Skip to Content
0
Former Member
Sep 22, 2010 at 04:42 AM

PAT-CPF Contribution Rate Change Updates - EE & ER contribution base error.

154 Views

Hi Experts

CPF is the social contribution of Singapore. There are some computation issue with the current setup.

For background information :

We have 2 categories of CPF-related wage in Singapore u2013 u201COrdinary wageu201D and u201CAdditional Wageu201D.

u201COrdinary Wageu201D are for common wage types such as Basic Salary, OT Paymentu2026..

u201CAdditional Wageu201D are for bonus wage types

Both categories are cumulated to compute Employee and Employer CPF contribution.

For CPF contribution computation, it is always based on current month gross salary inclusive of retroactive months. It will not be breakdown into individual months for retroactive period.

Eg.

RETRO : $1000

CURRENT : $5000

TOTAL MTH GROSS (inclusive of retro) : $6000.

The $6000 should be taken as the base for this month CPF contribution as u201COrdinary wageu201D.

PROBLEMS - the issues can be break into 3 parts.

1) Wage Types that are defined as u201COrdinary Wagesu201D for retroactive period are not cumulated to the correct CPF contribution base.

Retro amount of eg. basic Salary is added to u201CAdditional wageu201D CPF contribution base, which is not correct. It should be cumulated to u201COrdinary Wageu201D based.

2) Adjustment due to retroactive period are not cap at limit correctly.

For any employees earning >$4500, EE & ER CPF contribution base are cap at $4500. However, for employees who have retroactive computed, the cap used is not correct.

CORRECT -

RETRO : $1000

CURRENT : $6000

Cap based limit at $4500

NOW (INCORRECT) -

RETRO : $1000

CURRENT : $6000

Cap based limit at ($4500 - $1000) = $3500.

3) Adjustment due to change of citizenship status (IT0186) base limit are not taken correctly.

Foreign Workers do not need to pay EE & ER CPF contribution

Permanent Residents & Citizens need to pay EE & ER CPF contribution

In the event, employee converted from u201CForeign Workeru201D to u201CPermanent Residentu201D, EE CPF contribution should be prorated according.

Eg. 1st-14th of the month : Foreign Worker, 15th-30th of the month : converted to u201CPermanent Residentu201D

CORRECT -

CURRENT : $10000

Cap based limit at $4500

NOW (INCORRECT) -

CURRENT : $10000

Cap based limit at ($4500/30 days) * 15 days = $2250.