Central Provident Fund (CPF) in Singapore

Central Provident Fund (CPF)Summary: Singapore’s social security system that covers several areas like housing, retirement, health, etc.

The Central Provident Fund (CPF) is Singapore’s all-in-one social security system. It gives Singaporeans and Permanent Residents (PRs) an effective way to save for retirement, along with providing funds for housing, insurance, and other asset enhancement needs.

If you’re a working Singaporean or PR, you’ll need to save to account monthly. And as you do that, your employer needs to contribute to it too! The amount depends on things like your age, nationality, and your monthly wage.

You can check CPF calculator portal to find out the contribution rates for employers and employees.


How is the CPF Broken Down?

The CPF is divided into three separate accounts:

  1. Ordinary Account – For your housing needs and retirement funds.
  2. Special Account – Specifically set up for retirement.
  3. MediSave Account – To ensure you’re covered for healthcare costs.

The amount of CPF you receive will be split across these accounts, and this depends on your employment status and age group.


What Interest Rates Can You Expect with CPF?

CPF members get the benefit of interest on their savings, risk-free! As of July 1, 2018, here are the rates:

– Ordinary Account: Between 2.5% – 3.5% interest.
– Special, MediSave, and Retirement Accounts: All offer 4% – 5% interest.

Note: An additional 1% interest is added on the first $60,000 of the combined balance. This includes up to $20,000 from the Ordinary Account. For folks aged 55 years and over, you get another extra 1% on the first $30,000 of the combined balance, again this includes up to $20,000 from the Ordinary Account.


What if You’re Late or Miss a CPF Payment?

Employers, heads up – you’re responsible for your employees’ monthly CPF contributions, which have to be timely, at the end of each month.

A late or missed CPF payment can result in fines and added interest. In some cases, employers could even face jail sentences. So, it might be wise to have a reliable payroll provider on board to help manage your company’s monthly CPF duties.