CPF Contribution of Employees and Employers, Rates & More
While most of us know that the Central Provident Fund (CPF) is a mandatory savings scheme, it is sometimes difficult to understand how it works. Employees have it easy – for Singaporeans and Permanent Residents (PRs) who are contractually employed, their CPF contributions are made on their behalf by their employers.
However, if you are an employer and are confused about the specifics of employee/employer CPF contributions, let us break this down for you.
What are Employee and Employer CPF Contributions?
Every month, you must contribute two portions of money to your employees’ CPF accounts. This includes:
- The employee’s contribution; and
- The employer’s contribution.
The amounts you have to contribute depend on factors such as your employees’ wages and their ages (explained below).
As an employer, you are entitled to recover the employee’s share of the mandatory CPF contributions if your employees are earning more than $500 per month.
All you have to do is deduct the amount from the employee’s wages after making the CPF contributions for that particular month.
The following infographic summarises which employees must employers make CPF contributions to as well as for which payments and leaves is CPF contribution applicable. You may click on it to download it in a new tab.
Must I Pay CPF Contribution for All Employees?
No, you do not have to make CPF contributions for all employees.
In order to be entitled to CPF contributions, an employee, in general must:
- Be a Singaporean citizen, or a Singapore PR
- Be employed in Singapore
- Have signed a contract of service with an employer
- Not be employed as a master, seaman or an apprentice in any shipping vessel (unless the employment contract does not exempt you from making CPF contributions for that employee)
Does the type of employment matter?
Yes. In general, employees can receive CPF contributions if they are of the following employment types (and provided that they also fulfil the criteria mentioned above):
- Full-time employees
- Part-time employees earning more than $50/month
- Temporary/casual employees earning more than $50/month
This is even if the employee has more than one employer, or is your family member.
Who do I not have to pay CPF for?
You do not have to pay CPF for the following groups of people:
- Foreign employees (Holders of an Employment Pass, S pass, Miscellaneous Work Pass or Work Permit)
- Singaporean/Singaporean PRs who are posted overseas (but you may voluntarily pay CPF for them nevertheless)
- Registered Partners of a Limited Liability Partnership (LLP) or Limited Partnership (LP) (unless engaged under an employment contract within the partnership)
What Payments/Leave Do and Do Not Attract Employee CPF Contribution?
In general, you will have to make CPF contributions to your employees’ CPF accounts for the following types of payments:
- Basic salary
- Overtime pay (only for workmen and employees whose basic salary per month does not exceed $4,500 and $2,500 respectively)
- Cash incentives:
- Payments for good work and attendance
- Long Service Awards
- Productivity Awards
- Meal expenses
- Education-related expenses for your employees’ children
- Transport expenses
- Cash gifts given to employees during festive seasons etc.
- Commissions (payments that are based on the percentage of sales achieved)
- Annual Leave Pay (payments made in lieu of leave)
There are certain payments that do not attract employee CPF contributions, such as the following:
- Reimbursements for:
- Expenses your employee incurs on behalf of your company
- Courses that are part of your employee’s training programme
- Money spent on entertaining your company’s clients etc.
- Small tokens
- Gifts to congratulate employees on their marriage or to commemorate the birth of their children
- Compensation for injuries approved under the Work Injury Compensation Act
- Termination benefits:
- Retirement gratuity
- Retrenchment pay
- Severance pay
- Compensation for loss of employment etc.
What are the Employee CPF Contribution Rates?
“CPF contribution rate” refers to the method used to calculate the CPF contribution you should be making for your employees.
Your employees will have different CPF contribution rates, depending on their:
- Citizenship (Singaporean, PR for 3 years and above, or PR for 2 years and below)
- Age group
- Total wages for the month (sum of Ordinary Wages and Additional Wages)
- Sector (i.e. private or public sector)
Ordinary and Additional Wages
Ordinary Wages (OW) refer to the wages an employee has earned through their employment in 1 month. An example of this is the monthly salary you pay to your employees.
