How the CPF Really Offers The Best Results



The Central Provident Fund (CPF) is the name for Singapore’s social security scheme. It covers health care, retirement and home ownership.

The contribution rate varies depending on the age, the wage band and the status of the employee (i.e. Singaporean citizen or Permanent Resident). The maximum amount of CPF contribution payable is based on a monthly salary ceiling of $6,000. Voluntary contributions can be paid in addition to the mandatory contributions.

The employee’s share of CPF contribution is deducted from their salary by the employer during the monthly payroll processing. The employer is then required to pay the employer’s and employee’s share of CPF contributions monthly for all employees (Singapore citizens and Singapore PRs) at the rates set out in the CPF Act. The contributions payable should be based on the employee’s actual wages earned for the month. Here are All You Need to Know About Central Provident Fund (CPF).

CPF contributions are not allowed for:

Foreigners working in Singapore under an EP, S Pass or a Work Permit and Directors’ fees

How is the Central Provident Fund contribution calculated?

For the purpose of CPF, wages are classified into 2 categories.

Ordinary Wages

Ordinary Wages (OW) refers to the basic salary earned in the month. The CPF contribution on OW is capped at $6,000 a month.

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Additional Wages

Additional Wages (AW) refers to bonuses and other variable components earned. The CPF contribution on AW is capped based on the following computation:

AW subject to CPF = Total Wages – OW subject to CPF

Total wages are capped at $6,000 x 17 months = $102,000 a year

For Example, An Employee Earning $8,000 A Month With An Annual Bonus Of $50,000 Will Contribute CPF Based On The Following Capping:

  • OW: CPF will be contributed based on the cap of $6,000 on a monthly basis.
  • AW: AW subject to CPF =$102,000 – OW subject to CPF for the year
  • AW CPF will be contributed based on the cap of $30,000.

Equivalent to 17 months x $6,000

Employment Act To Cover All Employees

Core provisions of the Employment Act were updated effective 1st April 2019 to cover all employees. Prior to this, Managers and Executives earning up to $4,500 were excluded from these core provisions. With this change, all employees are now entitled to paid annual leave, paid public holidays and sick leave.

Overtime Rates For Non-Workmen

Non-workmen earning up to $2,600 are entitled to overtime pay and are covered under Part IV provisions of the Employment Act. This section of the Act provides for hours of work, rest day and overtime payments to eligible employees.

Managers and executives continue to be excluded from Part IV provisions.

CPF Treatment Of Employee Benefits

Effective 1st January 2020, the CPF treatment for the reimbursement of employee benefits have been revised as follows:

Reimbursements for medical and dental benefits (incurred for both local and overseas) for employees, employee’s spouse and children are not be CPF contributable.

Reimbursements for holiday benefits for employees, employee’s spouse and children are CPF contributable.

  • These changes will align the CPF treatment for benefits provided to employees and their dependents.
  • Employee benefits paid as cash allowances continue to be CPF contributable.

Increase in CPF Contribution Rates from 1 January 2022

As recommended by the Tripartite Work group on Older Workers, CPF contributions rates for employees aged 55 to 70 will be increased to strengthen their retirement adequacy.

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