The Senior Employment Credit (SEC) was announced in 2020, as part of the government’s Senior Worker Support Package. The SEC combined two previous government schemes – the Special Employment Credit and the Additional Special Employment Credit.
The Senior Worker Support Package itself comprises 4 main initiatives, with the 3 other being the CPF Transition Offset; Senior Worker Early Adopter Grant; and Part-Time Re-employment Grant.
These support measures is meant to help businesses adjust to higher costs from other government announcements, namely:
- to increase in the retirement and re-employment age in Singapore to 65 and 70, from 62 and 67 respectively.
- to increase CPF contribution rates for senior workers in 2022 (initially planned for 1 Jan 2021, but deferred amid Covid-19 pandemic in 2020)
What Is The Senior Employment Credit (SEC)?
The Senior Employment Credit provides wage offsets to employers that hire senior Singaporean workers aged 55 and above, and earn up to $4,000. More support will be given for employees earning below $3,000.
This wage offset will be provided for a 2-year period from 1 January 2021 to 31 December 2022.
|Maximum Wage Offsets for employees aged 55 and above, and earn up to $4,000/month|
|Age of employee as of 1 Jan 2021||2021 (up to)||2022 (up to)|
|67 and above||8%||8%|
Source: Ministry of Manpower (MOM)
It is important to note that Senior Employment Credit are paid to businesses to help offset costs during the transition phase, and employees should not expect to receive any part of this payout.
How Much Senior Employment Credit (SEC) Payouts Will Businesses Get?
How much Senior Employment Credit payouts a business gets will depend on 2 things: 1) how much a senior employee is earning; and 2) how old their senior employees are.
While the SEC payouts are given for senior employees earning up to $4,000, more support is provided for those earning $3,000 or less.
|Monthly Wage of Employee||Aged 55-59||Aged 60-64||Aged 65-66||Aged 67 and above|
|Up to $3,000||2% of wage [in 2021] |
1% of wage [in 2022]
|3% of wage||5% of wage||8% of wage|
|>$3,000 to $4,000||$240 – (6% of wage) [in 2021] |
$120 – (3% of wage) [in 2022]
|$360 – (9% of wage)||$600 – (15% of wage)||$960 – (24% of wage)|
The main difference between SEC payouts in 2021 and 2022 is the maximum support for workers aged 55 to 59. It is 2% in 2021 and falls to 1% in 2022.
From the calculations, a business that has an employee aged 67 and paid $3,000 a month will receive a Senior Employment Credit payout of $240 per month (8% of $3,000), or up to $5,760 over 2 years.
For the SEC payouts, businesses receive a gradually decreasing support for employees who earn more than $3,000, with those earning $4,000 (and more) receiving no support.
For an employee aged 67 and paid $4,000 a month, SEC payouts amount to $0 ($960 – 24% of $4,000), as 24% of $4,000 amounts to $960. For an employee aged 67 and paid $3,500 a month, SEC payouts amount to $120 a month ($960 – 24% of $3,500), or up to $2,880 over 2 years.
Of course, a business with senior employees who are in younger age groups will also receive the respective lower SEC support levels.
For businesses that want to do the calculations on their own, you can use an SEC calculator provided by IRAS.
When Can Businesses Expect To Receive The Senior Employment Credit (SEC) Payouts?
For wages that are paid from January to June 2021, employers will receive the SEC payout in September 2021. For wages paid from July to December 2021, employers will receive the SEC payout in March 2022.
The same applies to wages paid in 2022, and employers can expected to receive the payouts in September 2022 and March 2023.
Businesses do not have to apply for these payouts as IRAS will be able to compute it based on CPF contributions. IRAS will then notify eligible employers of the amount payable to them. You can also view your notices once ready on your myTax Portal. These payouts will be disbursed through GIRO or PayNow Corporate.
Businesses Have To Pay Taxes On The Senior Employment Credit (SEC) Payouts
The SEC payouts are considered revenue in nature. If you receive the SEC payouts, they will be taxable in the year you receive them.
Individuals (including sole proprietors) and partnerships are not required to declare scheme payouts, as they will be automatically calculated by IRAS.
Companies are required to declare SEC payouts in their income tax.
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