Central Provident Fund
The Central Provident Fund (CPF) is a statutory board and was constituted in 1955. Its operations are governed by the Central Provident Fund Act (Cap 36, 1991 Ed). The Board consists of a chairman and six other persons all of whom was appointed by the President.
CPF contributions must be paid in respect of any employee working in Singapore who is domiciled in Singapore or Malaysia. Permanent residents of Singapore are regarded as domiciled in Singapore for this purpose.
In the case of Employment Pass and Professional Visit Pass holders, CPF contributions are not compulsory if the employee was employed in Singapore on or after 1 August 1995. However, foreign employees and their employers may elect to contribute on a voluntary basis.
Contributions to the Fund are made by both the employer and the employee at prescribed rates and the Board pays interest on the contributions standing to the credit of an employee at the end of each year. Provisions in the CPF Act allow both the employer and the employee to make additional contributions subject to certain capping rules.
Employers’ Ordinary Contributions
An employer is widely defined as one by whom an employee is employed and includes a manager, agent or a person responsible for the payment of wages to an employee, any body of persons (this includes companies, statutory boards, etc) and the government. It is compulsory for employers to pay CPF contributions for all SIngaporean and Permanent Resident employees irrespective of their age. Employers are entitled to tax deductions for ordinary contributions made to the CPF. The tax deduction allowed is limited to the amount of an employer’s compulsory contributions. CPF contributions made by an employer in respect of an employee’s ordinary wages are not regarded as taxable income in the hands of the relevant employee. Employers of foreign workers who hold Work Permits are required to pay a foreign worker levy in lieu of CPF contributions.
Employee’s Ordinary Contributions
An employee is defined as any person who is employed in Singapore and includes a Singapore citizen who is employed as a seafarer by a foreign shipowner or who has entered into a contract of service or other agreement in Singapore. An employee whose monthly wages are less than $200 is not required to make any contributions to the Fund.
Employees who are required to contribute to CPF include those who are:
- above 55 years of age
- casual workers
- domestic servants who are not on Foreign Worker Levy Scheme
- expatriates on employment or professional visit passes who were employed before 1 August 1995.
- family workers
- hair stylists/barbers
- lorry drivers
- market research interviewers
- on reservist training
- on temporary, probationary, part-time or piece-rate employment
- salaried directors
- school leavers
- undergraduates on vacation jobs, unless their training has been approved by their institutions or the Science Council of Singapore
- work permit holders not on Foreign Levy Scheme.
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