Skip to main content

Advertisement

Advertisement

Fortitude Budget: Govt defers CPF contribution rate increase for seniors, to mandate landlords to grant rental waivers to help firms

SINGAPORE — The Government will defer the planned increase in Central Provident Fund (CPF) contribution rates for senior workers by a year, said Deputy Prime Minister Heng Swee Keat in Parliament on Tuesday (May 26).

Mr Heng said that the rate increase, which will be deferred from Jan 1, 2021 to Jan 1, 2022, will “help businesses manage costs in these challenging times”.

Mr Heng said that the rate increase, which will be deferred from Jan 1, 2021 to Jan 1, 2022, will “help businesses manage costs in these challenging times”.

Follow us on Instagram and Tiktok, and join our Telegram channel for the latest updates.

SINGAPORE — The Government will defer the planned increase in Central Provident Fund (CPF) contribution rates for senior workers by a year, said Deputy Prime Minister Heng Swee Keat in Parliament on Tuesday (May 26).

Delivering his fourth Budget this year called the Fortitude Budget, Mr Heng said that the rate increase, which will be deferred from Jan 1, 2021 to Jan 1, 2022, will “help businesses manage costs in these challenging times”.  

He added that the CPF Transition Offset scheme will also be postponed until after the higher contribution rates take effect. This scheme will now offset half the increase in employer CPF contribution rates in 2022, instead of 2021.

The deferment of the planned increase in CPF contributions was among the measures announced by Mr Heng, who is also Finance Minister, to help firms alleviate cost pressures. 

Mr Heng also said that the Foreign Worker Levy waiver and rebate will be extended for two months for businesses which are not allowed to resume operations on-site immediately after the easing of the circuit breaker. 

“This will include all businesses in the construction, marine and offshore, and process sectors,” he said. 

These companies will receive a full waiver in June and a 50 per cent waiver in July. 

In the meantime, they will receive a rebate of S$750 in June and S$375 in July. 

RENTAL RELIEF

While businesses have given feedback that the Government’s Jobs Support Scheme has helped to support their wage costs, they are still facing difficulties in rental costs, said Mr Heng. 

“This is especially tough on SMEs,” he noted. 

To address this, he said the Government will “significantly add” to the support for rental costs provided through the property tax rebate this year in the earlier Unity and Resilience Budgets, which were announced in February and March respectively. 

The property tax rebate provides up to 100 per cent rebate for non-residential properties amounting to over one month of rent. It is granted to the owner of the property.

First, the Government will provide a cash grant, costing S$2 billion, to offset the rental costs of SME tenants, to be disbursed through property owners. It will be automatically disbursed to property owners from the end of July. 

“Taken together with the Property Tax Rebate, the Government will, in effect, offset about two months of rental for qualifying SME tenants of commercial properties, and about one month for qualifying SME tenants of industrial and office properties,” said Mr Heng.

A new Bill will be introduced in Parliament next week to mandate that landlords grant a rental waiver to SME tenants who have suffered a significant revenue drop the past few months. 

The Bill will also cover provisions on temporary relief from onerous contractual terms such as excessive late payment interest or charges, and allow tenants to repay their arrears through instalments, said Mr Heng. 

“We deliberated on this matter very carefully. The Government does not ordinarily intervene in contracts after they have been entered into. 

“However, as the Minister for Law (K Shanmugam) had explained in his Second Reading Speech on the COVID-19 (Temporary Measures) Bill, in exceptional situations such as this, the Government needs to intervene, through legislation, with temporary targeted steps to safeguard the economic structure for the common good,” he said. 

If passed, Mr Heng said that SMEs in such commercial properties will benefit from a total of four months of rental relief, shared equally between the Government and landlords. 

RENTAL RELIEF FOR GOVERNMENT TENANTS

Mr Heng also announced that the Government will provide two more months of rental waivers for its commercial tenants and hawkers. 

This will bring the total rental waiver to four months for commercial tenants, said Mr Heng, while stall holders in hawker centres and markets managed by Government agencies will receive a total of five months of rental waivers.

For industrial, office, and agricultural tenants of Government agencies, the Government will provide an additional month of rental waiver, bringing the total to two. 

“We will also ensure that these measures flow through to help sub-tenants, many of whom are SMEs,” said Mr Heng.

CORRECTION: An earlier version of this report said that the CPF Transition Offset scheme will offset half the increase in employer CPF contribution rates in 2021. This is incorrect. It will take effect from 2022, when the higher contribution rates kick in. We apologise for the error.

Related topics

Covid-19 coronavirus cpf rental business Budget 2020 Fortitude Budget

Read more of the latest in

Advertisement

Popular

Advertisement

Stay in the know. Anytime. Anywhere.

Subscribe to get daily news updates, insights and must reads delivered straight to your inbox.

By clicking subscribe, I agree for my personal data to be used to send me TODAY newsletters, promotional offers and for research and analysis.