Singapore CPF Contribution Guide 2025

As a startup founder or SME owner in Singapore, you've got enough on your plate. Product-market fit, fundraising, hiring—the list never ends. Then comes CPF, and suddenly you're drowning in percentages, contribution caps, and submission deadlines.

I get it. When I first started building our HRM platform, CPF compliance kept me up at night. Not because it was particularly difficult, but because the consequences of getting it wrong seemed so severe.

This guide breaks down everything you need to know about CPF in 2025 without the jargon and complexity. I've been in your shoes, and I'm going to help you navigate this maze.

What is CPF and Why Should You Care?

The Central Provident Fund (CPF) is Singapore's mandatory social security system. Think of it as a forced savings plan for retirement, healthcare, and housing. Both employers and employees contribute a percentage of the employee's salary to their CPF account.

As an employer, you're legally obligated to make these contributions. Missing deadlines or making incorrect calculations can result in:

• Late payment penalties
• Composition fines up to $5,000
• Potential criminal charges for repeated non-compliance
• Disqualification from hiring foreign workers

Beyond legal requirements, proper CPF management is crucial for:

• Building trust with your employees
• Maintaining financial discipline
• Avoiding unexpected cash flow disruptions

Who Contributes to CPF?

Not everyone on your payroll requires CPF contributions. Here's who does:

• Singapore Citizens and 3rd year+ Permanent Residents: Full contribution rates apply
• 1st and 2nd year Permanent Residents: Graduated contribution rates apply
• Employees aged 55 to 70+: Reduced contribution rates apply
• Foreign employees: No CPF required

CPF Contribution Rates in 2025

CPF contribution rates vary based on:

1. Citizenship status
2. Age of employee
3. Wage amount

Contribution Rates for Singapore Citizens and 3rd+ Year PRs

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Note: These rates apply to monthly wages greater than $750. Different rates apply for wages $750 and below. CPF rates may vary based on year.

Special Cases: Low Wage Employees

If your employee earns less than $750 per month, special contribution rates apply:

TW = Total Wages

1st Year PR Rates (Graduated G/G)

For first-year Permanent Residents, contribution rates are significantly lower to ease their transition:

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2nd Year PR Rates (Graduated G/G)

Second-year PRs contribute at higher rates:

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PRs can opt for full employer-employee contribution rates if both parties agree.

Understanding the CPF Contribution Cap

One crucial aspect that catches many startups off guard is the CPF contribution cap. There are two important thresholds to know:

1. Ordinary Wage Ceiling: $7,400 per month in 2025 (up from $7,000 in 2024)
2. Additional Wage Ceiling: $102,000 - (Total Ordinary Wages subject to CPF for the year)

This means you only contribute CPF on the first $7,400 of an employee's monthly salary, and additional wages (bonuses, commissions) are only subject to CPF up to the remaining cap.

Example:

• Employee earns $9,000 monthly (ordinary wages)
• Annual bonus of $25,000 (additional wages)
• CPF contribution is calculated only on $7,400 of monthly salary
• For the bonus: Annual OW subject to CPF = $7,400 × 12 = $88,800
• Additional wage ceiling = $102,000 - $88,800 = $13,200
• CPF is only calculated on $13,200 of the $25,000 bonus

Source: CPF Board

Maximum CPF Contributions

For employees earning at or above the wage ceiling, the maximum CPF contributions are:

CPF Allocation Breakdown

When you contribute to an employee's CPF, the funds are distributed across three accounts:

Note: Allocation percentages shift as employees age, with more going toward healthcare for older employees.

Calculating CPF: Crucial Rounding Rules

The CPF Board has specific rounding rules that you must follow:

1. Total CPF contribution: Round to the nearest dollar
   • Less than 50 cents: Round down
   • 50 cents and above: Round up
2. Employee's share: Always round down to the nearest dollar
3. Employer's share = Total contribution - Employee's share

These rounding rules might seem trivial, but applying them incorrectly can result in compliance issues.

Source: CPF Board

Step-by-Step CPF Calculation Examples

Let's walk through some practical examples to demystify the CPF calculation process for different scenarios.

Example 1: Standard Full-Time Employee (Singapore Citizen, 35 years old)

• Monthly salary: $5,000
• Annual bonus (paid in December): $10,000

Monthly CPF calculation:

• Ordinary wages: $5,000 (below wage ceiling of $7,400)
• Employer contribution: 17% × $5,000 = $850
• Employee contribution: 20% × $5,000 = $1,000
• Total CPF contribution: $1,850

December (bonus month) calculation:

• Ordinary wages: $5,000
• Additional wages: $10,000
• Additional wage ceiling check:
  • Annual OW subject to CPF: $5,000 × 12 = $60,000
  • AW ceiling: $102,000 - $60,000 = $42,000
  • Since $10,000 < $42,000, entire bonus is subject to CPF
• Employer contribution: 17% × ($5,000 + $10,000) = $2,550
• Employee contribution: 20% × ($5,000 + $10,000) = $3,000
• Total CPF contribution: $5,550

