How to Calculate Employer CPF Contribution Rate in Singapore

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 that Singapore Citizens or PRs of Singapore do not spend their life savings during the course of their employment.  The saved amount can be used to support medical bills, home ownership expenses, 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 CPF Contribution?

The following persons are exempted from contributing CPF contribution.

1. Selected students who fulfil exemption criteria
   • (To see what are students exempt please refer to the Government website)
     
2. Foreigners working in Singapore, excluding Singapore PRs
   
3. Domestic workers whose work hours do not exceed 14 hours a week, including maids, cooks, gardeners
   
4. Employees of UN Organization or any agency of UN Organization who are stationed in Singapore
   • (Please refer to the UN website for the list of organizations)
     
5. Seamen who are Singapore Citizens and are employed –
   • in a Swedish ship on terms and conditions 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 Seaman’s Union in Denmark
     
6. Self-employed

Is there a minimum or maximum CPF contribution percentage or amounts?

Wages can be classified into Ordinary Wages or Additional Wages. Total Wages is the sum of Ordinary Wages and Additional Wages. 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: 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.

Ordinary Wage Ceiling

This type of CPF Wage ceiling is currently capped at $6,000. The first $6,000 of the employee’s salary for the calendar month is subjected to CPF deduction. Any salaries above this will not be subjected to CPF deduction. Similarly, employers will not be subjected to contribute CPF for Employees beyond the first $6000 of earned salary for the same calendar month.

Additional Wage Ceiling

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, calculated as follows:

$102,000* – Total Ordinary Wage subject to CPF for the year
*Equivalent to 17 months x Ordinary Wage ceiling of $6000

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

Are there any changes to CPF contribution rates on the 1^st January 2022?

Starting January 1^st 2022, there are a few changes applicable to the CPF for older people. The purpose behind bringing about these changes was to facilitate an improvement in the retirement adequacy of these Older Workers. The initiative to bring about these changes were 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.

For the remaining people below the age of 55, the existing CPF contribution rates do not change and will remain per current.

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

Who is responsible for processing CPF amounts and contributing CPF amounts to the CPF Board?

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

(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 share.)

CPF Contribution Rates

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

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

Below lists the monthly CPF contributing percentage for both the Employer and Employee.

Payroll services – Singapore

Employers usually find it challenging to track, manage and handle their employees’ CPF processes by themselves. In such situations, it is highly recommended to outsource this process to third-party expertise.

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 HR 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 in Singapore.

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• A Nifty Guide on How to Manage Your Singapore Payroll
• Singapore Business Guide: What is Foreign Worker Levy (FWL)?
• What is Payroll Outsourcing Services? Should You Use It?

Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcing, visa application, PEO/EOR Secondment, outplacement, recruitment and more! Contact us for more information on how we can help leverage your HR function.