Home » CPF Contributions and Benefits: What Singapore Citizens and PRs Need to Know
- by SGTI_Admin
The Central Provident Fund (CPF) is a mandatory savings scheme in Singapore that helps residents save for retirement, healthcare, and housing. It is one of the most important financial schemes for Singapore citizens, and Singapore Permanent Residents (PRs).
The current CPF monthly salary ceiling stands at S$6,000. Starting from 1 September 2023 to 2026, the CPF monthly salary ceiling will be increased gradually in four steps to reach S$8,000. This adjustment provides both employers and employees ample time to adjust to the new regulations.
Image Source: Central Provident Fund Board (CPF)
However, it’s important to note that the CPF annual salary ceiling of S$102,000 remains unchanged. This means that while more of an individual’s monthly income will be eligible for CPF contributions, there will still be a cap on the total amount of CPF contributions that can be made in a year. Employers and employees should take note of the gradual implementation of these changes and make any necessary adjustments to their CPF contributions accordingly.
In this article, we will explore the CPF system in Singapore and how it works for PRs and Citizens.
Overview of CPF System
The CPF system in Singapore comprises 3 accounts – the Ordinary Account (OA), Medisave Account (MA), and Special Account (SA).
Ordinary Account (OA)
The Ordinary Account is primarily used for housing, education, and investment purposes. Contributions made to the OA can be used for the purchase of a home, payment of education fees, and investment in stocks, bonds, and other financial instruments. The OA has a lower interest rate compared to the other two accounts, but it is the only account that allows CPF members to withdraw their savings for housing and education purposes.
Medisave Account (MA)
The Medisave Account is specifically designed to help CPF members save for their healthcare expenses. Contributions made to the MA can be used to pay for medical expenses for the member and their immediate family members. The MA has a higher interest rate than the OA but a lower interest rate than the SA.
Special Account (SA)
The Special Account is primarily used for retirement savings. Contributions made to the SA have a higher interest rate than the other two accounts, and the money in the SA can only be withdrawn for certain purposes such as investment in approved financial instruments, payment of insurance premiums, and purchasing a home. The SA is an important account for CPF members to accumulate savings for their retirement years, and it is particularly useful for those who do not have other retirement savings plans.
CPF Contribution Rates for Singapore PRs and Citizens
CPF contribution rates for Singapore PRs and Citizens vary slightly. Currently, the CPF contribution rate for Citizens and third year of PRs aged below 55 years is 37% of their gross monthly wages, with the employer contributing 17% and the employee contributing 20%. However, the contribution rate for first and second-year PRs is different. Below is the chart of the breakdown percentage:
| For Singapore PRs | First year | Second year | ||
| By employer (% of wage) | By employee (% of wage) | By employer (% of wage) | By employee (% of wage) | |
| Graduate Employer & Employee | 4 | 5 | 9 | 15 |
| Full Employer & Graduate Employee | 17 | 5 | 17 | 15 |
| Full Employer & Employee | 17 | 20 | 17 | 17 |
For employees aged 55 and above, the CPF contribution rate is lower, depending on the aged. Below is the chart of the breakdown percentage:
| Employee’s age (years) | Contribution rates from 1 January 2023 (monthly wages > $750) | ||
| By employer (% of wage) | By employee (% of wage) | Total (% of wage) | |
| 55 and below | 17 | 20 | 37 |
| Above 55 to 60 | 14.5 | 15 | 29.5 |
| Above 60 to 65 | 11 | 9.5 | 20.5 |
| Above 65 to 70 | 8.5 | 7 | 15.5 |
| Above 70 | 7.5 | 5 | 12.5 |
CPF Withdrawal and Usage
CPF savings can be withdrawn for various purposes, such as the purchase of a home, healthcare expenses, and retirement. However, there are certain rules and restrictions on the withdrawal and usage of CPF savings. For example, CPF savings can only be used to purchase a home that is approved by the Housing and Development Board (HDB) or private residential properties that meet certain criteria. CPF savings can also be used to pay for healthcare expenses for yourself, your spouse, and your dependents.
