Stellar Blog | Understanding CPF in Singapore as a Business Owner

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If you’re running a business in Singapore, understanding CPF is crucial. It’s not just a legal requirement—it's a way to support your employees' long-term well-being. CPF contributions are mandatory for employers, and they go beyond just ticking a compliance box. These contributions help employees with their retirement, healthcare, and even home purchases.

How Does CPF Work?

Every month, employers contribute a percentage of their employees’ salary who are Singapore Citizens and Permanent Residents to the CPF.

The contribution rates vary depending on the employee’s age and salary. The government has set specific percentages, so it’s essential to stay updated with these rates to ensure compliance.

On 1st April 2024, there is an update to the CPF contribution rates for senior employees (aged 55 to 65) this is expected to be implemented on Jan 2025. We will cover this changes below.

CPF Contributions: What Employers Need to Know

CPF contributions break down into three key parts: the employee's total wage (salary + any bonuses), the employee's CPF contribution, and the employer's CPF contribution.

The employee’s CPF contribution is deducted from their salary, while the employer's CPF contribution is an additional contribution made on top of the employee's salary.

For Example:

Timothy is a local citizen.

Timothy’s total wage is SGD 3,500, Timothy would contribute SGD 700 (20%) to his CPF account. The remaining SGD 2,800 would be paid directly into Timothy’s bank account. On top of this, Timothy's employer would also contribute an additional SGD 595 (17% of total wage) to Timothy’s CPF.

This means that as an employer, Timothy's Salary cost is effectively : SGD 4,095 = SGD 2,800 (Take Home Pay) + SGD 700 (Employee Contribution) + SGD 595 (Employer Contribution).

Calculating CPF contributions might seem daunting, but it's straightforward once you get the hang of it. Here’s a step-by-step guide:

Determine the employee’s total wage: This includes any bonuses alongside the employee's base salary
Check the current contribution rates: These are set by the government and can change, so regular checks are important.
Calculate the employer and employee contributions: Based on the employee’s wage, apply the rates to determine the amounts.

Missing a payment? Beware—the penalties for non-compliance include hefty fines and legal repercussions. Always mark your calendar with key CPF deadlines to avoid these pitfalls.

CPF Contribution Tables

For Local citizens and >3rd Year Permanent Residents As of 2024

Employee Age	Employee Share	Employer Share	Total CPF Contribution
55 & Below	20% * Max. of $1,360 (Max Increased to $1,480)	17%	37% * Max. of $2,516 (Max Increased to $2,738)
Above 55 - 60	16% * Max. of $1,088 (17% * Max of $1,258)	15%	31% * Max. of $2,108 (32.5% * Max of $2,405)
Above 60 - 65	10.5% * Max. of $714 (11.5% * Max. of $851)	11.5%	22% * Max. of $1,496 (23.5% * Max. of $1,739)
Above 65 - 70	7.5% * Max. of $510 (Max Increased to $555)	9%	16.5% * Max. of $1,122 (Max Increased to $1,231)
Above 70	5% * Max. of $340 (Max Increased to $370)	7.5%	12.5% * Max. of $850 (Max Increased to $925)

*Bracket values are updated rates to be implemented on January 2025.

Download PDF here

For Local citizens and 1st/2nd/3rd Year Permanent Residents As of 2025

Download PDF Here

Note that the above rates may also be subjected to additional conditions not stated in this article. Stellar handles both payroll processing and management of your employee's CPF contribution. Schedule a call with Stellar to get an accurate breakdown.

CPF for Foreign Employees and Workpass holders

Not all employees are subject to CPF contributions. Foreign workers, such as Employment Pass holders, aren’t required to contribute to CPF. However, other schemes like the Skills Development Levy (SDL) or the Foreign Worker Levy (FWL) might apply. It’s crucial to know which rules apply to your foreign staff to avoid unnecessary complications.

How to Manage CPF disbursements as a Business Owner

If you wish to do it yourself, managing CPF contributions doesn’t have to be a headache. There are several tools available, like CPF EZPay, that streamlines the process.

For business owners seeking to delegate payroll tasks, Stellar offers expert Singapore payroll processing and management services. We ensure your employees are paid accurately while keeping your company compliant with regulations.

Common Questions about CPF for employers

Can Stellar help process my employee's CPF contribution and payroll?
Yes. Stellar provides payrolling services which includes ensuring your Singapore employees' CPF contribution is proper.

Is there a max cap for employers contribution cap?
As the calculation for CPF contribution first starts with computing the employee's share. The employer's share will mainly be calculated by subtracting the Total Contribution and the Employee's share. It is also important to note that there is a max ceiling to an employee's total wage which may affect CPF calculations. As calculation might be confusing, we recommend speaking to an expert or you may use CPFB's Calculator.

What happens if an employee leaves the company mid-month?
You’re only required to make CPF contributions for the days the employee worked. Pro-rate the contribution based on their final salary.

Are CPF contributions tax-deductible?
Yes, employer CPF contributions are tax-deductible, which can help reduce your business's taxable income.

Can CPF contributions be adjusted retroactively?
In most cases, no. However, you can correct mistakes in future payments, but it’s best to avoid errors by double-checking contributions each month.

Conclusion

CPF is more than just a statutory obligation—it’s a way to secure your employees' futures while also taking care of your business's compliance needs. Stay informed, use the right tools, and don’t hesitate to seek advice if you’re unsure about any aspect of CPF. After all, a well-managed CPF system not only benefits your employees but also enhances your company’s reputation as a responsible employer. Book a call with Stellar to start scaling your back office operations.

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