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Central Provident Fund (“CPF”) – Know The CPF Contribution Rates in Singapore
What is Central Provident Fund (“CPF”)?
The Central Provident Fund (“CPF”) is the comprehensive social security savings plan in Singapore. As the name implies, CPF Contribution helps working Singaporeans to build their retirement savings via lifelong income, healthcare financing and home financing. In other words, CPF helps Singaporeans to have sufficient retirement fund, to have enough money to pay for medical bills, and to own a house.
Therefore, every monthly contribution of CPF will go into three accounts:
- Ordinary Account (savings for retirement, housing needs, investment and education. The remaining fund is to be used for retirement)
- Special Account (savings for retirement needs)
- MediSave Account (for healthcare needs)
The rationale behind CPF is that working Singaporeans will be forced to put aside a certain percentage of their income on monthly basis into their CPF accounts. On top of the forced saving mechanism, the Singaporean government will also help to supplement the CPF savings of lower income earners via schemes such as Workfare and top-ups to MediSave for senior citizens.
Basic Information About CPF
- Withdrawal age: 55 years (the age when you can start withdrawing your CPF savings)
- Payout eligibility age: 65 years (for those who were born after 1953).
- CPF Basic Retirement Sum: $88,000 for members who turn 55 in 2019.
- CPF Basic Healthcare Sum (from 1 Jan 2016): $57,200 from 1 January 2019.
- The amount above the BHS will flow to your Special or Retirement Accounts to increase your monthly payouts.
- In the event you do not meet your cohort Basic Healthcare Sum, you will not be required to top up your MediSave Account.
What Are the CPF Contribution Rates for Singaporean Employees and Employers?
CPF Contribution rates from 1 January 2016 for private sector and public sector non-pensionable employees are as follows:
Please refer to the CPF Contribution Rates Table for details information.
a. For salaried employees
- CPF contributions for salaried employees are made automatically. In other words, a portion of your monthly income will be paid into your CPF accounts as your employee’s contribution.
- Please note that there is a CPF Wage Ceiling (a form of CPF contribution cap limit): the Ordinary Wage Ceiling and the Additional Wage Ceiling.
- The Ordinary Wage Ceiling, as the name suggests, is a CPF contribution cap limit on your monthly salary. The monthly contribution cap is set at $6,000. The cap amount implies that only the first $6,000 of your monthly salary is subject to CPF contributions. The Additional Wage Ceiling implies the CPF contribution cap amount on your additional wages (e.g. annual bonuses).
b. For employer
- Employer is mandated to contribute to his employee’s CPF account.
- Please note that in the case you are paying the foreign worker levy for your foreign workers, you are not required to pay CPF contributions for them. However, you must pay the Skills Development Levy (SDL).
c. For self-employed working Singaporeans
You can opt for voluntary CPF contributions except Medisave contributions – you will be prompted to pay after filing your taxes each year.
Penalties of non-payment of CPF contributions
If an employer fails to comply with the CPF act, he will face certain penalties, as follows:
- Late payment interest: 18% per annum (1.5% per month) that commences from the first day of the following month after the contributions are due.
- A fine of up to $5,000 with no less than $1,000 per offence and/or up to 6 months jail.
- For repeat offenders: A fine of up to $10,000 with no less than $2,000 per offence and/or 12 months jail.
- A fine of up to $10,000, imprisonment of up to 7 years or both (if you fail to pay the CPF contributions after deducting your employee’s share of CPF contributions)