CPF savings can be withdrawn in full only when you reach the age of 55, and a portion of your savings must be used to purchase an annuity that provides a monthly payout for life. The remaining savings can be withdrawn in a lump sum or kept in the CPF accounts to earn interest.
CPF Schemes and Programs
There are various CPF schemes and programs that help PRs and Citizens save more for retirement, healthcare, and housing. One such program is the CPF Investment Scheme (CPFIS), which allows you to invest your CPF savings in approved financial instruments such as insurance products, fixed deposits, stocks, bonds, and unit trusts. The CPFIS is designed to help you achieve higher returns on your CPF savings, and it comes with various risks and limitations.
Another program is the CPF Retirement Sum Scheme (RSS), which provides a monthly payout for life once you reach the age of 65. You can apply to start receiving payouts at any time after age 65. Payouts will start automatically at 70 if you have not chosen to start earlier. The RSS is designed to provide a steady stream of income in retirement, and it can be used to supplement your other sources of income such as the CPF Life Scheme or personal savings.
CPF Life Scheme is another important program under the CPF system. It is a life annuity that provides a monthly payout for life, starting from the age of 65. If you have S$60,000 in your retirement savings, you will be automatically included in the scheme. If you are not automatically included, you can enroll yourself when you’re ready to start receiving payouts, anytime from 65 to one month before you turn 80. CPF Life Scheme is designed to provide a steady stream of income in retirement, and it is funded by your CPF savings.
Conclusion
The CPF system in Singapore is an important savings scheme that helps PRs and Citizens save for retirement, healthcare, and housing. While the contribution rates for PRs and Citizens differ slightly, the CPF system provides various schemes and programs to help both groups save more and achieve their financial goals. It is important to understand the rules and restrictions on the withdrawal and usage of CPF savings, as well as the risks and limitations of the various CPF schemes and programs.
Becoming a Singapore PR is a smart investment for anyone looking to maximise their CPF savings and enjoy the benefits of living in Singapore. With the CPF system in place to help you save for your future needs, taking the first step towards PR status can set you on the path towards a secure and comfortable retirement.
If you’re considering applying for PR, it’s important to have a clear understanding of the immigration process and requirements. That’s where an experienced immigration agency can be of great help. We can guide you through the entire process, from evaluating your eligibility to preparing your application and providing ongoing support. To learn more about how we can assist you, read our article on why should you consider engaging an immigration firm.
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FAQs
Do PRS need to pay CPF? ›
If you are an employee and are a Singaporean or Singapore permanent resident, you are entitled to CPF contributions from your employer. CPF contributions are payable when there is an employer-employee relationship, i.e. a contract of service.
How much is CPF contribution for PR? ›| Singapore PR Employee's Age (Years) | Employer's Contribution | Employee's Contribution |
|---|---|---|
| Up to 55 | 9% | 15% |
| 56 to 60 | 6% | 12.5% |
| 61 to 65 | 3.5% | 7.5% |
| Above 65 | 3.5% | 5% |
Each month, we have to contribute up to 20% of our salary, and our employers have to contribute up to 17% of our salary to our CPF accounts up to a salary cap of $6,000. This percentage may vary depending on our age and our income. As announced in Budget 2023, this salary cap is set to increase to $8,000 by 2026.
Who is eligible for CPF in Singapore? ›As an employer, you're required to pay CPF contributions for your employees who are Singapore Citizens or Singapore Permanent Residents and who are earning total wages of more than $50 per month. You need to pay total CPF contributions (comprising of the employer and employee's shares) to the CPF Board.
Do I need to pay CPF if I work overseas? ›FAQs. Are CPF contributions payable if I am working in Singapore for an overseas employer? CPF contributions are required on wages payable to any Singapore Citizen or Permanent Resident employee working in Singapore, even if the contract is signed overseas.
Do foreigners have to pay CPF in Singapore? ›CPF is a comprehensive social security system that is intended to support Singapore Citizens and Singapore Permanent Residents (SPRs). From 1 January 2003, CPF contributions are exempted for foreign employees as they may not retire here in Singapore.
