Singapore CPF Contribution Rates, Eligibility, Process and other details

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    Table of Contents

    singapore cpf contribution

    What is the CPF and Why Should Employers Pay?

    The CPF is Singapore’s social security net ensuring that employees have enough saved funds for retirement, hospitalization, and housing. Employers need to mandatorily pay the entire contribution to the Provident Fund. The employer can later deduct a certain portion from the employee’s salary as specified by the authorities. In this way, Singapore citizens and Permanent Residents are forced to save money for a minimum quality of life. PF contributions are universally recognized as the most viable way to ensure that your employees are able to fend for themselves and keep inflation at bay.

    Singapore CPF Contribution Rates for 2021?

    The percentage of employee wages that are to be contributed towards his/her Central Provident Fund (CPF) is 37% for the productive age group of persons below 55 years of age. Of this 37%, 17% is to be contributed by the employer while 20% will be deducted out of the employee’s salary.
    Effective CPF rates from 1 January 2022

    Effective CPF rates applicable in 2021 (Salary $750 or more)

    Effective CPF rates from 1 January 2022
    NOTE: An employee must earn at least SGD 50 to be paid CPF.

    Is it mandatory for employers to pay CPF contributions?

    In Singapore, the CPF is a compulsory social security saving plan which is contributed by both the employee and the employer, the contribution done by the both parties goes to the healthcare, housing, and retirement needs of the employee. Every citizen of Singapore and permanent resident of Singapore under a contract of service or under part time or permanent employment must submit monthly CPF contributions.

    Singapore CPF Contribution Rates

    CPF contributions vary depending on the employee’s age, citizenship, and total monthly wages. The contribution rate is dictated by the employee’s category that he/she falls into. For Singapore Citizens, contribution rates are calculated from the third year onwards and apply to the private sector and public sector non-pensionable employees.

    Singapore CPF Contributions for Foreign Employees

    For Singapore Permanent Residents, contribution rates are applicable in the first 2 years of obtaining their SPR status. Singapore employers are not mandated to submit CPF contributions for their foreign employees until he/she obtains SPR status. The employer and employee pay a lower rate known as graduated employer-graduated employee contribution rate in the first two years of acquiring SPR status and contribute normal rates from the third year onwards.

    How are CPF Contributions Calculated?

    To calculate your employees’ CPF Contributions, you should follow the following steps –

    Step 1 – Based on your Citizenship Status, select the contribution rate table.

    Citizenship Status

    For this, you have to choose the appropriate contribution rate table for your employee. Thus,

    Table 1 – From the third year of SPR status, Singapore Citizen or Singapore Permanent Resident (SPR) (Source: cpf.gov.sg)

    CPF Contribution calculation 1
    Table 2 – SPR in the initial year of SPR status (Source: cpf.gov.sg)
    Table 3 – SPR in the following year of SPR status (Source: cpf.gov.sg)

    Moreover, please know when your employees will become or become Singapore citizens or SPRs because various CPF contribution rates apply.

    Determine the year in which you were granted SPR status. To know the year of SPR status, note the following –

    • The first year starts the day you convert to SPR.
    • The second-year begins on the first day of the month following the SPR conversion’s first anniversary.
    • The third-year begins on the first day of the month following the SPR conversion’s second anniversary.

    Contribute more to SPRs in their first and second years.
    You and your employee in the initial two years of SPR status can demand a higher CPF contribution rate. The options are as follows:

    • Both you and your employee make total contributions.
    • You make total contributions while your employee makes tiered contributions.

    Step 2 – Determine contribution rated depending on Age Groups and Wage Bands

    Age Group

    It should be noted that various charges apply to different age groups. So, from the first day of the month after the employee’s 55th, 60th, or 65th birthday.

    Wage scale

    For different pay categories, additional rates apply.

    Step 3 – Determine the Total Wages Based on the CPF Contributions

    Calculate the total wages subject to CPF contributions using the pay ceilings.

    The total wages payable in a calendar month is used to calculate an employee’s CPF contributions. Note that the sum of an employee’s Ordinary Wages and Additional Wages is known as Total Wages. Ordinary Wages and Additional Wages have different ceilings.

