As an employer in Singapore, you are legally required to make monthly Central Provident Fund (CPF) contributions for all employees. This includes Singapore citizens and permanent residents who work for you. The CPF system helps employees save for retirement. Therefore, contributing accurately as an employer is an important responsibility. Mistakes in CPF payments can have serious financial implications for your staff. It also leads to enforcement action from the CPF Board. This guide covers everything companies in Singapore need to know about making Employer CPF contributions correctly.
The CPF system was introduced in 1955. It is essentially the state-managed pension fund for the Singapore workforce. When employment income is earned in Singapore, both employer and employee make matching CPF contributions every month. These accumulative savings provide members key social security benefits, including:
As an employer, you are legally required to contribute to an employee’s CPF if they:
It is mandatory for employers to pay both portions of CPF – the employer’s and employee’s share. Here are some fundamental things to note:
Let us look at the CPF rates applicable in more detail.
The percentage an employee contributes to CPF is based on their gross monthly wage. Employers match this same percentage with their corresponding share. Here is an overview of the current allocation percentages across age groups (monthly income>$750):
Age Group | Employer’s Share (%) | Employee’s Share (%) | Total Contribution (%) |
---|---|---|---|
55 years or below | 17 | 20 | 37% |
Above 55 to 60 years | 15 | 16 | 31% |
Above 60 to 65 years | 11.5 | 10.5 | 22% |
Above 65 to 70 years | 9 | 7.5 | 16.5% |
Above 70 | 7.5 | 5 | 12.5% |
Calculating CPF contributions per employee can quickly get tricky with the tiered rates. But we will break the steps down next.
When processing monthly salaries, you must accurately compute CPF contributions for every applicable staff. Here is a step-by-step process to follow:
For example:
An employee earns $4,500 a month and is 28 years old.
His/her company needs to contribute $4,500 x 37% = $1,665 per month to her CPF account. The company pays $765 (17% share), while the employee's contribution will be $900 (20% share). This needs to be done monthly for every employee.
As an employer, you need to take two key actions each month relating to CPF:
The first action ensures you pay on time. The second provides the allocation details to credit each person’s CPF account.
The monthly deadlines to take note of are:
Late submissions lead to enforcement action. Here is an overview of key implications and penalties:
The CPF Online Business Portal makes filing monthly CPF contributions easy through a digital process. To get started, you must set up a CorpPass to access the portal securely. Steps you can then complete include:
The portal also allows payments to be set up, CPF transaction history, and notifications on issues to improve compliance.
In some situations, previously declared CPF amounts need to be adjusted due to inaccuracies or changes. Common scenarios where you may need to amend CPF submissions include:
Here are key things to note on CPF contribution adjustments:
Adjustment steps can all be completed directly through the CPF Online Business Portal:
Do keep supporting documentation on any adjustments made for audit purposes later on. And obviously, try to avoid needing adjustments by getting your monthly CPF contributions right the first time!
As an employer, you should pay CPF contributions correctly and promptly to your employees. Enforcement actions will be taken, and the CPF Board will impose penalties if you do not fulfill your legal obligation. If you are unable to pay the CPF contributions on time, you should:
Your employees can check if you need to pay their CPF contributions on time or correctly.
If discovered, the CPF Board will commence formal enforcement action seeking restitution. This includes heavy fines and penalties like:
Your business can face CPF audits, too, which examine contribution calculations, payments, and employment records for lapses.
During enforcement action and audits, cooperate fully to avoid further penalties. Maintaining proper CPF contribution practices ultimately protects your and your employees’ interests.
Managing CPF obligations for your staff should be easy and simple with the right guidance. Here are key resources CPF Board offers that can help:
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In summary, managing employer CPF contributions becomes straightforward once fundamental rules and processes are clear. Tap on available resources for help whenever you face uncertainty. Staying legally compliant safeguards the retirement funds of your valued employees, too.