What is Central Provident Fund (CPF)?

Modified on Mon, 10 Jul, 2023 at 9:47 AM

The CPF is a mandatory social security savings scheme funded by contributions from employers and employees for Singapore Citizens and Permanent Residents to set aside funds for retirement.

The CPF is a key pillar of Singapore’s social security system, and serves to meet our retirement, housing and healthcare needs.

The government also helps to supplement the CPF savings of lower wage workers through schemes such as Workfare and top-ups to MediSave for senior citizens.

Both employers and employees have to make monthly CPF contributions that are split into 3 savings accounts:

Ordinary Account (OA) - for housing, insurance, investment and education
Special Account (SA) - for retirement-related financial instruments
Medisave Account (MA) - for hospitalisation expenses and medical insurance

What payments attract CPF contributions?

Most types of wages attract CPF contribution e.g. basic salary, allowance, bonus, cash incentive, commission and overtime pay.

Examples of payments that are excluded from CPF contribution are reimbursement, termination benefit and benefit in kind.

You can find out more here: https://www.cpf.gov.sg/employer/employer-obligations/what-payments-attract-cpf-contributions

Ordinary Wages vs. Additional Wages

Employee wage payments that attract CPF contributions are categorised either as Ordinary Wages or Additional Wages.

Ordinary Wages

For wages to be classified as Ordinary Wages for the month, it must satisfy both conditions below:

The wages are due or granted wholly or exclusively in respect of an employee’s employment during that month; and
The wages for that month are payable by 14th of the following month.

For example, monthly salary.

There is an Ordinary Wage ceiling that limits the amount of Ordinary Wages that attract CPF contributions in a calendar month. The Ordinary Wage ceiling is capped at $6,000 currently.

This means that if an employee’s Ordinary Wages for a calendar month is $6,500, his/her contribution would be computed based on $6,000. CPF contributions are not required on the remaining $500.

Additional Wages

Any wages that are not classified as Ordinary Wages will be Additional Wages for the month. For example, annual performance bonus.

There is an Additional Wage ceiling that limits the amount of Additional Wages that attract CPF contributions. The Additional Wage ceiling is applied on a per employer per calendar year basis.

The Additional Wage ceiling is computed as follows.

$102,000* - Total Ordinary Wage subject to CPF for the year

You can find out more here: https://www.cpf.gov.sg/employer/employer-obligations/what-payments-attract-cpf-contributions

Find out more information regarding your CPF obligations here: https://www.cpf.gov.sg/employer/employer-obligations