Example 2: High-Earning Executive (Singapore Citizen, 42 years old)

• Monthly salary: $12,000
• Annual bonus (paid in March): $50,000

Monthly CPF calculation:

• Ordinary wages subject to CPF: $7,400 (capped at wage ceiling)
• Employer contribution: 17% × $7,400 = $1,258
• Employee contribution: 20% × $7,400 = $1,480
• Total CPF contribution: $2,738

March (bonus month) calculation:

• Ordinary wages subject to CPF: $7,400
• Additional wages check:
  • Annual OW subject to CPF: $7,400 × 12 = $88,800
  • AW ceiling: $102,000 - $88,800 = $13,200
  • Only $13,200 of the $50,000 bonus is subject to CPF
• Employer contribution: 17% × ($7,400 + $13,200) = $3,502
• Employee contribution: 20% × ($7,400 + $13,200) = $4,120
• Total CPF contribution: $7,622

Example 3: Part-Time Employee (Singapore Citizen, 29 years old)

• Monthly wage: $650 (part-time)

Since the wage is between $500 and $750:

• Employer contribution: 17% × $650 + 0.6 × ($650 - $500) = $110.50 + $90 = $200.50 → $201 (rounded)
• Employee contribution: 0.6 × ($650 - $500) = $90 → $90 (rounded down)
• Total CPF contribution: $291

Example 4: Older Employee (Singapore Citizen, 62 years old)

• Monthly salary: $4,000

Monthly CPF calculation:

• Ordinary wages: $4,000 (below wage ceiling)
• Employer contribution: 11% × $4,000 = $440
• Employee contribution: 11.5% × $4,000 = $460
• Total CPF contribution: $900

Source: Examples based on CPF Board calculation methodology

Setting Up Your CPF Submission Process: A Startup-Friendly Guide

As a startup, establishing an efficient CPF process early saves headaches later. Here's how to set it up:

1. Register with CPF Board

Before making your first hire, register your business with the CPF Board:

• Submit your ACRA Business Profile
• Provide your company's UEN
• Get your CPF Submission Number (CSN)

2. Choose Your Submission Method

The CPF Board offers multiple submission channels. The main one is CPF EZPay: Good for small teams with simple payroll

3. Set Up a Standardized Calculation Process

Create a CPF calculation template or use HRM software that:

• Automatically applies the correct contribution rates based on age/citizenship
• Calculates both ordinary and additional wage contributions
• Handles wage ceilings and rounding rules properly

4. Establish a Monthly Timeline

A typical monthly CPF workflow:

Day 1-2 after month-end:

• Finalize payroll calculations
• Review and verify CPF contributions

Day 3-5:

• Prepare CPF submission file/data
• Get approval from finance lead/CFO

By Day 7:

• Submit CPF contributions
• Store confirmation receipt

By Day 14:

• Reconcile CPF payment with bank records
• Document any discrepancies

5. Document Your Process

Create a simple CPF SOP document that:

• Lists step-by-step instructions
• Includes screenshots of submission screens
• Specifies who's responsible for each step
• Notes common errors to watch for

This ensures business continuity even when your HR or finance person changes.

Practical Tips for Cash Flow Management

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CPF contributions can significantly impact a startup's cash flow. Here's how to manage it effectively:

1. Budget for the True Employment Cost

When planning headcount, always budget for the full employment cost:

• Gross salary + Employer CPF contribution
• For a $5,000 salary, budget ~$5,850 including employer CPF

2. Time Your Additional Wage Payments Strategically

If possible, spread bonuses and commissions throughout the year rather than paying them all in December. This helps:

• Smooth out cash flow impact
• Allow employees to maximize their Additional Wage Ceiling

3. Consider CPF When Structuring Compensation

For expatriates who become PRs, discuss the shift in take-home pay due to CPF deductions. Some companies offer a "CPF adjustment" to maintain the same net salary.

4. Build a CPF Reserve

Set aside employer CPF contributions as you process payroll, not when the payment is due. This prevents cash crunches at month-end.

5. Leverage Tools and Automation

Several tools can help simplify CPF management:

• Payroll Software: Many Singapore payroll systems automatically calculate CPF
• CPF Calculator: The CPF Board provides an online calculator for verification
• Accounting Software: Look for solutions with Singapore-specific tax and CPF features

Kelick provides the ideal foundation for Singapore startups with its intuitive interface, free-forever plan for your first 10 employees, and Singapore-specific compliance features. Our platform grows alongside your business, with seamless integrations to specialized tools as your needs evolve. Start building your scalable HR tech stack today and position your startup for sustainable growth without the overhead of an expanding HR department.

Source: Insights based on CPF Board guidelines and practical implementation experience

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