Understanding Administering Central Provident Fund Contributions

PeopleSoft supports the administrative and reporting requirements of Central Provident Fund (CPF) administration and maintenance and provides:

  • Support for employee and employer payments to a nominated CPF or other fund or levy (including such funds as MBMF, CDAC, and ECF) in accordance with the calculation of eligibility rules for CPF legislation.

  • The calculation of monthly CPF contributions on ordinary and additional wages according to CPF rate schedules for government and non-government employees.

  • The calculation of other contributions collected by the CPF Board according to the required rate schedules.

  • The identification and management of unique company and employee identifiers.

  • Recalculation and adjustment of CPF contributions at year end using actual wages for the year.

  • Additional CPF contributions to be taken from the final pay.

  • A process that creates a file containing all CPF contributions for a month for submission to the CPF Board via the CPF PAL Internet facility and CPF/IRAS Line.

  • Reports to support administrative reporting in accordance with CPF requirements.

    Monthly CPF Schedule reports provide listings of all CPF contributions and other deductions that can be submitted to the CPF Board each week.

Field or Control

Description

CPF

The Central Provident Fund (CPF) is a compulsory savings scheme for employees. It was constituted in 1955 with the objective of providing financial security for workers in their retirement. Over the years, schemes have been introduced to allow CPF savings to be used for home ownership, life insurance, medical insurance, hospitalization expenses, approved investments and education at local approved institutions. The Central Provident Fund is administered by the CPF Board and contributions to the fund are made by both employers and employees based on a percentage of the employee's wages. If a work permit holder on the FWL Scheme is granted Singapore Permanent Resident (SPR) 0 status, he will be placed on the CPF scheme. This will take effect from the day he is granted SPR status.

FWL

The Foreign Worker Levy (FWL). The government uses a combination of quota restrictions and the imposition of a foreign worker levy as methods to control the foreign worker population. A levy is imposed on every employer in respect of each employee who is a non-resident work permit holder. The levy is not imposed on foreign workers who are permanent residents— they come under the CPF scheme instead. There is no employee contribution to FWL. The FWL and CPF schemes are mutually exclusive. An employer who pays the levy for foreign workers is not required to make CPF contributions for those workers. A work permit holder who is subsequently granted permanent resident status will come under the CPF scheme instead. However, the employer is required to pay the Skills Development Levy (SDL) for the workers at the prevailing rate and wage ceiling.

MBMF

The Mosque Building and Mendaki Fund. MBMF contributions are collected by the Central Provident Fund Board on behalf of Majlis Ugama Islam Singapura (MUIS) at the same time that contributions are collected for the Central Provident Fund. Contributions are mandatory for Muslim employees and the contribution rates depend on their monthly wages.

SINDA

The Singapore Indian Development Association (SINDA). From April 1, 1992, employees belonging to the Indian community can make monthly contributions to their self-help body, SINDA, through salary deductions. The Central Provident Fund will collect the tax-deductible monthly contribution on behalf of SINDA. Indians who are not CPF members can make contributions through GIRO (electronic payments system), in cash or by cheque. Contributions are mandatory for all working Indians at a prescribed minimum amount according to their wages.

CDAC

The Chinese Development Assistance Council (CDAC). A scheme was put into operation on September 1, 1992 by the Chinese Development Assistance Council (CDAC) for employees to contribute towards an endowment fund. Similar to the schemes for SINDA and MBMF, contributions are collected by the CPF Board on behalf of CDAC. Contributions are made by working Chinese adults and the amount contributed depends on their monthly wages. The default is that contributions are taken and the employee elects not to contribute if they so desire.

ECF

The Eurasian Community Fund (ECF). Contributions to a community fund for the Eurasian Association commenced on April 1, 1995. Contributions are collected by the CPF Board. Employees can choose to contribute to the fund — contributions vary based on the monthly income of the employee.

SHARE

The Social Help and Assistance Raised by Employees (SHARE). An employee can voluntarily arrange for a monthly donation to SHARE to be deducted from their wages. The SHARE Programme is a campaign of the Community Chest of Singapore and is used to raise money which is given entirely to fund voluntary welfare organizations to provide services to various charities. The employer will forward the donations to the Central Provident Fund Board which collects the donations on behalf of the Community Chest. Donations should be sent at the same time as Central Provident Fund contributions.

SDL

The Skills Development Levy (SDL). The Skills Development Fund aims to promote, develop and upgrade skills and expertise of employees, and to retrain retrenched persons. The Skills Development levy is collected by the Central Provident Fund Board on behalf of the Singapore Productivity and Standards Board. Employers should make payment of the levy at the same time as they pay contributions to the Central Provident Fund. The Skills Development levy is payable by employers based on the number of employees and their respective remuneration. The Skills Development levy collected is channeled into the Skills Development Fund, which provides for training.

Ordinary Wages

Ordinary Wages are wages due or granted wholly and exclusively in respect of an employee's employment in that month and payable before the due date for payment of CPF contributions for that month. This includes allowances (such as food allowance or overtime payment).

Additional Wages

Additional Wages are wages which are not granted wholly and exclusively for the month. Examples are the annual bonus, leave pay, incentive and other payments made at intervals of more than a month. Employees and their employers must make CPF contributions based on additional wages earned by the employee. Such contributions are subject to certain capping rules. Annual wage supplement, annual bonuses and other such payments that are paid at intervals of more than a month are regarded as additional wages for the month in which they are paid and no attempt should be made to apportion such payments retrospectively over a prior period.

NPVP

Non-Pensionable Variable Payment, which is payable monthly.

NPC

Non-Pensionable Component of the revised salary.