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CPF guide for employers

Keeping up with the changes in regulations can be tough while running a business. Here at Payboy, we have put together a comprehensive CPF guide to answer your FAQs regarding CPF contributions, as well as keep you posted on the revised CPF contribution rates from 1 January 2022 onwards!

Is it compulsory for an employer to pay CPF contributions for your employees?

Yes. Under the CPF Act, all employers are required to pay CPF contributions for their employees who are Singapore Citizens or Singapore Permanent Residents and who are earning total wages of more than $50 per month.

What types of employees do an employer need to pay CPF contributions for? 

As long as your employee is engaged under a contract of service, earns above $50 per month AND is a Singapore Citizen or a Singapore Permanent Resident, you are required to pay the employer’s share of CPF contributions. This therefore includes the following types of employees:

  • Full-time
  • Part-time
  • Temporary
  • Contract
  • Interns

There is however no employee’s share of CPF contribution if the employee earns less than $500 per month.

What are the revised CPF contribution rates for employers and employees from 1 January 2022?

The CPF contribution rates for employees aged above 55 to 70 will be increased from 1 January 2022 to strengthen their retirement adequacy.

This table summarises the contribution rates for SIngapore Citizens and Singapore Permanent Residents (from third year and onwards) for monthly wages > $750 from 1 January 2022:

Employee’s age By Employer(% of wage) By Employee (% of wage) Total (% of wage)
55 & below 17 20 37
Above 55 - 60 14 14 28
Above 60 - 65 10 8.5 18.5
Above 65 - 70 8 6 14
Above 70 7.5 5 12.5

What is considered employee’s total wages, which is subjected to CPF contributions?

The total wages are made up of an employee’s Ordinary Wages and Additional Wages.

Ordinary wage refers to wages which are granted wholly and exclusively for the month while Additional wages refers to wages such as annual bonus, leave pay and incentive payments, such as long service awards.

What are the CPF ceilings for Ordinary Wages and Additional Wages?

Different ceilings are applied to Ordinary Wages and Additional Wages.

The ordinary wage ceiling is currently capped at $6,000 while the additional wage ceiling is computed as:

$102,000* - Total Ordinary Wage subject to CPF for the year

  • Equivalent to 17 months x Ordinary Wage ceiling of $6000

Is allowance also subjected to CPF contributions?

Allowance is considered wages and hence will be subjected to CPF contributions as well. Some examples include monthly meal and transport allowance. Here is a more comprehensive list of allowance and payments which attract CPF contributions, as published by the CPF board.

How to calculate the CPF contributions on total wages?

We have created 2 free calculators for you to calculate your employee’s CPF contributions with ease:

How to submit CPF contributions?

There are two convenient ways to submit your CPF contributions: CPF EZPay and CPF EZPay Mobile.

CPF EzPay: Save time by letting CPF EZPay auto-compute your contributions. You can also set up a standing instruction for recurring CPF payments.

CPF EzPay Mobile: Submit CPF contributions on-the-go using your mobile device. Simply download the app to get started.

Does an employer need to pay for the employee’s share of CPF contributions during CPF submission?

Yes, an employer needs to pay the total CPF contributions (comprising the employer and employee’s shares) to the CPF Board. However, the employer is entitled to recover the employee’s share of CPF contributions when paying your employee’s wages for the month.

When are the CPF contributions due? 

Employers are required to submit and pay the CPF contributions by the 14th of the following month (or the next working day if the 14th falls on a Saturday, Sunday, or Public Holiday).

What happens if an employer submits CPF contributions late?

For employers who failed to submit and pay CPF contributions by the 14th of the following month (or the next working day if the 14th falls on a Saturday, Sunday, or Public Holiday), there will be a late payment interest charged at 1.5% per month, commencing from the first day after the due date.

What happens if an employer does not pay CPF contributions?

The CPF Board will first send a notice to inform the company that legal action will be taken upon detecting late payment or non-payment of CPF contributions.

If the employer still doesn’t pay and is convicted for offences under Section 58(1)(b) of the CPF Act, they will be liable for:

  • A court fine of between $1,000 and $5,000 per offence and/or up to 6 months’ imprisonment for the first conviction.
  • A court fine of between $2,000 and $10,000 per offence and/or up to 12 months’ imprisonment for subsequent convictions.

The CPF Board will also seek a court order requiring the employer to pay outstanding CPF contributions and late payment interest.

Failure to pay employee’s share of CPF contributions despite recovering employee’s share from his/her wages may result in a fine up to $10,000 and/or up to 7 years’ imprisonment.

Can I use any payroll software to submit my employees’ CPF contributions?

Yes! In fact, you can do e-submission of CPF contributions through Payboy’s portal.

The following are automatically included in the CPF file generated by Payboy:

  • CPF contributions for each individual employee
  • Self Help Group (SHG) for each individual employee

Here’s our useful guide on “How to generate CPF e-submit file” with our payroll software.

Benefits of using Payboy payroll module:

  1. 100% Compliant and 100% peace of mind
    • Prepare your e-submission of CPF contributions with a few simple clicks on Payboy! 
  2. Covers any work arrangement
    • Working with full timers, part timers, freelancers and contract staff? We’ll take care of the unique payroll requirements for each working arrangement.
  3. Transparent, Accurate and Simple
    • Full visibility on how payroll is calculated automatically based on shifts, attendance, leave and submitted claims, within an intuitive experience.
  4. Fully integrated with your preferred platforms
    • We’ll fit into your ecosystem seamlessly and keep your finance team happy. Check out our full list of integrations.

Are there any SME grants available if I’m interested in using Payboy HR payroll software?

Yes Payboy is eligible under the PSG Grant! You can find our answers to your questions regarding PSG grant here.

Find out how you can do it all with Payboy

Reach out to us if you are keen for a free demo on how we can help you save hours and give you some peace of mind on payroll and other HR matters so that you can focus on your business and people.
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