What is the Central Provident Fund (CPF)?
The Central Provident Fund (CPF) is Singapore’s mandatory social security savings scheme, designed to fund retirement, healthcare, and housing needs for working citizens and permanent residents. Established in 1955, CPF functions as a comprehensive, government-managed savings system where both employers and employees contribute a percentage of wages into dedicated CPF accounts.
While often compared to traditional pension schemes, CPF goes further—it supports lifelong needs, from buying a home to paying for medical care to securing a stable retirement. For employers operating in Singapore, CPF compliance is not just a statutory requirement—it’s a core component of payroll strategy and employee experience.
Why CPF Matters for Global Employers
If you're hiring talent in Singapore—whether directly or through an Employer of Record (EOR)—CPF plays a pivotal role in:
- Ensuring payroll compliance
- Managing total employment costs
- Supporting long-term employee welfare
- Building a compliant and locally aligned benefits strategy
Failing to understand or manage CPF accurately can lead to hefty penalties, reputational risks, and talent attrition.
Key Components of CPF
|
Component |
Purpose |
Who Contributes? |
|
Ordinary Account (OA) |
Housing, education, and investment |
Employer & employee |
|
Special Account (SA) |
Retirement savings |
Employer & employee |
|
Medisave Account (MA) |
Medical and healthcare expenses |
Employer & employee |
|
Retirement Account (RA) |
Created at age 55 to consolidate SA + OA |
Employee only |
CPF Contribution Rates (2024 example)
|
Employee Age Group |
Employer (%) |
Employee (%) |
Total (%) |
|
Up to 55 years |
17% |
20% |
37% |
|
55 to 60 years |
14% |
14% |
28% |
|
60 to 65 years |
10% |
10% |
20% |
|
Above 65 years |
8% |
6.5% |
14.5% |
Contribution rates are subject to periodic changes by the CPF Board. Different rules apply for permanent residents in their initial years of employment.
Who Is Covered Under CPF?
CPF contributions are mandatory for:
- Singapore citizens and permanent residents (SPRs)
- Employed individuals earning more than S$50/month
- Full-time, part-time, temporary, and contract workers
Foreign employees on work permits or employment passes are excluded from CPF.
Employer Responsibilities
As an employer, you’re legally obligated to:
- Register new employees for CPF
- Calculate and remit CPF contributions monthly by the 14th of each month
- File CPF returns accurately via the CPF Board’s system
- Provide clear payslip breakdowns including CPF contributions
- Maintain records for inspection or audits
Non-compliance may attract fines, interest charges, or prosecution.
Why CPF Is More Than Just Payroll
Beyond compliance, CPF reflects how an organisation aligns with Singapore’s employment culture. Contributing properly to CPF:
- Builds trust with local employees
- Enhances talent retention
- Demonstrates commitment to long-term employee wellbeing
- Reflects operational maturity to local regulators
How TopSource Worldwide Supports CPF Compliance
Managing CPF contributions, especially when scaling or entering Singapore for the first time, can feel complex. TopSource Worldwide simplifies CPF administration through:
- Automated payroll and CPF calculation workflows
- Onboarding support aligned with CPF eligibility rules
- Timely submission and contribution reconciliation
- Advisory on changing rates, reliefs, and PR phase-in rules
- Real-time compliance tracking via our global payroll platform
With our in-country experts and tech-enabled solutions, you can navigate CPF with clarity and confidence.
Frequently Asked Questions
Q: Do I have to pay CPF for contractors or freelancers?
No. CPF applies only to employees under a contract of service. Independent contractors are not covered.
Q: What happens if I miss a CPF payment?
Late contributions attract interest (currently 1.5% per month) and potential fines or prosecution. Repeated offences can lead to blacklisting.
Q: Can foreign employees contribute to CPF?
No. CPF is not applicable to foreign employees on work visas. However, you may explore other local benefit schemes to remain competitive.
Q: Are there exemptions for start-ups or new employers?
No. All employers must comply with CPF rules, regardless of company size or tenure.
Looking Ahead
As Singapore tightens regulatory oversight and emphasizes local workforce support, CPF will remain a cornerstone of employment legislation. For global companies, mastering CPF isn't just about avoiding penalties—it’s about earning trust in one of Asia’s most dynamic markets.
Expanding into Singapore?
Let TopSource Worldwide handle your CPF and payroll complexity—so you can focus on growing your team with peace of mind.
→ Speak with our Singapore payroll experts today
Practical Example of the Central Provident Fund (CPF):
A marketing executive in Singapore sees a portion of her salary and a matching contribution from her employer go into her CPF accounts, helping her save for retirement, medical expenses, and housing needs.
Ready to become a true global employer? Talk to our team about global payroll services today.
