When it comes to crucial aspects related to wages, there would be rumors, speculations and myths and you know what, many people suffer because of these clouds of doubts. Many of the employers in Singapore are relying on rumors, which also cause them to suffer and pay penalties. We conducted a survey and found that more than 33% of SMEs are still not sure if their CPF contribution system is an ideal process or not.
If you are also into HR or one of the employers, it becomes even more crucial to stay updated on the CPF policies to ensure complete compliance. Trends like using EOR services are quite on rise, it’s because employers can avoid complexities and also the CPF deductions, but there is more to it and that we will discuss below.
Also Read: A Step-by-Step Guide to singapore cpf contribution 2025
In this post I will discuss 10 super common myths about Singapore’s CPF contributions, and will try debunking them all.
Table of Contents
10 Common Myths About Singapore CPF Contributions
Below I have debunked some 10 top ranking Myths regarding the CPF contributions;
| Myth | True / False | Reality |
| 1. CPF contributions are only for Singaporean citizens. | FALSE | CPF contributions are also required for Permanent Residents working in Singapore. |
| 2. CPF contributions are only for employees working in Singapore. | TRUE | CPF contributions are required on wages payable to any Singapore Citizen or Permanent Resident employee working in Singapore, even if the contract is signed overseas. |
| 3. I can avoid CPF contributions by hiring foreign workers. | TRUE | CPF contributions are only mandatory for Singaporean citizens and permanent residents. Foreign workers on work passes are not required to contribute to the CPF. |
| 4. CPF contributions are a huge financial burden. | TRUE | CPF contributions can be a significant cost, but it’s a mandatory contribution required by law. |
| 5. I can choose not to contribute to CPF for my employees. | FALSE | Employers are legally obligated to contribute to the CPF for their eligible employees. |
| 6. CPF contributions are the same for all employees. | FALSE | CPF contribution rates vary based on the employee’s age and salary. |
| 7. I can deduct CPF contributions from my employee’s salary. | FALSE | Employers are responsible for paying their share of the CPF contributions, and they are not deducted from the employee’s salary. |
| 8. CPF contributions are only for retirement. | FALSE | CPF contributions are also used for healthcare (MediSave) and housing (Ordinary Account). |
| 9. CPF contributions are a complex process. | TRUE | While the CPF system can seem complex, there are resources available to help employers navigate the process, including the CPF Board’s website and calculators. |
| 10. There’s no penalty for late CPF contributions. | FALSE | There are penalties for late CPF contributions, including interest charges and potential legal action. |
CPF Contributions Rate 2025
CPF contribution rates are updated at the beginning of every year, below mentioned are the current ones;
| Age of employee | CPF Contribution by Employer | CPF Contribution by Employee | Total CPF Contribution Rate |
| 55 and below | 17% | 20% | 37% |
| Above 55 to 60 | 15.50% | 17% | 32.50% |
| Above 60 to 65 | 12% | 11.50% | 23.50% |
| Above 65 to 70 | 9% | 7.50% | 16.50% |
| Above 70 | 7.50% | 5% | 12.50% |
Also Read: The Future of Outsourced HR: Trends and Predictions
Important CPF Changes In 2025
I have mentioned below some of the key changes in CPF rules and regularities in 2025;
1. Special Account (SA) Closure for those 55 and Above
2. Higher Enhanced Retirement Sum (ERS)
3. CPF Contributions From Platform Workers
4. Increased CPF Monthly Salary Ceiling
5. Higher Contribution Rates for Senior Workers
6. Workfare Income Supplement (WIS) Scheme Changes
7. Enhanced Matched Retirement Savings Scheme (MRSS)
8. Increased Silver Support Scheme Payments
Streamline Your CPF Submissions with SME
SME payroll software is AI powered and equipped with advanced ML algorithms. This helps in simplifying even the complex payroll periods, regardless of how large is your team, the process runs smoothly. SME payroll software solutions offers;
- Built-in CPF Calculator: No human intervention avoiding errors with automated & accurate calculations for CPF contributions to be always compliant with the latest CPF rates.
- Direct Bank GIRO and CPF Submission Features: Simple features to optimize the process as per your needs to timely submit CPF directly
Conclusion
CPF is a mandatory savings scheme and definitely not only a retirement fund, it’s for housing, healthcare, and retirement also. A working professional can withdraw a portion of their savings at 55, but aren’t allowed to withdraw all savings. Make sure that you as an employer download the transparent and comprehensive information to your employees and enable them to understand and further they can use their CPF contributions for their advantages.
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