How to Calculate Employer CPF Contribution Rate in Singapore [2024 Update]

The Singaporean CPF system, known for its robust approach to retirement savings, has recently undergone significant modifications in its employer CPF contribution rate and CPF contribution by employers. One notable update is the increase in the CPF Ordinary Wage (OW) ceiling from $6,000 to $8000 by 2026 for all employees1 . Additionally, a phased increase in CPF contribution rates for senior workers, set to begin on January 1, 2024, and fully implemented by 2030, aims to strengthen retirement adequacy2. This article dives into these changes and provides a comprehensive guide on how to calculate the employer CPF contribution rate in Singapore, ensuring that both employers and employees can navigate these updates effectively to secure their financial futures.

What is CPF Contribution?

CPF stands for Central Provident Fund, which is a social security system designed to help Singaporeans and Permanent Residents (PRs) set aside savings for their retirement.  An individual’s CPF can be accessed to fund expenses arising for healthcare, housing, education and retirement.

The purpose of CPF contribution is to ensure the saved amount can be used to support medical bills, home ownership expenses, and further education investments, amongst others.

There are different categories of CPF and below is the list of CPF accounts and their individual usage.

● Ordinary Account (OA) – Applicable for housing, insurance, and investment
● Special Account (SA) – Old age and investment in financial products for retirement
● MediSave Account (MA) – Healthcare, medical expenses and approved medical insurance
● Retirement Account (RA) – Auto-created on individual’s 55th birthday which will provide you with monthly payouts

Who is exempted from a Employer/Employee CPF Contribution?

The following persons are exempted from contributing a CPF contribution.

  1. Selected students who fulfil exemption criteria
    • (To see what are students exempt please refer to the Government website3)
  2. Foreigners working in Singapore, excluding Singapore PRs
  3. Domestic workers
  4. Employees of UN Organizations or any agency of UN Organizations that are stationed in Singapore
    • (Please refer to the UN website4 for the list of organisations)
  5. Seamen who are Singapore Citizens and are employed –
    • in a Swedish ship on terms and conditions of service applicable to Swedish seamen; or
    • in a Norwegian ship on terms and conditions of service applicable to Norwegian seamen; or
    • By the East Asiatic Co. Ltd. of Denmark on terms and conditions of the agreement between the Danish Shipowners’ Association and the Seamen’s Union in Denmark
  6. Self-employed workers, including persons who work for themselves, or are in the position to realise a business profit or loss. For this category, you’re required to make mandatory MediSave contributions under the Self-Employed Scheme.

Is there a minimum or maximum employer/employee CPF contribution percentage or amounts?

Wages can be classified into Ordinary Wages or Additional Wages. Total Wages is the sum of the both. CPF contributions are computed on Total Wages payable to the employee in a calendar month, with different ceilings applied to Ordinary Wages and Additional Wages.
CPF Annual Limit: the maximum amount of mandatory and voluntary contributions CPF members can make to their Ordinary Accounts (OA), Special Accounts (SA) and Medisave Accounts (MA) in a calendar year is currently at $37,740. Despite the recent CPF Contribution Changes, there will be no changes to the Additional Wage ceiling, which is calculated as SG$102,000 – Total Ordinary Wage subject to CPF for the year5.

CPF Ordinary Wage Ceiling: 2023-2026

The CPF monthly salary (i.e. Ordinary Wage) ceiling will be gradually raised from $6,000 to $8,000 by 2026 for all employees.  Starting from 1 January 2024, the CPF Ordinary Wage Ceiling has been increased to SG$6,800 and to SG$7,400 from 1 January 2025. The final increase expected will take place from 1 January 2026, reaching SG$8,0005.

CPF Ordinary Wage Ceiling: 2023-2026

Salary Ceiling (as of January 2024)5

Any salaries above the capped salary amount will not be subjected to CPF deduction. Similarly, employers will not be subjected to contribute CPF for Employees beyond the capped earned salary for the same calendar month.