Additional Wages (AW) refer to wages which are either:
- Not granted wholly/exclusively for the month; or
- Made at intervals of more than a month
Examples of AW include annual bonuses and leave pay.
CPF contribution ceilings
OW and AW are important as they both have “ceilings” that limit the CPF contribution your employee can receive.
The OW ceiling is capped at $6,000. This means that if an employee’s monthly salary is $8,500, his/her CPF contribution will only be calculated based on an OW of $6,000. You will not need to pay CPF contribution on the remaining $2,500.
The AW ceiling can be found by using the following equation:
$102,000 – Total OW for the year
This means that if an employee’s monthly salary is $5,000, his/her AW ceiling will be:
$102,000 – ($5,000 x 12) = $42,000.
So if you happen to give this particular employee a $45,000 bonus, his/her CPF contribution will only be calculated based on an AW of $42,000. You will not have to pay CPF contribution on the remaining $3,000.
Calculating CPF contributions
If you work in the public sector, you must determine whether your employees are pensionable (i.e employees who are eligible to receive pensions under the Pensions Act) before you can calculate their CPF contributions.
For pensionable public sector employees, CPF contribution rates can be calculated according to the following table:
|Employee’s age||Contribution Rates from 1 January 2016 Based on %
(for pensionable wage component only)
|By employer||By employee||Total|
|55 and below||12.75||15||27.75|
|Above 55 to 60||9.75||9.75||19.5|
|Above 60 to 65||6.75||5.625||12.375|
For all employees who work in the private sector and non-pensionable employees from the public sector, CPF contribution rates can be calculated according to the table below:
|Employee’s age||Contribution Rates from 1 January 2016 Based on %
(for monthly wages ≥ $750)
|By employer||By employee||Total|
|55 and below||17||20||37|
|Above 55 to 60||13||13||26|
|Above 60 to 65||9||7.5||16.5|
Let’s say that one of your private sector employees is a 57-year-old man who earns a monthly salary of $7,500, and is being given a bonus of $1,000 for the month of June.
According to the second table, your employee, who falls under the “Above 55 to 60” age group, should receive a CPF contribution worth 26% of his total wages. Since OW are capped at $6,000 and his AW has not exceeded the AW ceiling, he will receive approximately $1,820, since:
26% x (6,000 + 1,000) = $1,820.
Since it may be difficult to manually calculate the CPF contributions of employees who vary in age and have different monthly salaries, the CPF Board has created an online CPF contribution calculator.
All you have to do is key in the necessary information, such as each employee’s birthday, and the OW and AW each employee has received for that particular month, and the calculator will inform you of how much you will have to contribute to your employee’s CPF account.
How to Pay Employee CPF Contributions
You can pay employee CPF contributions online, via the CPF e-Submit@web portal.
In order to use the CPF e-Submit@web portal, you will need:
- A SingPass/CorpPass account
- A Unique Entity Number (UEN)
- A computer with internet access
- A working email address
- An approved mode of payment (either Direct Debit or eNETS)
- To be a registered user with the CPF Board for CPF e-submissions
If you have just set up your company, or have been submitting CPF contributions manually and would like to switch to the web portal, you will have to submit an application before you can access the web portal.
Once you have access to the web portal, you will need the following details regarding your employees in order to pay their CPF contributions:
- CPF Account Numbers
- Full names
- OW and AW
- Date of Birth
- Citizenship (Singaporean, or Singapore PR)
After you key in the details listed above, the system will automatically calculate the CPF contributions that you will have to make for each employee, based on their wages, citizenship and ages. You can then make the payments via Direct Debit or eNETS.
If you submit the CPF contributions online, you will not have to pay the processing fee of $7 per employee per month.
If you do not have access to a computer, you can also e-submit CPF contribution details via any mobile device, using the free “CPF e-Submit@mobile” mobile app, OR via any AXS station using the “CPF e-Submit@AXS” portal.
