Summary
The Central Provident fund is the mandatory social security savings scheme in Singapore. It is primarily designed to deliver benefits that can be withdrawn at retirement age or in a limited range of other circumstances. There are also elements of the fund which provide healthcare coverage, invalidity benefits and unemployment insurance
The CPF is essentially a mandatory personal savings scheme for Singaporean Nationals and Permanent Residents.
Details
Contributions
Employers of individuals under 55 years old pay contributions of 17% of monthly wages up to a capped income of SGD 8,000 – i.e. a maximum monthly contribution of US$1,062. An employee’s maximum contribution is 20% of their monthly wages up to the same capped income – i.e. their maximum contribution is SGD 1,600 (US$1,250) per month. Lower rates are payable for employees over the age of 55, but these are increasing over time.
Treaties
Singapore does not have International Social Security treaties which eliminate a double social security charge. However because of the CPF exemption which applies to expatriates, double charging rarely arises.
Exemptions
CPF contributions are only payable by Singapore Permanent Residents and Singapore Citizens. Foreigners on an Employment Pass, S Pass or with a work permit can choose to pay into the Supplementary Retirement Scheme (a state sponsored, privately run system) on a voluntary basis, and with attached tax concessions.
Administration
The CPF is operated through Singapore payroll so generally creates no administrative burden for individuals. Foreign companies hiring Singaporean nationals or Singapore permanent residents have to pay CPF.
Benefits
The central benefit of the CPF is a lump sum withdrawal of accrued savings (plus interest) upon reaching retirement age. Withdrawals can also be made for house purchases, healthcare financing or simply long term savings with subsidized interest rates. CPF balances can be withdrawn in full if an individual is about to leave Singapore permanently.
Other
CPF contributions are tax deductible for individuals.
Social security insights are intended to provide quick and straightforward insights into social security regimes. Always seek professional advice based on actual circumstances before acting.
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