At what age can I withdraw my CPF PR? ›Upon turning 55 years old, CPF members have the option of withdrawing part of their CPF savings. 1 From age 55, CPF members have the flexibility to make retirement withdrawals at any time and as often as they like, to pay for immediate cash needs.
How much CPF money should I have? ›...
How Much CPF Savings Should You Have, Based On Your Age.
| Age Group We Are In | Median CPF Savings Range |
|---|---|
| >25 to 30 | $40,000 to below $60,000 |
| >30 to 35 | $120,000 to below $140,000 |
| >35 to 40 | $180,000 to below $200,000 |
| >40 to 45 | $240,000 to below $260,000 |
Your CPF account will be closed and your CPF savings will be transferred to your bank account if you are no longer a Singapore Citizen or Permanent Resident, as the CPF system is intended to help Singapore Citizens and Permanent Residents retire with peace of mind in Singapore.
What is the maximum CPF in Singapore? ›...
FAQs.
| CPF Ordinary Wage ceiling | CPF annual salary ceiling | |
|---|---|---|
| Current | $6,000 | $102,000 (no change) |
| From 1 September 2023 | $6,300 (+$300) | |
| From 1 January 2024 | $6,800 (+$500) |
Who is exempted from CPF? ›
Persons who are not Singapore Citizens or Permanent Residents. Domestic employees with employment not exceeding 14 hours in any week. Examples include cooks, maids and gardeners. Employees of the United Nations (UN) Organisation, or any agency or institution of the United Nations Organisation stationed in Singapore.
What happens to my CPF when I turn 65? ›Your savings from your SA and OA, up to the current FRS of $198,800 (as of 2023), will be transferred to your RA to form your retirement sum. These funds are then set aside, and compounded, for the next 10 years, for the purpose of contributing into the CPF LIFE scheme when you turn age 65 (or latest, by age 70).
Can foreigners apply for CPF? ›Foreigners in Singapore have not been allowed to contribute to CPF since 2003, but according to CPF Board data, currently there around 300,000 non-citizens and non-PRs who still have CPF accounts.
What is CPF benefits Singapore? ›Every Singaporean aged (i) 20 years and below, or (ii) 55 years and above, will receive up to $450 in their CPF MediSave Account from 2023 to 2025. The amount will be disbursed over three years, starting from Feb 2023.
Who benefits from CPF? ›The CPF is a mandatory social security savings scheme funded by contributions from employers and employees. The CPF is a key pillar of Singapore's social security system, and serves to meet our retirement, housing and healthcare needs.
Is Singapore CPF taxable in USA? ›The CPF is considered a type of Foreign Asset for Form 8938 purposes, which must be reported to the Internal Revenue Service. Since there is no tax treaty between the US and Singapore, the CPF is generally taxable as well.
What happens to my CPF if I leave Singapore? ›As soon as you are no longer a SC or PR, you may close your CPF account and transfer your CPF savings to your bank account. If not, your CPF account will be automatically closed in the month following the renunciation of your Singapore Citizenship/Permanent Residency.
How can a foreigner withdraw CPF from Singapore? ›- Printed and completed application form - downloadable via this link.
- Current valid passport and passports (original) used during your employment/residence in Singapore.
- Impart your skills. Sharing is caring. ...
- Raise your voice. Singaporeans are passionate and outspoken people who are not afraid to speak up for what is right. ...
- Volunteer your time. One way to give back to society is to give the gift of time. ...
- Rally your peers.
CPF Withdrawal
You can withdraw at least 20% of your retirement savings, either from 55 or 65 depending on your birth year. This includes the first $5,000 withdrawable at any time after 55. Please refer to this link to learn more about the percentage and withdrawal age.
What happens to CPF after 70? ›
Payouts will start automatically at 70 if you have not chosen to start earlier. Your monthly payout will be calculated based on your current retirement savings, to last you up to 20 years from your payout eligibility age, with a base interest of 4% a year.
