Rules & Calculations of CPF for Employers in Singapore

October 24, 20192:03 pm2692 views

Central Provident Fund (CPF), which was established on July 1, 1955, is a mandatory social security saving scheme for employees and employers to provide retirement funds for salaried Singaporean workers in addition to help with housing and medical expenses.

Under the Central Provident Fund Act chapter 36, employers are required to make CPF contributions at monthly rates. Employers can recover the employee’s share of the contribution by deducting it from their wages.

See also: The Rules & Calculation of EPF for Indian and Malaysian Employers

Who is covered in the CPF program?

According to the CPF law, the program is eligible and an obligatory for employees who are Singaporean citizens or Singaporean permanent residents (SRPs).

An employee who is employed in Singapore is also covered in the program, including company directors, part-time or casual employee, and seaman who is employed under a contract of service or other agreement entered into in Singapore.

NSmen employees who are in-camp training are also eligible for CPF contributions. Employer must pay CPF contributions on an NSman’s wages, including makeup pay from MINDEF. Then, the employer can recover NS employees’ share of contributions from their wages.

Employees who are concurrently employed by another employer and family members of a business owner who receives wages for work done are also eligible for the program.

Employers hiring foreign workers in their company do not have to contribute to CPF but they are required to pay the Skills Development Levy (SDL). SDL payable is 0.25 percent of the monthly remuneration for each employee, with a minimum payment of $2 (employee’s wage is less than S$800 a month) and maximum of S$11.25 (employee’s wage is more than S$4.500 a month).

How much should an employer contribute to CPF?

According to CPF Board, the contribution rate applicable for an employer depends on three factors: (see here for detail calculation and detail rate contribution)

  • Citizenship – Singapore citizen or SPR in the first and second year or from the third year of obtaining SPR status.
  • Age group which are classified as 55 years and below; above 55 to 60 years; above 60 to 65 years; and above 65 years.
  • Total wages for the calendar month. It is the sum of the employee’s ordinary wages (OW) for the month and the additional wages (AW) paid to an employee in that month.
How to pay CPF contribution?

To ease you with paying method, there are two options available.  

  •  CPF e-Submission is a free service provided by the CPF Board for employers to submit employees’ CPF contribution details and make payment electronically.
  • CPF can also be paid from direct debit provided by the CPF Board.
When to pay the contributions?

Employer should pay the contribution at the end of the month. Employer has a grace period of 14 days to pay it. If the 14th falls on a Saturday, Sunday, or public holiday, employers can pay by the next working day.

Penalties for not paying CPF

Employers who fail and/or violate CPF contributions are liable to:

  1. Late payment interest charged at 18 percent per annum and 1.5 percent per month.
  2. A fine of up to S$5,000 and no less than S$1,000 per offence and/or up-to 6-month jail.
  3. A fine of up to S$10,000 and no less than S$2,000 per offence and/or 12 months jail for repeat offenders.
  4. Fine of up to S$10,000, imprisonment of up to 7 years or both if employer deducts employee’s share of CPF contributions but fails to pay the contributions to CPF Board. 

Read also: Basic Overtime Rules and Calculations for Employers in APAC

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