Early history
The CPF had its beginning in 1951 when a CPF bill was introduced in the legislative council. It was later sent to a Colony Select Committee. However, a commission set up to look into a retirement scheme for workers recommended a pension scheme. It was only after 16 months of public debate by the Select Committee that in October 1953, a save-as-you-earn scheme was finally decided and a new department was formed to operate it.
On 11 December 1953, the CPF Ordinance was enacted. Nonetheless, it took the department an additional eight months to set up an office at the Victoria Memorial Hall. It was only on 4 January 1955 that the registration of employers began.
The launch that was previously scheduled for 1 May 1955 was also postponed due to the communist-led bus strikes organised to disrupt the newly elected Labour Front coalition. Finally on 29 June 1955, a change was made to the 1953 Ordinance and was rushed through the Legislative Assembly, exempting workers earning $200 or less a month from contributing while their employers were required to do so. Two days later, the fund was made a reality.
Description
Each CPF member has three accounts with the Fund, the Ordinary,
Medisave and Special accounts. Ordinary Account savings can be
used for housing, approved investments, insurance, education
and transfers to top-up parents' Retirement Accounts.
Medisave Account savings are for meeting hospitalisation
expenses and certain approved outpatient treatments such as
Hepatitis-B vaccinations, Renal Dialysis and Chemotherapy. It
can also be used to buy MediShield/MediShield Plus and approved
private medical insurance under the Private Medical Insurance
Scheme (PMIS). Savings in the Special Account are set aside for
old age, contingency and investment purposes.
Under this scheme, both the employer and employee contribute to
the Fund. The contribution rates are 36% of wages for employees
age 55 years and below, 18.5% for those who are above the age
of 55 to 60 years, 11% for those above the age of 60 to 65
years, and 8.5% for those above 65 years old. Besides providing
for CPF members' needs, these rates also encourage the
continued employment of older workers.
Employees aged 55 years and below contribute 20% of income
earned while employers contribute 16%. Monthly contributions
are subject to a maximum of S$960 for the employer and S$1,200
for the employee, based on a salary ceiling of S$6,000 a month,
beyond which no CPF is payable.
For members below age 55, the total contribution rate of 36% is distributed into the three accounts in the proportion of, 26% points for the member's Ordinary Account, 6% points for Medisave Account and 4% points for Special Account.
For members aged 35 to 44 years, 7% points goes to the Medisave Account, 6% points goes to the Special Account and 23% points to the Ordinary Account.
Members aged 45 and above, will contribute 8% points to the Medisave Account, with a corresponding decrease in contribution to the Ordinary Account. Therefore, 22% points will go to these members Ordinary Accounts. There is also a Retirement Account for members who after withdrawing their CPF savings at 55 need to set aside a Minimum Sum in the account for their old age.
The CPF scheme was further extended to all self-employed persons earning a net trade income of more than S$2,400 a year in July 1992. By contributing 6% to 8% (depending on age) to the Medisave Account, the self-employed are able to enjoy healthcare benefits as other members.
The future challenges for the CPF is
centred on how it can achieve its vision and still continue to
be successful in meeting the peoples needs and
expectations.
Author
Gabriel Tan, 2001
References
Central Provident Fund Board. (2000). A People's
wealth, a nation's health: The CPF story.
Singapore: Author.
(Call No.: RSING 354.5957 CEN)
Central Provident Fund Board. (2003). Central Provident
Fund Board. Retrieved November 6, 2003, from www.cpf.gov.sg/cpf_info/home.asp
The information in this article is valid as at
2001 and correct as far as we are able to ascertain from our
sources. It is not intended to be an exhaustive or complete
history of the subject. Please contact the Library for further
reading materials on the topic.