Can I keep my CPF after 70? ›You can choose to start your monthly payouts anytime from 65 to 70. If you do not submit any instructions on your payouts, your monthly payouts will automatically start when you turn 70 (i.e. the latest payout start age). In addition, you may have some CPF savings which you can withdraw for your immediate needs.
Is CPF enough for retirement? ›CPF Life is an important component of the retirement income for most Singaporeans as it provides a basic level of financial security. However, CPF Life alone may not be sufficient to cover all of your retirement needs.
How much CPF do I need to retire? ›Example: To receive a monthly payout of $1,470 - $1,570, you will need $288,900 in your Retirement Account (RA) at 65. A much lesser sum of $192,000 is required if you set aside the amount in your RA at 55.
What is the highest CPF payout? ›There is a maximum for CPF LIFE: It's pegged to the Enhanced Retirement Sum ($288,000 this year). So for those who are 55 this year, the highest CPF LIFE payout is $2,120 to $2,280 a month. And that's for the Standard plan. If you opt for the Escalating plan, it will be even lower.
How can I lose my PR status in Singapore? ›If you leave Singapore or remain overseas without a valid REP, you will lose your permanent residence status. You will be assessed for entry into Singapore as a foreign visitor, subject to prevailing entry requirements.
What happens to my CPF life after death? ›CPF savings will be distributed to the nominee(s). If you're a nominee, we'll contact you within 15 working days from notification of the member's demise. You can then apply to make a withdrawal from the deceased's CPF account and receive his/her CPF savings in cash or GIRO.
Can Singapore citizenship be revoked? ›A citizen of Singapore can only renounce his/her Singapore citizenship if he/she is of or over the age of 21 years and has acquired citizenship of another country.
What is the minimum sum for CPF in Singapore? ›| Year that members reach age 55 | ||
|---|---|---|
| Basic retirement sum (BRS) | $850 | $930 |
| Full retirement sum (FRS) | $1,570 | $1,730 |
| Enhanced retirement sum (ERS) | $2,300 | $2,530 |
| Retirement sum at age 55 | ||
This allows you to grow additional savings for your retirement and earn attractive interest over the years. If you are below the age of 55, you can top up your CPF Special Account (SA) up to the Full Retirement Sum, which is $181,000 in 2020 (PDF, 0.17MB).
What is the full retirement sum? ›
The Full Retirement Sum (FRS) is meant to safeguard our retirement and is the maximum amount that would be transferred to our RA at age 55 and the maximum we can top up our SA before the age of 55.
Is CPF withdrawal taxable in Singapore? ›Do I need to pay taxes for the amount I withdraw from my CPF accounts? No, CPF savings withdrawn are not taxable. However, if you have unpaid taxes or MediShield Life premiums, we may recover the unpaid amount from the CPF savings you are withdrawing.
What is the tax relief for CPF in Singapore? ›You can enjoy tax relief if you are a Singapore Citizen or Permanent Resident and make cash top-ups for yourself, your loved ones* or employees, subject to a cap of top-ups up to the current Full Retirement Sum. You are eligible for tax relief of up to $8,000 if you top up in cash to your own retirement savings.
Is CPF guaranteed? ›Your CPF savings are invested in Special Singapore Government Securities (SSGS) which are guaranteed by the Government. SSGS are non-tradable bonds issued specifically to the CPF Board for the investment of CPF savings. This ensures that CPF savings are safe, regardless of financial market conditions.
How long does CPF life last? ›Payouts may also be adjusted to account for long-term changes in interest rates or life expectancy. Such adjustments (if any) are expected to be small and gradual. With RSS, your monthly payouts will stop when your RA savings are depleted or until age 90, whichever is earlier. CPF LIFE offers monthly payouts for life.
How can I get CPF in USA? ›- Complete the online form on the Federal Revenue website, available at the following links: ...
- After clicking on "send", a registration form (FCPF) will be generated that contains a service code.
- Sign the form.
The CPF is a mandatory retirement system unlike the 401(k) plan in the U.S., where employees can elect to opt-out of a company's 401(k) plan if they choose.
Is CPF the same as pension? ›The Central Provident Fund (CPF) is the statutory authority that administers Singapore's public pension system. Established in 1955 by the British colonial administration, the CPF was intended to provide retirement income security for private-sector employees.
