Have you ever considered how CPF contributions can directly impact the growth and sustainability of your business? As a Singapore employer, meeting CPF obligations is more than just a compliance task. It’s a strategic move that helps foster trust, improve employee retention, and strengthen your company’s reputation.
Furthermore, with Singapore projected to become a ‘super aged’ society by 2026, where over 20% of the population will be aged 65 or older, managing CPF contributions effectively is essential for staying competitive in a changing demographic landscape.
To make this process easier and more efficient, HashMicro’s HRM Software offers a comprehensive solution based on the latest HR trends. From face recognition and GPS attendance to prevent fake check-ins, to automated payroll with tax compliance, and tools to manage employee shifts and overtime, our software simplifies complex HR tasks.
It also includes features like real-time employee loan tracking, detailed expense management, and automated approval delegation. These features ensure your administrative tasks are handled smoothly, freeing you up to focus on growing your business. There’s plenty more to learn about how CPF contributions and smart HR solutions can benefit your business, so read on to discover more!
Key Takeaways
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Table of Content:
Table of Content
What is the Meaning of CPF?
CPF is a mandatory social security scheme that helps retired CPF to gain monthly payouts based on funds from employers and employees. While CPF (Central Provident Fund) employer, refers to an employer who contributes to the CPF for their employees in Singapore. Established in 1955, CPF is a mandatory savings plan where both employees and employers contribute a portion of the employee’s wages.
This scheme is more than just a retirement fund; it’s a comprehensive accounting system that also supports housing, healthcare, and investment opportunities. These contributions are essential to building long-term financial security and ensure that employees are well-prepared for the future.
CPF Key Accounts & Requirements
The CPF Singapore system is structured into four key accounts:
- Ordinary Account (OA): Primarily used for retirement savings, housing, insurance, and investments.
- MediSave Account (MA): Designed to cover medical expenses and approved health insurance needs.
- Special Account (SA): Focuses on long-term retirement savings and investments related to retirement.
- Retirement Account (RA): Activated at age 55, this account is dedicated to providing monthly retirement payouts.
As an employer, you are responsible for contributing both your share and your employee’s share to the CPF each month. Contributions must be made by the end of the month, but employers are given a grace period until the 14th of the following month to make the necessary payments.
For Singapore Citizens and PRs earning more than SGD 50 a month, these contributions are compulsory. By contributing to CPF, you not only help your employees secure their financial future but also contribute to the overall stability and welfare of the nation.
The CPF system ensures that workers are financially supported throughout their lives, from covering healthcare costs to providing for a comfortable retirement. It’s a win-win for both businesses and employees, fostering a healthier and more secure workforce.
Other Similar Article: Top 15 HR Software in Singapore for 2025
What are the Recent Updates on CPF Employers?
Recent updates to the Central Provident Fund (CPF) system will affect employers in several keyways. Starting January 1, 2025, employers will see an increase in CPF contribution rates for employees aged 55 to 65, with the total rate rising by 1.5 percentage points, split between employers (0.5%) and employees (1%).
To help businesses manage these higher costs for senior workers, the CPF Transition Offset (CTO) will be extended for an additional year. Additionally, from January 2025, the Special Account (SA) for members aged 55 and above will be closed, and the savings will be transferred to the Retirement Account (RA) up to the Full Retirement Sum (FRS).
Any remaining funds will be moved to the Ordinary Account (OA). The Enhanced Retirement Sum (ERS) will also increase, rising from three times to four times the Basic Retirement Sum (BRS), providing senior workers with higher monthly payouts.
The Matched Retirement Savings Scheme (MRSS) will continue beyond its pilot phase, with higher matching grants and the removal of the age cap. However, tax relief for cash top-ups attracting MRSS matching grants will no longer apply.
Finally, the Home Protection Scheme (HPS) will be expanded to offer more coverage to CPF members, further strengthening retirement security for employees. Businesses should review these changes and adjust their CPF contributions and employee benefits strategies to stay compliant and effectively manage costs.
