Overview of CPF and CPF contribution rates for employees in Singapore

What is CPF Singapore? This is a question that most employees and businesses in Singapore are interested in when starting their operations. The Central Provident Fund (CPF) is not only a compulsory retirement fund, but also a comprehensive social security system that helps people secure their finances, health care and long-term housing. 

For businesses, understanding the regulations, contribution rates and how to comply with CPF is a must to avoid legal risks and build trust with employees. In this article, GLA will provide you with the most complete and detailed view of CPF Singapore and effective compliance solutions.

1. What is CPF Singapore?

The Central Provident Fund (CPF) is Singapore’s compulsory social security system, which plays a key role in ensuring the long-term well-being of its citizens. The CPF is designed for Singapore citizens and Permanent Residents, with the main objective of helping them have a stable financial foundation for retirement, healthcare and housing.

CPF is a compulsory social security savings scheme, formed from the joint contributions of employees and employers. This contribution is managed by the CPF Board – an agency under the Singapore Government.

1.1 Main features of CPF Singapore

The CPF system in Singapore has several salient features:

• Obligatory: Both employees and employers are required to contribute a percentage of monthly income into CPF.
• Centralized management: The system is operated by the CPF Board to ensure transparency and efficiency.
• Wide coverage: CPF is not only aimed at financial security during retirement, but also supports housing needs and medical expenses throughout working life.
• National security pillar: CPF is seen as an important part of Singapore's social security system, ensuring citizens are able to take care of themselves in their old age and reduce their dependence on state benefits.

1.2 Singapore CPF Submission Deadline

Employers and business owners have 14 days from the date of salary payment to make CPF contribution obligations.

For example, the deadline for CPF contribution for December 12 is 2013 January 14. If the 1th falls on a public holiday or weekend, the mandatory CPF contribution must be completed on the next working day.

Workers in Singapore enjoy very good working conditions and benefits, and Singaporean law also has very strict regulations on working conditions. Therefore, after Singapore company registration, GLA also provides other services such as support for human resource recruitment in Singapore, support for CPF calculation for business owners, etc. 

2. Singapore CPF Accounts 

When participating in the CPF system, employees will have many different types of accounts, per account designed for a specific purpose in life. This is how CPF ensures that Singaporeans have a stable source of funds for housing, healthcare and retirement, including: 

1. Ordinary Account (“OA”).
2. Special Account (“SA“)).
3. MediSave Account (“MA”).
4. Retirement Account (“RA”).

Figure: Types of Singapore CPF accounts (Source: Inland Revenue Authority of Singapore (IRAS))

Each account has its own purpose and interest rate. Specifically as follows:

3. Singapore CPF Contribution Process

The CPF contribution system is designed to be transparent, clear and mandatory for both employees and employers in Singapore.

3.1 CPF Contribution Rate

CPF contribution rates depend on the age of the employee, ranging from 12,5% ​​to 37% of monthly salary. Both employers and employees are responsible for contributing according to the rates set by the Singapore Government.

(According to regulations applicable from 1/1/2025 for employees with monthly salary over 750 SGD)

3.2 Who is required to contribute to Singapore CPF?

As per the regulations, CPF applies to the following subjects:

• Singapore Citizen (SC) working in Singapore.
• Singapore Permanent Resident (PR) has been granted a PR card, working under a service contract.
• Workers working full-time, part-time or under contract in Singapore.

Meanwhile, foreigners who do not have a PR card are not required to pay CPF. This obligation only arises if they are later granted a permanent resident card.

4. How to use Singapore CPF savings book

Savings in CPF are not just for retirement, but can also be used for many important needs in life such as retirement, housing and medical care.

5. Benefits of CPF for employees in Singapore

CPF is not only a compulsory social security system, but also brings many practical benefits to help workers in Singapore ensure long-term financial security.

5.1 Attractive interest rates

Savings in CPF enjoy higher and more stable interest rates than many conventional forms of savings:

• People under 55 years old: Enjoy interest of up to 5%/year on CPF account balance.
• People 55 years and older: enjoy preferential interest rates of up to 6%/year for a certain amount of savings in CPF.

