Singapore:
Central Provident Fund
With effect from 1 January 1999, the employer’s CPF contribution rate has been cut to 10% from the previous rate of 20%. For employees above age 55 (for whom employers pay lower contribution rates) the cut will be pro-rated. The CPF contributory monthly salary ceiling remains at S$6,000 and the employee contribution rate stays at 20%.
While the bitter pill of a CPF cut is recognised as being essential to boosting Singapore’s competitiveness by slashing the business cost of employers, Watson Wyatt’s latest Quarterly Update survey among local companies found that 10% of respondents are planning to compensate their employees through a variety of mechanisms, including supplementing monthly pay and increasing bonus pools.
A few companies have retirement schemes (mostly defined benefit) which are integrated with CPF and consequently they will have an increased retirement cost which reflects the lower CPF cost.
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