What Will be the CPF Employer Contribution Rate for 2025?
The monthly CPF Ordinary Wage maximum has increased twice since this increment was put into effect: on September 1st, 2023, it went up from SGD6,000 to SGD6,300, and on January 1st, 2024, it went up to SGD6,800.
The CPF Ordinary Wage cap will increase to SGD7,400 per month on January 1st, 2025. However, the CPF annual salary cap, which includes both Ordinary Wages and Additional Wages, is still set at SGD 102,000.
Additionally, the existing CPF Annual Limit and Additional Wage ceiling will not be altered; they will stay at SGD 37,740 and SGD 102,000, respectively. Here is a summary of the 2025 CPF contribution rate tables to help you understand the new changes:
For Workers Making More Than SGD 750 Per Month
| Age Group of Employees (Years) | CPF Contributions from Employers | CPF Contributions from Employees |
|---|---|---|
| Below 55 | 17% | 20% |
| 55 – 60 | 15.5% | 17% |
| 60 – 65 | 12% | 11.5% |
| 65 – 70 | 9% | 7.5% |
| Above 70 | 7.5% | 5% |
The CPF contribution rates also differ based on various categories. For example, Singapore Citizens or Singapore Permanent Residents (SPR) who have worked in the country for three years or more are subject to standard contribution rates.
However, for first-year SPRs working part-time, different CPF contribution rates apply. Similarly, second-year SPRs working part-time will have their own set of rates. The CPF contribution rates for first-year SPRs employed full-time differ from those for second-year SPRs in full-time roles as well.
These distinctions ensure that CPF rate contributions are aligned with each employee’s specific work and residency status.
What Will Happen to Singaporeans and Singapore Permanent Residents in Third Year Onwards?
For Singaporean workers and SPR who have been employed in the nation for three years or longer, this category represents the percentage of CPF payments made by employers and employees.
| Age Group of Employees (Years) | Total Pay for Employees | CPF Contributions from Employers | CPF Contributions from Employees |
|---|---|---|---|
| Below 55 | SGD 50 – SGD 500 | 17% | – |
| SGD 500 – SGD 750 | 17% | 0.6 (TW – SGD 500) | |
| SGD 750 & Above | 17% (Max. of SGD 1,250) | 20% (Max. of SGD 1,250) | |
| 55 – 60 | SGD 50 – SGD 500 | 15.5% | – |
| SGD 500 – SGD 750 | 15.5% | 0.51 (TW – SGD 500) | |
| SGD 750 & above | 15.5% (Max. of SGD 1,147) | 17% (Max. of SGD 1,258) | |
| 60 – 65 | SGD 50 – SGD 500 | – | – |
| SGD 500 – SGD 750 | 0.345 (TW – $500) | 0.345 (TW – $500) | |
| SGD 750 & above | 12% (Max. of SGD 888) | 11.5% (Max. of SGD 851) | |
| 65 – 70 | SGD 50 – SGD 500 | 9% | – |
| SGD 500 – SGD 750 | 9% | 0.225 (TW – $500) | |
| SGD 750 & above | 9% (Max. of SGD 666) | 7.5% (Max. of SGD 555) | |
| Above 70 | SGD 50 – SGD 500 | 7.5% | – |
| SGD 500 – SGD 750 | 7.5% | 0.15 (TW – $500) | |
| SGD 750 & above | 7.5% (Max. of SGD 555) | 5% (Max. of SGD 370) |
What Will be the First year of SPR Status Undergraduate?