This helps your savings grow faster thanks to compound interest, creating a solid financial foundation for retirement.

5.2 Support from the Singapore Government

In addition to interest rates, the Singapore Government also has many additional programs to encourage people to save through CPF, typically:

• Workfare Income Supplement (WIS): provides additional support to low-income workers, helping them increase their income and accumulate more in CPF.
• Retirement savings top-up: The government has policies to top-up MediSave or retirement accounts for older workers, ensuring they still have enough financial resources when they retire.

6. Regulations for businesses when paying CPF

For businesses operating in Singapore, contributing CPF for employees is not only a legal obligation but also a responsibility to ensure the welfare of employees.

6.1 Employer's responsibilities

• Register CPF account for employees as soon as they start hiring.
• Deduct the correct percentage from employee's salary and submit the company's contribution as prescribed.
• The deadline for CPF submission is the 14th of each month. Businesses need to submit fully and on time to avoid violations.

6.2 Consequences of late or non-payment of CPF

If a business delays or deliberately fails to pay CPF, it may face:

• Administrative fines and interest on unpaid amounts.
• Legal action, in case of serious breach or wilful failure to fulfil CPF contribution obligations for employees.

Compliance with CPF regulations helps businesses maintain a reputable image, ensure employee rights and avoid legal risks.

7. Employer's CPF contribution obligations

Every month, the company is responsible for contributing CPF for employees at the rate prescribed by the Singapore CPF Law. Specifically:

• The total CPF contribution consists of two parts: the employer's portion and the employee's portion.
• Employers have the right to deduct employees' contributions from monthly salaries before paying salaries.
• CPF contribution deadline: Deadline is the last day of the month. If the business is late in submitting, late payment interest will be charged and administrative penalties may be imposed.

If the company fails to perform its obligations, employees have the right to request an explanation and, where necessary, to report to the CPF Board.

8. Consequences of not paying CPF on time

Failure to pay CPF on time not only directly affects the rights of employees but also causes businesses to face serious legal consequences.

Late payment interest

• Businesses will be charged a penalty interest of 18%/year (equivalent to 1,5%/month) on the amount owed to CPF.
• The minimum penalty is SGD 5/month, even if the debt amount is less.

Administrative sanctions

• Fines range from SGD 1.000 to SGD 5.000 per violation.
• In some cases, business owners can be imprisoned for up to six months, or face both a fine and imprisonment.

Serious Violation

If an employer has deducted from an employee's salary but failed to remit CPF correctly, this is considered serious fraud. The consequences could be:

• Fine up to SGD 10.000, or
• Imprisonment for up to 7 years, or
• Apply both penalties at the same time.

9. How does GLA support your business in complying with Singapore CPF? 

GLA can assist your business in complying with Singapore CPF in a comprehensive and transparent manner through the following services:

• Detailed advice & guidance on CPF policies, ensuring businesses are always updated and comply with the law.
• Calculate and manage employee CPF contributions accurately and promptly.
• Representative works with CPF Board, supports quick resolution of questions or problems that arise.
• Declaration and support tax – accounting for businesses in Singapore, optimize compliance processes.

With GLA's support, your business will comply with CPF in accordance with the law, minimize legal risks, and enhance reputation and employee engagement.

10. Frequently Asked Questions about CPF Singapore

Highlights

• Central Provident Fund (CFP)) is a compulsory welfare account (for retirement, healthcare and housing) in Singapore to which all residents must contribute.
• CPF contribution rates vary by age: Employees under 55 years old have higher total contributions than older employees, to ensure better accumulation for retirement
• CPF is divided into three main accounts: Ordinary Account (OA) for home purchases and investments, Special Account (SA) for retirement, and MediSave Account (MA) for medical expenses.
• CPF beneficiaries: CPF applies to Singapore Citizens (SCs) and Singapore Permanent Residents (SPRs) working under an employment contract, but does not apply to foreign workers holding a Work Permit or S Pass.
• Employers in Singapore are required to pay CPF on time, and any delay can result in a fine of up to SGD 10,000, penalty interest or even legal liability.