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With the economy doing well, it is timely to retune the balance of our CPF contribution rates towards the upper end of the 30-36% range. A modest CPF increase will not erode our economic competitiveness and will allow us to better meet the needs of an ageing population. To enable our workers to benefit from economic growth and to help them build up their CPF savings, effective 1 July 2007 the Government will raise the employer's CPF contribution rate by 1.5 percentage points.

This CPF increase will not apply for older low wage workers who are affected by wage stagnation and structural unemployment as a result of global competition. For this group, a different solution is required. Instead of raising their employer CPF contribution rates, we will instead reduce their CPF contributions: a reduction in employer CPF contributions to help improve their employability and a reduction in employee CPF contributions to increase their take-home pay. To complement these CPF changes, Government will implement a new Workfare Income Supplement Scheme (WIS) which will make up for the reductions in their CPF contributions.

The WIS and the 2007 CPF changes will provide more incentives for older low wage workers to work, and for employers to hire them.

Please refer to the Ministerial Statement delivered on 17 September 2007 for more details on the higher WIS payments for workers aged above 55 and other CPF changes.