This category applies to employees who have held their full Singapore Permanent Resident (SPR) status for at least one year and are employed by non-full-time employers. This includes part-time or casual workers, rather than those working in full-time roles. The contributions from both employers and employees in this group are based on the specific rates for part-time or casual employment.
| Age Group of Employees (Years) | Total Pay for Employees | CPF Contributions from Employers | CPF Contributions from Employees |
|---|---|---|---|
| Below 55 | SGD 50 – SGD 500 | 4% | – |
| SGD 500 – SGD 750 | 4% | 0.15 (TW – $500) | |
| SGD 750 & Above | 4% | 5% (Max. of SGD 370) | |
| 55 – 60 | SGD 50 – SGD 500 | 4% | – |
| SGD 500 – SGD 750 | 4% | 0.15 (TW – $500) | |
| SGD 750 & above | 4% (Max. of SGD 296) | 5% (Max. of SGD 370) | |
| 60 – 65 | SGD 50 – SGD 500 | 3.5% | – |
| SGD 500 – SGD 750 | 3.5% | 0.15 (TW – $500) | |
| SGD 750 & above | 3.5% (Max. of SGD 296) | 5% (Max. of SGD 370) | |
| 65 – 70 | SGD 50 – SGD 500 | 3.5% | – |
| SGD 500 – SGD 750 | 3.5% | 0.15 (TW – $500) | |
| SGD 750 & above | 3.5% (Max. of SGD 259) | 5% (Max. of SGD 370) |
What Will be the Second Year of SPR Status Undergraduate?
The CPF employers and employee’s contribution who have been fully covered by SPR for two years and who work for non-full employers which include part-time or casual workers, fall under this group.
| Age Group | Total Wage (SGD) | Employer Contribution Rate | Employee Contribution Rate |
|---|---|---|---|
| Below 55 | SGD 50 – SGD 500 | 7.5% | 5% |
| SGD 500 – SGD 750 | 13% | 12.5% | |
| SGD 750 & Above | 17% | 20% | |
| 55 – 60 | SGD 50 – SGD 500 | 4% | 5% |
| SGD 500 – SGD 750 | 9% | 12.5% | |
| SGD 750 & Above | 13% | 12.5% | |
| 60 – 65 | SGD 50 – SGD 500 | 3.5% | 3.75% |
| SGD 500 – SGD 750 | 6% | 7.5% | |
| SGD 750 & Above | 8.5% | 7.5% | |
| 65 – 70 | SGD 50 – SGD 500 | 3.5% | 3.75% |
| SGD 500 – SGD 750 | 6% | 5% | |
| SGD 750 & Above | 6% | 5% | |
| Above 70 | SGD 50 – SGD 500 | 3.5% | 3.75% |
| SGD 500 – SGD 750 | 6% | 5% | |
| SGD 750 & Above | 6% | 5% |
Second Year of SPR Status Under Full Employer & Graduated Employee
Contributions from employers and workers who have been employed by full employers and have had full SPR status for two years fall under this group. This indicates that their companies have made them full-time employees.
| Age Group of Employees (Years) | Total Pay for Employees | CPF Contributions from Employers | CPF Contributions from Employees |
|---|---|---|---|
| Below 55 | SGD 50 – SGD 500 | 17% | – |
| SGD 500 – SGD 750 | 17% | 0.45 (TW – $500) | |
| SGD 750 & Above | 17% (Max. of SGD 1,258) | 15% (Max. of SGD 1,110) | |
| 55 – 60 | SGD 50 – SGD 500 | 15.5% | – |
| SGD 500 – SGD 750 | 15.5% | 0.375 (TW – $500) | |
| SGD 750 & Above | 15.5% (Max. of SGD 1,147) | 12.5% (Max. of SGD 1,110) | |
| 60 – 65 | SGD 50 – SGD 500 | 12% | – |
| SGD 500 – SGD 750 | 12% | 0.225 (TW – $500) | |
| SGD 750 & Above | 12% (Max. of SGD 888) | 7.5% (Max. of SGD 1,110) | |
| 65 – 70 | SGD 50 – SGD 500 | 9% | – |
| SGD 500 – SGD 750 | 9% | 0.15 (TW – $500) | |
| SGD 750 & Above | 9% (Max. of SGD 666) | 5% (Max. of SGD 1,110) | |
| Above 70 | SGD 50 – SGD 500 | 7.5% | – |
| SGD 500 – SGD 750 | 7.5% | 0.15 (TW – $500) | |
| SGD 750 & Above | 7.5% (Max. of SGD 555) | 5% (Max. of SGD 1,110) |
When to Pay CPF Employer Contributions?
