H1: Guide to CPF: What New Permanent Residents in Singapore Need to Know

H2: Understanding CPF Contributions for New PRs

Navigating the Central Provident Fund (CPF) system is an essential part of being a permanent resident (PR) in Singapore. Alongside immersing in the vibrant hawker culture and embracing Singlish, PRs must familiarize themselves with CPF, the national retirement savings scheme. This article will guide new PRs on how CPF contributions work, including the initial contribution rates, employer contributions, and withdrawal options.

H2: Paying CPF as a New PR

Upon receiving approval for PR status, new PRs must start contributing to CPF. The Form 5/5A, which confirms PR status, indicates when CPF contributions will begin. This date also corresponds to the start of employment for PRs. Consequently, a portion of their monthly salary will be automatically deducted and directed to their CPF accounts.

H3: Adjusting to CPF Contributions

Adapting to the immediate deduction of up to 20% of one’s take-home pay can be challenging for new PRs. To ease this transition, the CPF board provides a two-year period during which employees contribute at lower rates. This buffer allows new PRs to gradually adjust to the CPF scheme.

Employers of new PRs are also entitled to lower CPF contribution rates during the first two years. This means that new PRs will receive a higher total salary when considering employer contributions on top of their base salary. The full CPF contribution amount will only be required from the third year onward.

H3: Contribution Rates for New PRs

The CPF contribution rates for new PRs during the first two years vary based on the combination of employer and employee contributions. The default contribution rate is known as the graduated rate and applies to both employers and employees, except for non-pensionable employees working for a Ministry.

If both the employer and employee wish to contribute higher rates, they must jointly apply for the increase. The higher contribution rate can either be full employer-graduated employee or full employer-full employee. Additionally, individuals can make voluntary contributions or utilize the Retirement Saving Topping Up Scheme to contribute higher rates independently.

H3: CPF Contribution Rates for New PRs Below 55 Years Old

For new PR employees below 55 years old and earning a salary of $750 and above, the contribution rates for the first two years are as follows:

– Graduated Employer & Graduated Employee (G/G):
– Employee’s share of CPF contributions: 5% of Ordinary Wage (Capped at $300) + 5% Additional Wage
– Employer’s share of CPF contributions: 4% of Ordinary Wage (Capped at $240) + 4% Additional Wage
– Total CPF contributions (Employer’s & Employee’s share): 9% of Ordinary Wage (Capped at $540) + 9% Additional Wage

– Full Employer & Graduated Employee (F/G):
– Employee’s share of CPF contributions: 5% of Ordinary Wage (Capped at $300) + 5% Additional Wage
– Employer’s share of CPF contributions: 17% of Ordinary Wage (Capped at $1,020) + 17% Additional Wage
– Total CPF contributions (Employer’s & Employee’s share): 22% of Ordinary Wage (Capped at $1,320) + 22% Additional Wage

– Full Employer & Full Employee (F/F):
– Employee’s share of CPF contributions: 20% of Ordinary Wage (Capped at $1,200) + 20% Additional Wage
– Employer’s share of CPF contributions: 17% of Ordinary Wage (Capped at $1,020) + 17% Additional Wage
– Total CPF contributions (Employer’s & Employee’s share): 37% of Ordinary Wage (Capped at $2,220) + 37% Additional Wage

H3: CPF Contributions for Singaporean Citizens

The full employer-full employee contribution rates for new PRs are the same mandatory CPF contribution rates for Singaporean citizens. This transition occurs after the third year of PR status. If an employee previously applied for full employer-full employee CPF contribution rates with a prior employer but moves to a new employer that does not offer it, CPF contributions will revert to the current graduated rates. In such cases, new PRs must re-apply with their current employer for higher rates.

H2: Withdrawing CPF as a Departing PR

In the event that a PR decides to leave Singapore permanently and renounce their PR status, they may apply to withdraw their CPF savings. The withdrawal process can be completed online via Singpass or in-person at CPF Service Centres. Overseas individuals without Singpass can submit the necessary forms to a Singapore Overseas Mission.

When withdrawing CPF savings, the funds can be transferred to a local Singapore bank account via interbank Giro or to an overseas bank account through telegraphic transfer (TT). Any outstanding tax liabilities will be deducted from the CPF savings. If the individual has CPF Investment Scheme (CPFIS), Central Depository (Pte) Ltd (CDP) charges a fee for transferring share counters. After the transfer, the individual can liquidate their shares to access the invested funds.

For PRs covered by CPF LIFE, they have the option to withdraw unused premiums or continue with the scheme, receiving monthly payouts through their Singapore bank account at the eligible age. The benefits under the CPF LIFE scheme remain unchanged whether an individual is a PR or chooses to renounce it.

It is important to note that if a PR decides to re-obtain PR or citizenship in the future, a full refund of the amount withdrawn, including accrued interest rates, must be made to CPF.

H2: Summary

Becoming a new PR in Singapore entails contributing to CPF, the national retirement savings scheme. New PRs have a two-year adjustment period during which lower contribution rates apply for both employees and employers. The specific contribution rates depend on the combination of employer and employee contributions. After the initial two years, full CPF contributions will be required. In the event of permanently leaving Singapore, PRs can apply to withdraw their CPF savings, with various options for transferring the funds.


Benjamin Low
Benjamin Low

Benjamin is known as The Passive Income Guy. He has helped hundreds of people to build passive income. He is also a member of the Million Dollar Round Table, and Certified Financial Planner™ (CFP®) and Certified Private Banker (CPB).

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