{"id":10328,"date":"2024-08-11T17:00:00","date_gmt":"2024-08-11T09:00:00","guid":{"rendered":"https:\/\/dollarsandsense.sg\/business\/?p=10328"},"modified":"2024-08-11T17:35:41","modified_gmt":"2024-08-11T09:35:41","slug":"complete-guide-to-cpf-contribution-for-platform-workers","status":"publish","type":"post","link":"https:\/\/dollarsandsense.sg\/business\/complete-guide-to-cpf-contribution-for-platform-workers\/","title":{"rendered":"Complete Guide To CPF Contribution For Platform Workers"},"content":{"rendered":"\n

Central Provident Fund (CPF) payments for private-hire car drivers and freelance delivery workers are becoming a reality.<\/p>\n\n\n\n

This comes as a move to uplift and provides support to more than 73,000 platform workers in Singapore.<\/p>\n\n\n\n

Another policy requirement is for companies who hire them to provide standardised insurance protection for those who get hurt during working hours. Platform workers will be entitled to the same scope and level of work injury compensation as employees under the Work Injury Compensation Act (WICA).<\/p>\n\n\n\n

The new policies will kick in as soon as the second half of 2024. This comes after the government accepted recommendations made by the Advisory Committee on platform workers.<\/p>\n\n\n\n

Currently, CPF measures are a grey area for these workers, who are also seen as in-between self-employed people and full-fledged employees.<\/p>\n\n\n\n

CPF Contribution Scheme For Platform Workers Will Start As Early As 2H2024<\/strong><\/h3>\n\n\n\n

CPF payments will be made compulsory only for those below 30 years old. The changes are expected to affect 4% of private-hire car drivers and 31% of delivery riders who are below 30.<\/p>\n\n\n\n

The CPF contribution amount will take a few years before it reaches the same amount as other sectors. The end goal is for employees 60 and below to pay 20% of their salary to CPF, with employers contributing 17%. This is in line with the CPF contribution level for employees today.<\/p>\n\n\n\n

Some of the increased costs will pass on to consumers, and the service rates are likely to be \u201creset\u201d by market forces.<\/p>\n\n\n\n

This is an indicative table of how the aligned CPF contribution rates will be phased in evenly, for the first year and by the fifth year, starting from 2H 2024: <\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

The actual schedule for platform workers aged 55 to 70 will depend on the progress of the increases to CPF contributions for Senior Workers. <\/p>\n\n\n\n

Platform workers who earn $500 or less per month do not need to make CPF contributions. Those who earn above $500 but below $750 will contribute at a reduced rate. In addition, platform companies do not need to contribute CPF for Platform Workers who earn $50 or less per month. Again, this is in line with CPF contributions for employees today.<\/p>\n\n\n\n

The CPF Calculation Varies With Age<\/strong><\/h3>\n\n\n\n

The reason why those below 30 are being prioritised for CPF contributions is because this group needs the most help with housing and retirement planning.<\/p>\n\n\n\n

CPF savings in Platform Workers\u2019 Ordinary Account (OA) can be used for housing purchases. <\/p>\n\n\n\n

CPF Opt In Or Opt Out Options <\/strong><\/h3>\n\n\n\n

CPF payments are compulsory for those below 30 years old, but those who are older can choose to opt in or out.<\/p>\n\n\n\n

Platform workers from mandatory cohorts as well as platform workers who choose to opt in to the Aligned CPF Contribution Rates will see the additional CPF contributions from platform companies go towards their total earnings.<\/p>\n\n\n\n

The alignment will boost their savings in their CPF Ordinary and Special Accounts (CPF-OSA), so that they have more for retirement, and the CPF funds can also be used to finance their housing loans instead of cash. <\/p>\n\n\n\n

Read Also: Pros And Cons Of Requiring Compulsory CPF Contributions For Platform Workers<\/a><\/strong><\/em><\/p>\n\n\n\n

Platform Workers CPF Transition Support During Phase-In Period<\/strong><\/h3>\n\n\n\n

To support lower-income Platform Workers, the government will introduce the Platform Workers CPF Transition Support (PCTS) during the phase-in period from 2024 to 2027.<\/p>\n\n\n\n

The Committee recognised that some platform workers might experience a reduction in take-home pay as they contribute more to their CPF accounts, and therefore had recommended that the government consider providing support for PWs to ease the impact.<\/p>\n\n\n\n

The PCTS will offset part of the platform worker\u2019s share of the year-on-year increase in CPF- OSA contribution rates from Years 1 to 4.<\/p>\n\n\n\n

This will be applicable for lower-income Singaporean Platform Workers who are earning $2,500 or less per month (including from platform work and other employment sources), and are required to or opt in to make contributions based on the Aligned CPF Contribution Rates.<\/p>\n\n\n\n

PCTS will offset part of the increase in Platform Worker\u2019s CPF OA and Special Account (SA) contribution rates:<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

For example, Mr Ang, 30-years-old, earns $2,000 (after expenses) every month.<\/p>\n\n\n\n

His own CPF contributions will increase by $50 per month each year if he opts in to the aligned CPF contribution rates, and this will go to his OA and SA.<\/p>\n\n\n\n

In 2024, Mr Ang will save an additional $120 per month in his CPF account in 2024 after including both his and his platform company\u2019s contributions.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Aligning Workfare Income Supplement To CPF Changes<\/strong><\/h3>\n\n\n\n

The Workfare Income Supplement (WIS) scheme is a broad-based measure that tops up the salaries of our lower-income workers and helps them save for retirement.<\/p>\n\n\n\n

Eligible platform workers will receive WIS monthly instead of annually from Year 1 of the implementation of aligned CPF contribution rates (2H2024). This is to offset the more frequent CPF contribution deductions by platform companies.<\/p>\n\n\n\n

Workers with aligned CPF contribution rates will get higher WIS payments (same as the payment amounts for employees), and a higher proportion of WIS in cash, aligned with CPF : Cash ratio of employees.<\/p>\n\n\n\n

This is an illustration of how the changes will benefit platform workers:<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

This means that workers who opt in or are required to make CPF contributions can expect to receive more cash support through WIS from 2028.<\/p>\n\n\n\n

Other Support For Platform Workers To Support The Growing Gig Economy<\/strong><\/h3>\n\n\n\n

Beyond CPF, platform workers will also get a larger voice in representation. They will have the right to formal representation who can better protect and negotiate for their interests. The Tripartite Workgroup on Representation for Platform Workers is also looking to co-create a new representation framework with the three guiding principles:<\/p>\n\n\n\n