Keeping up with the changes in regulations can be tough while running a business. Here at Payboy, we have put together a comprehensive Central Provident Fund (CPF) guide to answer your FAQs regarding CPF contributions as well as keep you posted on the latest CPF contribution rates, CPF wage ceilings, and more!
What is the Central Provident Fund (CPF)?
The Central Provident Fund (CPF) is a comprehensive social security system implemented in Singapore and is designed to provide Singaporean citizens and permanent residents with a source of retirement income as well as funding for healthcare, housing, and education.
The CPF system operates through mandatory contributions from both employees and employers. A portion of an employee's salary is deducted and contributed to their CPF account, while the employer also makes a matching contribution. These contributions are made on a monthly basis.
The CPF contributions are divided into several accounts:
Ordinary Account (OA): The funds in the OA can be used for housing-related purposes, such as purchasing a home or repaying a housing loan.
Special Account (SA): The SA is meant for long-term savings and investments, including retirement planning.
Medisave Account (MA): The MA is dedicated to healthcare expenses, such as medical treatments and insurance premiums.
The funds in the CPF accounts also earn interest, and the system aims to ensure that individuals have a stable financial foundation throughout their lives.
Is it compulsory for an employer to pay CPF contributions for their 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 does an employer need to pay CPF contributions for?
For employers, as long as your employee (1) is engaged under a contract of service, (2) earns above $50 per month, and (3) 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 the CPF contribution if the employee earns less than $500 per month.
What are the CPF contribution rates for employers and employees?
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 2023:
Employee’s age
By Employer(% of wage)
By Employee (% of wage)
Total (% of wage)
55 & below
17
20
37
Above 55 - 60
14.5
15
29.5
Above 60 - 65
11
9.5
20.5
Above 65 - 70
8.5
7
15.5
Above 70
7.5
5
12.5
What are the CPF contribution rates for Permanent Residents (PR) in their first and second years?
Here are the CPF contribution rates for 1st year PRs with a monthly salary of $750 or more as of 1 January 2023.
Employee’s age
By Employer(% of wage)
By Employee (% of wage)
Total (% of wage)
55 & below
4
5
9
Above 55 - 60
4
5
9
Above 60 - 65
3.5
5
8.5
Above 65
3.5
5
8.5
Here are the CPF contribution rates for 2nd year PRs with a monthly salary of $750 or more as of 1 January 2023.
Employee’s age
By Employer(% of wage)
By Employee (% of wage)
Total (% of wage)
55 & below
9
15
24
Above 55 - 60
6
12.5
18.5
Above 60 - 65
3.5
7.5
11
Above 65
3.5
5
8.5
The CPF contribution rates will be the same as Singapore Citizens from the 3rd year of PR status onwards.
What is considered as an employee's total wages and which is subjected to CPF contributions?
The total wages are made up of an employee’s Ordinary Wages and Additional Wages.
Ordinary Wages refer to wages that are granted wholly and exclusively for the month, while Additional Wages refer to wages such as annual bonuses, leave pay, and incentive payments such as long service awards.
Are allowances also subjected to CPF contributions?
Allowances are considered wages and, hence, will be subjected to CPF contributions as well. Some examples include a monthly meal and transportation allowance. Here is a more comprehensive list of allowances and payments that attract CPF contributions, as published by the CPF board.
Is there a cap on CPF contributions?
The contribution cap refers to the maximum amount of CPF contributions that can be made on a yearly basis, and the annual limit is $37,740. The CPF contribution cap can be broken down into two parts - Ordinary Wages Ceiling and Additional Wages Ceiling.
What is the Ordinary Wages Ceiling for CPF contributions?
The CPF Ordinary Wages Ceiling refers to the maximum amount of monthly income that is subject to CPF contributions. As announced in the Singapore Budget 2023, the CPF Ordinary Wages Ceiling will increase in stages from $6,000 to $8,000 by 2026. Here is the timeline of the increases:
From September 2023, the CPF Ordinary Wages Ceiling will be raised from $6,000 to $6,300.
From January 2024, it will go up to $6,800.
From January 2025, it will increase to $7,400.
From January 2026, the CPF monthly salary ceiling will reach $8,000.
What is the Additional Wages Ceiling for CPF contributions?
The additional wage ceiling is computed as:
$102,000* - Total Ordinary Wages subjected to CPF for the year
How do I calculate the CPF contributions on total wages?
We have created two free calculators for you to calculate your employee’s CPF contributions with ease:
Are there any grants to help mitigate the rise in business costs due to the increase in the CPF ceiling?
As announced during the Singapore Budget 2023, the Singaporean government has implemented the provision of a one-year CPF transition offset for employers to help mitigate the rise in business costs resulting from the increase in the CPF ceiling.
The CPF transition offset is designed to assist employers in managing the increased CPF contribution rates for Singaporean and Permanent Resident workers aged above 55 to 70. The offset is equivalent to half of the increase in the employer’s CPF contribution rates that will take effect in 2024.
It's worth noting that employers do not need to apply for this offset, as it will be provided automatically.
How do I 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's 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 fail 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 charge of 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 an employee’s share of CPF contributions despite recovering the employee’s share from his/her wages may result in a fine of up to $10,000 and/or up to 7 years’ imprisonment.
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