As an employer in Singapore, it’s essential to ensure that CPF contributions are paid promptly. These contributions are due by the end of each calendar month. While there’s a grace period until the 14th of the following month, it’s best to make payments by the month’s end to avoid any complications.
Timely CPF payments not only fulfill your legal obligations but also build trust and transparency with your employees. Clearly communicating payment schedules reassures your team that their CPF contributions are managed responsibly.
Remember, employees have the right to inquire if their CPF isn’t paid on time. Open communication about any delays, along with prompt resolution, helps maintain a positive workplace environment.
By prioritizing timely CPF employer contributions and keeping your employees informed, you demonstrate professionalism and commitment to their well-being.
What Kinds of Penalties are Being Applied for Businesses?
As a business operating in Singapore, it’s crucial to understand the penalties associated with late or non-payment of Central Provident Fund (CPF) contributions. If you fail to pay by the 14th of the following month, you may incur a late payment interest of 1.5% per month (18% per annum), starting from the first day after the due date, with a minimum charge of $5 per month.
Additionally, first-time offenders can face fines ranging from $1,000 to $5,000 per offence and/or imprisonment of up to six months. Repeat offenders may encounter fines between $2,000 and $10,000 per offence and/or imprisonment of up to 12 months.
Moreover, if you deduct your employee’s share of CPF contributions but fail to remit them to the CPF Board, the penalties are more severe, with fines up to $10,000 and/or imprisonment for up to seven years. To maintain compliance and uphold your professional reputation, ensure timely CPF contributions and adhere to all regulatory requirements.
Do Employers Need to Pay CPF Contributions for Migrant Workers?
Within Singapore, employers are generally not required to make CPF employer contributions for migrant workers holding Work Permits or S Passes. Instead, they must pay the Foreign Worker Levy (FWL), a pricing mechanism designed to regulate the number of foreign workers in the country.
Additionally, employers are obligated to pay the Skills Development Levy (SDL) for all employees, including foreign workers. The SDL is set at 0.25% of the monthly total wages, with a minimum of $2 and a maximum of $11.25 per employee. These funds support workforce upgrading programs.
However, when a foreign worker attains Singapore Permanent Resident (PR) status, they become eligible for CPF contributions from the date PR status is granted. Consequently, employers must commence CPF contributions for these employees and cease paying the FWL. The SDL remains applicable to all employees, regardless of their residency status.
It’s crucial for businesses to monitor employees’ residency status and adjust payroll in Singapore accordingly to ensure compliance with employment regulations.
Conclusion
Efficiently managing payroll and CPF employer contributions is vital for businesses navigating Singapore’s competitive and fast-changing market. By using a robust HR software solution, you can ensure accuracy, minimize errors, and complies with local rules.
Features like integrated payroll with tax calculations, real-time contract updates, and biometric attendance tracking make handling payroll seamless and reliable. Moreover, tools for tracking overtime and generating payroll reports provide accurate data for better decision-making.
By automating these processes, businesses can save time, reduce manual errors, and boost operational efficiency. Staying compliant with HR processes and CPF regulations becomes effortless when the right software supports your team. To simplify payroll and CPF management, try HashMicro Human Resource Management Software (HRMS).
Its advanced features are tailored to enhance compliance and accuracy, making it an ideal choice for businesses in Singapore. Don’t forget to start with a free demo today and discover how HashMicro can simplify your HR operations while supporting your growth.
