Apart from appreciating the hawker culture, mastering the art of “Singlish”, and living in HDB flats, newly permanent residents (PRs) will also have to get used to the concept of contributing part of their monthly salary into the Central Provident Fund (CPF). CPF is Singapore’s national retirement saving scheme that helps to ensure retirement adequacy for its members.
Currently, all active CPF members contribute up to 37% (including up to 17% employer’s contribution) of their gross wages to CPF. This amount will be capped at a salary of $6,000 and is deducted automatically from their salary.
CPF Is Payable From The Date Of PR Status Approval
After the arduous process of applying for your PR status, the Form 5/5A will notify you of your successful application. The date on the form is the start date of your status as a PR in Singapore.
If you are currently employed, it also indicates when employers have to start making CPF contributions. As an employee, you would also start seeing a sizeable chunk taken off your salary – and channelled into your newly-opened CPF accounts.
Understandably, having to deduct up to 20% (employee’s contribution) immediately from your take-home pay may be difficult for many to adapt in such a short time frame. Hence, as newly initiated residents, the CPF board provides a two-year period for employees to contribute with lower contribution rates to get used to the new CPF scheme.
Employers of new PRs will also get the same buffer period to pay lower CPF contribution rates. That’s the other benefit for new PRs – you start receiving more in total salary once you factor in employer CPF contributions, which are in addition to your base salary.
Both you and your employer would only need to start contributing the full CPF amount on the third year of employment as a PR. The first full year starts from the date of PR approval and ends on the last day of the PR approval anniversary month. The second and third years follow this start date – from the first day of PR approval anniversary month.
For example, if your PR status was approved on 14 January 2023, your first year of CPF contribution will start from that date, and end on 31 January 2024. Your second CPF contribution year will start on 1 February 2024 and end on 31 January 2025. Finally, normal CPF contributions – which start from the third year – will start from 1 February 2025.
First And Second Year Contribution Rates Varies Based On Three Different Combination Of Employer – Employee
As mentioned above, the de facto CPF contributions for the first two years for both employees and employers are at a reduced rate. The reduced rate is termed as the graduated rate. Employers are required to contribute at the graduated rate unless you are working for a Ministry as a non-pensionable employee.
If your employer wishes to contribute higher CPF rates for you, both parties need to jointly apply for higher rates. The higher contribution rate can vary between full employer-graduated employee (Table #2) or full employer-full employee (Table #3).
For those who would wish to contribute a higher CPF rate independent of employer’s contribution, you can top up your CPF through Voluntary Contribution or Retirement Saving Topping Up Scheme (RSTU).
Your CPF contribution rates for the first two years of PR status can be calculated with the CPF Contribution Calculator. Regardless, the breakdown of rates for new PR employees aged below 55 years old, drawing a salary of $750 and above, are as shown below:
Table #1 Graduated Employer & Graduated Employee CPF Contribution Rates
|Graduated Employer & Graduated Employee (G/G) Contribution Rate||Employee’s share of CPF contributions||Employer’s share of CPF contributions||Total CPF contributions (Employer’s & Employee’s share)|
|First Year||5% of Ordinary Wage (Capped at $300) + 5% Additional Wage||4% of Ordinary Wage (Capped at $240) + 4% Additional Wage||9% of Ordinary Wage (Capped at $540) + 9% Additional Wage|
|Second Year||15% of Ordinary Wage (Capped at $900) + 15% Additional Wage||9% of Ordinary Wage (Capped at $540) + 9% Additional Wage||24% of Ordinary Wage (Capped at $1,440) + 24% Additional Wage|
Table #2 Full Employer – Graduate Employee CPF Contribution Rates (Need Joint Application)
|Full Employer & Graduated Employee (F/G)||Employee’s share of CPF contributions||Employer’s share of CPF contributions||Total CPF contributions (Employer’s & Employee’s share)|
|First Year||5% of Ordinary Wage (Capped at $300) + 5% Additional Wage||17% of Ordinary Wage (Capped at $1,020) + 17% Additional Wage||22% of Ordinary Wage (Capped at $1,320) + 22% Additional Wage|
|Second Year||15% of Ordinary Wage (Capped at $900) + 15% Additional Wage||17% of Ordinary Wage (Capped at $1,020) + 17% Additional Wage||32% of Ordinary Wage (Capped at $1,920) + 32% Additional Wage|
Table #3 Full Employer – Full Employee CPF Contribution Rates (Need Joint Application)
|Full Employer & Full Employee (F/F)||Employee’s share of CPF contributions||Employer’s share of CPF contributions||Total CPF contributions (Employer’s & Employee’s share)|
|Year Of Application With Employer Or Third Year Onwards||20% of Ordinary Wage (Capped at $1,200) + 20% Additional Wage||17% of Ordinary Wage (Capped at $1,020) + 17% Additional Wage||37% of Ordinary Wage (Capped at $2,220) + 37% Additional Wage|
As a note, CPF contributions for both employer and employee will fall after employees turn 55 and above. In addition, the exact contributions into your various CPF accounts – CPF Ordinary Account (OA), Special Account (SA) and MediSave Account (MA) – will depend on your age.
Lastly, full employer – full employee contribution rates are also the same mandatory CPF contribution rates for Singaporean citizens. As mentioned, this happens mandatorily after the third year that an employee is a PR.
In the event you have applied for a Full Employer – Full Employee CPF contribution rate with your previous employer but moved to another that does not provide it before the third year, your CPF contributions will resume back to the current graduated contribution rates. You would have to re-apply with your current employer for higher rates.
If You Are Departing Singapore For Good, You Can Apply To CPF For Withdrawal
In the event, you are not continuing your PR status in Singapore, and you plan to leave Singapore permanently, you can apply to withdraw your CPF monies.
In Singapore, if you have Singpass, you can submit your completed form and supporting documents via My Mailbox which will be the fastest mode of application. You can also make the application in-person at one of the CPF Service Centres, if you do not have Singpass.
If you are currently located overseas and do not have Singpass, you need to fill in a form under the witness of a Singapore Overseas Mission before sending the application by mail with official stamps.
Your CPF savings would be transferred to us via interbank Giro to a local Singapore bank or telegraphic transfer (TT) to your overseas bank account. Any existing tax liabilities would be deducted from your CPF savings. For those of you with CPF Investment Scheme (CPFIS), Central Depository (Pte) Ltd (CDP) charges a fee of $10.70 for each transfer of share counter. After the transfer, you can liquidate your shares to draw out your investments.
For those that are covered by CPF LIFE, you can choose to withdraw your unused premium or continue on the scheme. Continuing the scheme will allow you to receive monthly payouts (at the eligible age) through your Singapore bank account for the rest of your life. I.e. there is no change to the benefits you get on the CPF LIFE scheme whether you are a PR or choose to renounce it.
Do note that if you do return to re-obtain a PR or citizenship, you would have to make a full refund to CPF based on the amount withdrawn, including the accrued interest rates.
This article was first published on 30 June 2021 and was updated to include additional information.
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