Improving Retirement Adequacy by Restoring Older Worker CPF Rates

26 Jun 2019

This policy brief by IPS researchers Christopher Gee and Damien Huang considers the effect of CPF contribution rates on older Singaporean workers’ retirement adequacy. It quantifies the effect of full and partial restoration of CPF contribution rates for employees aged 55-64 years on employees’ retirement income adequacy, on employers’ wage bills, and the additional interest payable by the CPF Board. The researchers recommend CPF contribution rates be increased to (i) encourage older workers to remain employed and (ii) improve the retirement adequacy of these workers.

CPF contribution rates for workers above 55 years old were first reduced in 1988, subsequently in 1993 and then again in 1999. Today, the combined employer-employee contribution rate of a 64 year old is 10.5 percentage points lower than a 54 year old worker.

Their simulations show that a 55-year-old in 2018 can save between $31,000 and $145,000 more if full rates were restored in the 10-year time frame from age 55 to 64, more than doubling their eventual CPF Life Payouts. A full restoration also translates to an additional 21,790 individuals (or 10 per cent of each 5-year cohort) reaching their full retirement sum. In terms of CPF Life payouts this would mean approximately $248 extra every month (from $166) for the 20th income percentile ($1,424) and $451 extra (from $326) for the median income worker ($2,867) respectively.

Click here to view the interactive infographic.

Click here to read the policy brief.

Media Coverage