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2019

Prudential is the first financial institution to raise CPF contribution rate for employees above 55

New initiative follows Prudential’s scrapping of retirement age to help employees to be ready for 100

20190807

Ms Sue Li, 63, a customer service officer with Prudential, is one of the 46 employees who will benefit from the company’s new CPF scheme.


SINGAPORE, 7 August 2019
–In a move to help its older employees to be financially ready for longer life expectancy1, Prudential Singapore (“Prudential”) has raised its Central Provident Fund (CPF) contribution rate for those above the age of 55. It is the first financial institution to introduce this CPF scheme.

From 7 August 2019, this group of employees will have the option to enjoy the total CPF contribution rate of 37 per cent – similar to that offered to their younger colleagues. This comprises 17 per cent which will come from Prudential if an employee voluntarily increases his individual CPF contribution rate to 20 per cent. Currently, the government-mandated total CPF contribution rate for employees above 55 is between 12.5 per cent and 26 per cent. (refer to “CPF Contribution Rates table” on pg 3).

Prudential’s new CPF scheme for its older employees is an opt-in scheme as the insurer recognises that some individuals may prefer to have more disposable income to meet their current needs. It is introduced in close consultation with the Singapore Insurance Employees’ Union (SIEU).

Prudential Singapore’s CEO Wilf Blackburn said this new CPF scheme is in line with the company’s ambition to create a more age-friendly workplace. The insurer was the first financial institution to remove the retirement age in October last year to enable its employees to work for as long as they continue to perform.

“We believe in rewarding our people based on performance. It is with this in mind that we have decided to make equal our CPF contributions for all employees, regardless of age.

“Additionally, with rising lifespan and healthcare costs, we recognise that our employees will need to save more to fund their extended years. The additional CPF monies could help them build a bigger retirement nest egg so they will be more financially ready for the future,” said Mr Blackburn.

According to Prudential’s Ready for 100 study which surveyed 1,214 Singapore residents on their readiness to live to 1002, one in two said they were not financially prepared to do so.

Ms Sue Li, 63, a customer service officer with Prudential, is one of the 46 employees who will benefit from the company’s new CPF scheme.

“It was a bonus when the company scrapped the retirement age as I can continue to work for as long as I am able to. Now, they are going a step further by contributing more money to my CPF funds. Although I must top up my CPF account as well, I am more than happy to do so.

“The additional savings would help finance my retirement years and potential healthcare expenses. More importantly, I do not have to depend on my children for financial support,” said Ms Li, who has been working with Prudential for 24 years.

Currently, she contributes 7.5 per cent of her monthly salary to her CPF account while the company contributes 9 per cent, which makes it a total of 16.5 per cent. Under the company’s new CPF scheme, her total CPF contribution rate will more than double to 37 per cent.

With the increase in CPF contribution rates, the extra savings for a mature worker will be significant. For instance, a 61-year-old employee with a monthly salary of S$5,000 could save   S$1,025 more in CPF funds each month. In 12 months, his accumulated additional savings will be S$12,300.

Prudential’s latest initiative echoed the call by the People's Action Party (PAP) Seniors Group to raise the CPF contribution rate for workers above 55 to 37 per cent3. The Tripartite Workgroup on Older Workers is also looking into CPF contributions for older workers, and is expected to announce its recommendations later this year4.


Notes to the Editor:

For more information about Prudential’s Ready for 100 study, please visit


CPF Contribution Rates

https://www.cpf.gov.sg/Employers/EmployerGuides/employer-guides/paying-cpf-contributions/cpf-contribution-and-allocation-rates

Employee's age
(years)
Contribution Rates from 1 Jan 2016
(for monthly wages ≥ $750)
By Employer
(% if wage)
By Employee
(% if wage)
Total
(% if wage)
55 and below 17 20 37
Above 55 to 60 13 13 26
Above 60 to 65 9 7.5 16.5
Above 65 7.5 5 12.5



About Prudential Assurance Company Singapore (Pte) Ltd (Prudential Singapore)

Prudential Assurance Company Singapore (Pte) Ltd is one of the top life insurance companies in Singapore, serving the financial and protection needs of the country’s citizens for 88 years. The company has an AA- Financial Strength Rating from leading credit rating agency Standard & Poor’s, with S$36.7 billion funds under management as at 31 December 2018. It delivers a suite of well-rounded product offerings in Protection, Savings and Investment through multiple distribution channels including a network of more than 5,000 financial consultants.


Media contacts:

Julie Sim

Email: [email protected]

Megan Fernandes

Email: [email protected]

 

1The Burden of Disease in Singapore, 1990-2017: An overview of the Global Burden of Disease Study 2017 results

2Ready for 100?1 in 2 say they are not healthy or wealthy enough”

3https://www.businesstimes.com.sg/government-economy/cpf-contribution-rate-for-singapore-workers-above-55-should-be- raised-pap-seniors

4https://www.straitstimes.com/singapore/manpower/govt-unions-and-bosses-agree-on-need-to-raise-retirement-age