How much is pension in Singapore? ›Lifelong pension payouts ranging from S$350 to S$2,300 per month are also available to eligible citizens after they turn 65. But after accounting for inflation over the next decade, the maximum payout from the government is likely to be less than S$2,000 per month, Lee said.
How does Singapore CPF work? ›How much you contribute depends on age. Depending on your age, CPF contribution rates can range from 12.5% to 37% of your monthly wages. Besides employment contributions, CPF accounts will also be opened when the CPF Board receives cash top-ups or government grants.
What happens to PR CPF? ›
Your CPF account will be closed and your CPF savings will be transferred to your bank account if you are no longer a Singapore Citizen or Permanent Resident, as the CPF system is intended to help Singapore Citizens and Permanent Residents retire with peace of mind in Singapore.
When can PR take out CPF? ›You can withdraw anytime from 55. The amount you can withdraw depends on your birth year and the age you are making the withdrawal.
Can I withdraw my CPF if I give up my PR? ›Renunciation of Singapore Citizenship or Permanent Residency before 1 March 2024. As soon as you are no longer a SC or PR, you may close your CPF account and transfer your CPF savings to your bank account at any time. If not, your CPF account will be automatically closed on 1 April 2024.
Is CPF necessary in Singapore? ›The CPF is a mandatory social security savings scheme funded by contributions from employers and employees. The CPF is a key pillar of Singapore's social security system, and serves to meet our retirement, housing and healthcare needs.
Can I nominate my CPF to a foreigner? ›Who can I include as my nominee? You can nominate any person (regardless of age or nationality) or organisation.
What happens to my CPF after 65? ›You can apply to start receiving monthly payouts at any time after age 65. Payouts will start automatically at 70 if you have not chosen to start earlier.
Can I withdraw my CPF after 65? ›You can choose to start your monthly payouts anytime from 65 to 70. If you do not submit any instructions on your payouts, your monthly payouts will automatically start when you turn 70 (i.e. the latest payout start age). In addition, you may have some CPF savings which you can withdraw for your immediate needs.
What happens if you give up Singapore PR? ›Once your declaration of renunciation is registered, you cease to be a citizen of Singapore and there is no assurance for a grant when you apply Singapore citizen again. If you have further questions, you may contact a PR Application Agency or ICA.
What happens to my CPF at age 55? ›When you turn 55, we will transfer your CPF savings, up to your Full Retirement Sum (FRS), to create your Retirement Account (RA). The savings in your RA is meant to provide you with payouts in retirement. Your Special Account (SA) savings will be transferred first, followed by your Ordinary Account (OA) savings.
How much is the full retirement sum? ›Full Retirement Sum (FRS)
With an FRS of $198,800 in 2023, an individual turning 55 this year would be eligible for CPF LIFE payouts of approximately $1,600 every month when they turn 65 in 10 years' time.
How much is CPF monthly payout? ›
1 Assumes male member under CPF LIFE Standard Plan, starting payouts at age 65. With these increases, the BRS payouts for male members turning age 55 in 2027 on the CPF LIFE Standard Plan will be close to $1,000 per month when they turn 65, up from about $850 per month for male members turning age 55 in 2022.
How long can a PR stay outside Singapore? ›A PR status does not expire or have any time limit to it. However, if a Singapore PR chooses to leave the country without a valid REP, ICA will revoke his PR status. Your status will be a foreign visitor the next time you come to Singapore.
What is the maximum CPF withdrawal? ›Generally, members can withdraw at least $5,000 or any amount in excess after setting aside their Full Retirement Sum from 55. From 65, members born in 1958 and after can withdraw an additional amount of up to 20% of their retirement savings at 65. See more details on the withdrawal rules.
How much must I have in CPF to withdraw? ›CPF Withdrawal
You can withdraw at least 20% of your retirement savings, either from 55 or 65 depending on your birth year. This includes the first $5,000 withdrawable at any time after 55. Please refer to this link to learn more about the percentage and withdrawal age.