the $16 billion contributions for 2002). As at 31st January 2003, the outstanding arrears have been reduced to $4 million. The Board is continuing recovery actions for the remaining arrears.

Employers have a grace period of 14 days after the end of the month for which the contributions are due and payable. Those who fail to pay up by then will be charged interest, while compound fines will be imposed on recalcitrant employers. Employers are informed that legal action will be taken against them unless the CPF contributions, interest due and compound fines are paid within the notice period stated. In 2002, about 700 employers were convicted in court.

Sir, the Board takes a serious view of employers who pay late or fail to pay CPF contributions for their employees and is committed to ensuring prompt recovery of the CPF arrears for employees through speedy enforcement action.

Mdm Halimah Yacob: Sir, could the Minister give us a bit of the profile of employers who defaulted? Are they MNCs, local companies and which sectors are they from?

Dr Lee Boon Yang: Sir, I do not have the profile here, but my understanding is that a broad spectrum of companies are involved. Perhaps our small local companies may also represent a significant sector of those who were in default of their employees' CPF payments. If the Member is interested in the details in this area, we could supply the information to her.