When Must I Pay My Employee CPF Contributions?
You must pay your employee CPF contributions at the end of every month. If you have forgotten to pay the contributions, don’t worry – you have a 2-week grace period after the deadline to do so.
This means that if you forgot to pay the contributions on the 31st of January, you will have up till 14th February to pay the contribution. If the 14th of February happens to fall on a weekend or public holiday, you can pay by the next working day.
If you still have not paid your employees’ CPF contributions after this grace period has ended, you will have to pay a late payment interest of 18% per annum (1.5% per month) starting from the first day of the following month. Following the example provided above, you will have to start paying interest from 1st March onwards.
What Happens If I Paid My Employee Incorrectly?
Before you begin any of the below-mentioned procedures, note that:
- The refund or adjustment must be applied within 1 year from the date of payment
- You have notified all affected employees about the refund or adjustment
- The adjustment or refund is subject to the availability of funds in the employee’s CPF account
Accidentally submitting CPF contributions twice
If you have accidentally paid CPF contributions twice in the same month, you can apply for a full refund of the extra submission. Before you do so, you must inform all affected employees that you will be applying for a refund.
In this case, you will have to send the CPF Board an email or letter, providing the following details:
- Your Company’s name
- Your CPF Submission Number (CSN)
- The reason for the refund
- Date of payment
- Amount to be refunded
- Requestor’s designation
- Acknowledgement that all affected employees have been informed of the refund request
Generally, the refund will take around 7 working days.
Over-contribution to your employees’ CPF accounts
If you have over-contributed for your employees, you can either:
- Apply to the CPF Board for the excess contributions to be shifted to another month; or
- Apply for a refund of the excess contribution
Shifting excess contributions
If you would like to shift the excess contribution to a later month, you will have to submit your application only when contributions for that later month is due.
For example, if you over-contributed in March and would like to shift the excess payment to April, you can only apply for the adjustment in April. If you applied for adjustment in March itself, your application would be rejected, since CPF contributions for April are not due yet.
If you would like to request for a refund, you will have to submit an application. This can be done online, using your Singpass/CorpPass account, or manually by downloading the “Refund CPF Contributions Paid in Error” form and sending it to the CPF Board’s Refund Management Section.
Underpayment/Omission of CPF contributions
If you have underpaid/omitted to pay employee CPF contributions, you can simply pay the necessary amounts via e-submission or via manual payment. Make sure you do this before the 14-day grace period is up, or you will have to pay the late payment interest as mentioned previously.
Accidentally indicating the wrong details
If you have accidentally indicated the wrong details when making a CPF submission, such as by indicating the wrong month or CPF Submission Number, you can submit an application to adjust the CPF contribution.
This can be done online, as long as you have a CPF account number and the CPF Submission Number. Alternatively, you could complete the application form manually, by downloading the “Adjust CPF Payment by Employer” form and emailing it to the CPF Board.
What Happens If I Fail to Pay/Underpaid Employee CPF Contributions?
If you fail to pay or underpaid employee CPF contributions, there is a chance that your employees may report you to the authorities.
If you are a first-time offender who is found guilty of failing to pay or underpaying employee CPF contributions, you can face a fine of up to $5,000, and/or an imprisonment term of up to 6 months.
Repeat offenders will face harsher penalties – you could be fined up to $10,000 and/or face an imprisonment term of up to 12 months.
Alternatively, if you have deducted your employees’ share of CPF contributions but fail to pay the same amount to the CPF Board, you can be fined up to $10,000 and/or face an imprisonment term of up to 7 years.
The CPF is an incredibly important scheme that helps to fill Singaporeans and Singapore PRs with a sense of security, as these savings come in handy for many things, from health crises to ensuring a peaceful retirement. As an employer, it is your duty to ensure that your employees receive the necessary CPF contributions every month.
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