Saving as an employee

Under the CPF Act, an employee is defined as:

• A person who is employed in Singapore under a Contract of Service (COS); or
• A Singapore Citizen who is employed under a contract of service or other agreement entered into in Singapore as a master, seaman, or apprentice in any vessel.

If you’re a Singapore Citizen or Permanent Resident employee earning total wages of more than $50 per month, your employer must contribute CPF for you. 

An employee can be employed on full-time, part-time, temporary, contract, or casual basis.

Some employees are exempted from CPF contributions. They include students who fulfil exemption criteria, foreigners, domestic employees, employees of the United Nations, and seamen who fulfil exemption criteria.

You’re not an employee if you’re engaged under a contract for service (CFS), work for yourself, and are in the position to realise a business profit or loss. As a self-employed person, you’re required to make mandatory MediSave contributions under the Self-Employed Scheme.

Wages attract CPF contributions. Some examples of wages include: 

• Basic wage
• Overtime pay
• Cash incentive
• Allowance
• Bonus
• Commission

Some payments are not wages. Examples include termination benefit, reimbursement, and benefit in kind. 

Wages can be classified as Ordinary Wages (OW) or Additional Wages (AW).

Want to find out the difference between OW and AW?

The OW and AW ceilings limit the amount of wages that would attract CPF contributions. The OW ceiling is capped per month, while the AW ceiling is calculated on a per annum basis.

Need to calculate your AW ceiling?

Your employer is required to make CPF contributions at the rate applicable to you. The CPF contribution rate depends on whether you’re a Singapore Citizen or Permanent Resident, your age, and your total wages.

Need to calculate your CPF contributions?

Your employer is required to pay the total CPF contributions (comprising employer and employee’s shares) for you each month. Your employer is entitled to recover the employee’s share of CPF contributions when paying your wages for the month.

However, if you earn above $50 but not more than $500 per month, there’s no employee’s share of CPF contributions. Your employer is still required to pay the employer's share of CPF contributions for you.

Your CPF contributions are allocated to three CPF accounts: Ordinary Account (OA), Special Account (SA) or Retirement Account (RA) and MediSave Account (MA).

When you’re younger, more of your CPF contributions are allocated to your OA to support your home purchase. As you grow older, more CPF contributions are allocated to your SA or RA and MA to meet growing retirement and healthcare needs.

Upon the closure of the SA for CPF members aged 55 and above, the CPF contributions allocated to SA will be fully allocated to the member’s RA, up to the Full Retirement Sum (FRS). For members who have set aside the FRS in the RA, these contributions will be allocated to the OA.

Want to know how your CPF contributions are allocated to the three accounts?