With the start of the New Year, many changes are brought about in 2016. As always, many employees and employers come to us asking if their CPF contributions will be affected in any way, especially when it comes to their income/payments.
One’s income/payment contributions can be affected by many variables. In this post, we’ll address how the Central Provident Fund (CPF), a term every Singaporean is familiar with – plays a crucial part.
CPF contribution changes for 2016 reflect a push towards a more sustainable future for all Singaporeans. Our government expects the increase in contribution to be necessary for adequate retirement planning.
In brief, 3 groups of people need to take note of the 2016 updates:
- Employers who contribute CPF
- Employees aged above 50 years
- Employees who earn at least $6000 per month
CPF Contribution Rates for 2016 – Infographic
For easier reading, here’s an infographic (click on image to enlarge) created by yours truly. Feel free to share it with those around you.
Increase in CPF contribution rates for older workers
This applies to employees aged above 50 years, who earn at least $750 in wages.
The difference in contributions is split according to age tiers, and by who contributes the CPF.
Workers between 50 – 55 years old will get an additional 2% increase, in which both Employer and Employee contribute 1% respectively.
Workers between 55 – 60 years old will get an additional 1% increase, solely contributed by the Employer.
Workers between 60 – 65 years old will get an additional 0.5%, solely contributed by the Employer.
Increase in Ordinary Wage (OW) and Additional Wage (AW) Ceilings
This applies to all Private Sector and Public Sector (Non-Pensionable) employees.
The OW ceiling will be increased from $5,000 to $6,000 per month. This means that you will now need to contribute CPF out of $6,000 instead of the previously capped figure of $5,000.
For Public Sector (Pensionable) employees, the OW ceiling will be increased from $6,666.67 to $8,000 per month.
With the increase in Ordinary Wage (OW) ceiling, the Additional Wage (AW) ceiling will also increase.
AW Ceiling = $102,000* – Total OW
*Equivalent to 17 months of the OW ceiling of $6,000
Lastly, the CPF Annual Limit will also increase from $31,450 to $37,740 for this year.
Calculate your CPF contribution rates
Now that you’re familiar with the new numbers, we urge you to double check your contributions on Talenox’s free online CPF Calculator – it’s so friendly you’ll naturally just bookmark it!
To celebrate the New Year, we’re introducing a cool new feature – you can now save multiple CPF calculation results (.xls) and have them emailed to you instantly! Yes, the folks at Talenox are really friendly.
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