Additional Wage Ceiling (2024 Update)

The Additional Wage ceiling limits the amount of additional wages that attract CPF contributions. It is applied on a per employer per calendar year basis. If your employee is earning monthly Ordinary Wages (OW) that are above $6,000, the estimated Additional Wage (AW) ceiling for the year 2024 should be $102,000 – ($6,000 x 8) – ($W x 4) where W is capped at the Ordinary Wage (OW) ceiling of $6,800 from January 2024.

For example, if your employee’s monthly Ordinary Wage is $8000 in 2024, the estimated Additional Wage ceiling for 2024 will be: SG$102,000 – (SG$6,000 x 8) – (SG$6,800 x 4). This would mean that the CPF contributions you should pay on the AW is up to $26,800.

You may find additional information about CPF contribution rates and CPF Wage Ceiling on the official CPF Board website 6.

What are the most updated employer/employee CPF contribution rates in 2023/2024

The latest changes in the CPF contribution rates sare to facilitate an improvement in the retirement adequacy of these Older Workers. The initiative to bring about these changes was taken up by the Tripartite Workgroup on Older Workers and the recommended changes will be applicable for employees between the ages of 55 and 70.

The changes to the CPF contribution rates will be applicable to this group of Older Workers belonging to Singapore Citizens and Singapore Permanent Residents (PRs) categories, provided the latter has completed three years of their Permanent Residency.

Table 2: CPF Contribution Rates by Employers and Employees from 1 Jan 20245

Contribution rates from 1 January 2024 (Monthly wages > $750)

Contribution rates from 1 January 2024
*For the most updated information, please refer to the CPF Board website5

Employers must note that the due date for your CPF contributions is on the last day of the calendar month. Enforcement action will be taken against employers who fail to pay on the 14th of the following month or the next working day if the 14th falls on a Saturday, Sunday or Public Holiday.

Employer’s CPF Contribution Responsibility

As an employer, you are required to pay CPF contributions for all employees who are Singapore Citizens or Singapore Permanent Residents and earn total wages of more than SG$50 per month. You will need to pay total CPF contributions, consisting of the employer and employee’s shares to the CPF board7.

(Note: If your employee earns above SG$50 but not more than SG$500 per month, then there will be no employee’s share of CPF contributions but employers will still need to pay their share7.

CPF Contribution Rates By Employees

There are some factors that will impact the monthly CPF contribution rates by the Employee.

  • Citizenship of employee (Singapore Citizen or Singapore PR year 1 or year 2, or year 3 onwards)
  • Age group of employee
  • Total wages earned for each calendar month

Payroll services – Singapore

Managing a business in Singapore involves immense knowledge of the most updated business legislation and requirements. From complying to all Corporate Tax laws, to weighing the pros and cons of expanding your further expand your operation in the country, employers usually find it challenging to be on top of all the requirements. Now imagine the additional labour and mental load to track, manage and handle their employees’ CPF processes by themselves! To avoid penalties, it is highly recommended to outsource this process to third-party experts.

Links HR Outsourcing helps companies take care of a variety of HR needs with their 100% in-country HR outsourcing solutions. With over 20 years of experience in the industry, Links HR can help you personalise your solutions to ensure your employees’ CPF tracking, management and handling is hassle-free, risk-avoidant and fully compliant.

Contact Links International if you’re looking for HR / Payroll and CPF processing support in Singapore, and the Asia-Pacific region or visit the website to find more information on business in Singapore and payroll services in Singapore.

1 Source: Central Provident Fund Board- FAQ –  What are the changes to the CPF salary ceilings from 1 September 2023?

2 Source Central Provident Fund Board – FAQ – What are the changes to the CPF contribution rates for senior workers that will take effect from 1 January 2024?

3 Source: Government of Singapore – Who do you need to pay CPF for?

4 Source: United Nation

5 Source: Central Provident Fund Board – “CPF Contribution Changes from 1 September 2023 and 1 January 2024” – 1. Increase in CPF Ordinary Wage ceiling for 1 September 2023 and 1 January 2024, 2. Increase in CPF Contribution Rates from 1 January 2024

6 Source: Government of Singapore – What payments attract CPF contributions

7 Source: Central Provident Fund Board – Employer obligations

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