    Step 4 – Calculate the CPF Contributions based on Total Wages

    Calculate the total contributions to the CPF.
    By multiplying the contribution rate by the employee’s total wages subject to CPF, you may get the total CPF contributions. Your portion plus your employee’s CPF contributions make up the total CPF contributions for the employee.

    Total CPF contributions should be rounded up.
    It would be best to remember that the total CPF contributions are turned to the nearest dollar. For quantities less than 50 cents, the cents should be omitted. Amounts more significant than 50 cents should be considered as an extra $1. When paying your employee’s earnings for the month, you have the right to reclaim the employee’s part of CPF payments. For the employee’s portion of CPF contributions, the cents should always be omitted.

    Wage Ceiling on Amount to Be Considered for Calculating CPF

    How to Calculate CPF

    CPF Calculation

    Employees who require CPF contributions

    Employers are required to pay Singapore CPF contributions only for those employees who are either Singapore citizens or Permanent Residency holders (PRs).

    Citizens or PRs must first of all, be employed under a contract. Secondly, it doesn’t matter if they work part-time, full-time, or are simply casual workers.

    Other Employees Eligible for CPF Deductions

    • Directors of companies
    • NSmen ready for operations and undergoing in-camp training
    • Family members of the business owner, if they are receiving wages for work done for the owner
    • Employees concurrently employed by another employer

    Who pays CPF contributions to the Singapore government?

    CPF contributions must be made by the employer in both the employee’s and the employer’s names. The employer can later deduct the employee’s share from his/her wages.

    How To Pay Singapore CPF Contributions for Employers

    • Login with your NRIC
    • Use your SingPass for Authentication
    • Payment Modes as Shown in Image

    Which Payouts to Employees Must Be Considered to Calculate CPF Contributions?

    CPF contributions are made on the following types of employee payouts:

    • Basic Pay
    • Overtime
    • Bonus (monthly/yearly)
    • Allowances
    • Commissions
    • Incentives in Cash
    • Cash Benefits

    However, payouts in lieu of termination, non-cash benefits, and reimbursements for official expenses are not included in the monthly CPF calculation.

    Medisave Account

    This account takes care of hospitalization and medical insurance.

    Special Account

    Meant to safeguard an employee’s post-retirement financial obligations. It is for investments at an advanced age preferably post retirement.

    What is the Minimum Wage Above Which CPF Contributions become necessary?

    Every employee who earns more than $50 per month in Singapore should have CPF contributions submitted by their employer every month. For employees earning over $500 per month, the employer can deduct the employee’s share from his/her salary.

    If the employee receives other allowances and payments such as transport allowance, bonus, and other payments, CPF contribution is also deducted from these allowances.

    Examples of Other Payouts on Which CPF Contribution Must Be Deducted:

    • Cash incentives, Commissions
    • Overtime pay only for those employees with monthly basic salaries under $4,500 and $2,500 respectively,
    • Allowances such as transport allowance, meal allowance, laundry, Bonuses

    When Should I Pay CPF Contributions?

    CPF contributions must be paid at the end of the month and paid on time. You must inform your employees when these dues are paid.

    Your employees have the right to question you if you don’t pay their CPF amounts on time and at the rates applicable.

    If the employee receives other allowances and payments such as transport allowance, bonus, and other payments, CPF contribution is also deducted from these allowances.

    Examples of Other Payouts on Which CPF Contribution Must Be Deducted:

    • Cash incentives, Commissions
    • Overtime pay only for those employees with monthly basic salaries under $4,500 and $2,500 respectively,
    • Allowances such as transport allowance, meal allowance, laundry, Bonuses

    What are the Penalties for Failure to Submit CPF Contributions?

    If any person Fails to comply with CPF act then they will result in the following penalties:

    • An interest rate of 18% per annum will be charged on every late payment beginning from the first day of subsequent month contributions are due.
    • A fine of up to $10,000 is imposed or imprisonment of up to seven years or both charges if you deduct your employees but fail to submit to CPF.
    • Repeat offenders are liable to a jail term of up to 12 months or a fine of up to $10,000 and not less than $2,000 per offense.

      Also readSingapore Corporate Tax Rate 

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