As an employer in Singapore, ensuring that your employees are well-supported in terms of wages and statutory contributions plays a vital role in retaining top talent. Contributing to your employees' financial stability during their working years and preparing them for a secure retirement is not just a legal obligation but also an important part of fostering a strong workforce.
If you are hiring in Singapore or expanding your business with an Employer of Record (EOR) Singapore, you must understand the Central Provident Fund (CPF) contributions that employers are required to make. This guide will help you navigate the CPF contribution process for your employees.
What Is CPF Contribution?
The Central Provident Fund (CPF) is Singaporeโs national retirement savings scheme. It was designed to help Singaporeans meet financial needs such as retirement, healthcare, and home ownership. CPF is a mandatory savings scheme based on employment, requiring both employees and employers to contribute monthly.
CPF contributions are divided into three main accounts:
- Ordinary Account (OA): For housing, insurance, and investment
- MediSave Account (MA): For healthcare expenses
- Special Account (SA): For retirement savings
When a Singaporean employee turns 55, a Retirement Account (RA) is also created to hold savings for their retirement years.1
Who Must Receive CPF Contributions?
The CPF Act of Singapore defines employee as:
Under the CPF Act, the following employees are entitled to CPF contributions:
- Singapore citizens or Permanent Residents (PR) employed under a Contract of Service (COS)
- Employees who are full-time, part-time, temporary, or contract workers
Employers must make CPF contributions for employees earning more than $50 per month. However, certain groups are exempt from CPF contributions, including:
- Students meeting exemption criteria
- Foreign employees who are not Singapore citizens or PRs
- Domestic workers working fewer than 14 hours per week
- Employees of the United Nations or similar agencies stationed in Singapore
- Seamen employed under specific conditions on foreign vessels, such as Swedish, Norwegian, or Danish ships
For businesses expanding into Singapore through an Employer of Record Singapore, managing these contributions is simplified as the EOR handles CPF obligations on behalf of the company.2
CPF Contribution Rates for 2024
For 2024, the CPF contribution rates vary based on the employeeโs age and wages. The current rates for employers and employees are available in the CPF contribution table provided by the Central Provident Fund Board. Employers must stay updated with these rates to ensure compliance.3
How to Stay Compliant with CPF Contributions
To ensure compliance, employers must:
- Pay CPF contributions on time: CPF contributions must be made by the 14th of the following month.
- Communicate payment dates to employees: Keep employees informed about CPF payment timelines.
- Address missed payments promptly: If a payment is delayed, communicate with the employee and rectify the issue as soon as possible to avoid penalties.4
For businesses utilizing an Employer of Record (EOR) Singapore, the EOR handles all compliance, ensuring CPF contributions are paid accurately and on time.
Adjusting CPF Contributions
If you need to adjust CPF contributions, follow these steps:
- Notify employees: Inform the affected employees about the adjustments and ensure they understand the changes.
- Submit adjustments promptly: CPF adjustments must be made within one year from the original contribution date. Rectify errors early to avoid complications.
- Ensure sufficient funds: CPF adjustments can only be processed if there are sufficient funds in the employeeโs CPF account.
For businesses expanding into Singapore, using an Employer of Record simplifies this process, as the EOR manages all adjustments and compliance issues on your behalf.5
Expanding Your Business in Singapore with an Employer of Record
If youโre planning to hire talent and expand your business in Singapore, AYPโs Employer of Record (EOR) services offer a seamless solution. We manage all statutory contributions like CPF, payroll, and compliance, allowing you to focus on growing your business.
Contact us today to learn how AYP can support your expansion into Singapore.
