4.4 First, we will raise the CPF contribution rate for employers. It is currently 33% — 20% from employees and 13% from employers. We have set a long-term variable range of 30% to 36%. This range seeks to strike the right balance between achieving our social security objectives and economic competitiveness, while giving us the flexibility to respond to changing economic conditions. With the economy doing well, I believe we can sustain a modest rise in the employer CPF contribution rate.
4.5 Therefore, the Government has decided to increase the employer contribution rate by 1.5 percentage points to 14.5%, starting from 1st July 2007. One percentage point will go into the Ordinary Account. It will add to the savings of CPF members, and help many of them pay for their mortgages. The remaining 0.5 percentage point will go into the Medisave Account to better provide for healthcare needs. The Ministry of Health has made it easier for Singaporeans to draw from their Medisave Accounts, and will continue to liberalise the use of Medisave.
4.6 The increase in CPF will apply to all Singaporean workers, except for the group of workers who earn $1,500 or less and are also above 35 years old. For this group of workers, we will need a different approach.
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