State and Mandatory Benefits

The mandatory Central Provident Fund (CPF) provides a lump sum benefit on death, incapacity, emigration, or at age 55, plus a range of other benefits including house purchase and private medical care. On retirement, a minimum amount of SGD 99,600 (2008) must be used to provide an income (increasing to SGD 120,000 by 2013). The state also provides medical care for residents.

Typical New Private Plan

Employers can make additional voluntary contributions to the CPF or to an approved savings plan. Employers and employees can also make additional voluntary contributions to a Supplementary Retirement Scheme (SRS), up to a maximum of 11,476 SGD a year. Employers typically provide lump sum death benefits of two to three times earnings, personal accident benefits, disability pensions and private medical insurance. Different levels of benefit may be provided for different categories of employees.

Typical Costs

Contributions to the Central Provident Fund are age related, up to a ceiling of SGD5,000 a month. Employers contribute 14.5% of monthly earnings up to age 50 and employees contribute 20%. After age 50 contributions progressively reduce to 3.5% and 5% respectively from age 65.

Tax Implications

Mandatory contributions to the CPF and the SRS are tax deductible and investment returns are mainly tax free. Employees are not taxed on employer contributions. Voluntary contributions to the CPF are not tax deductible. Benefits from the CPF are tax free. 50% of benefits from the SRS are taxable.

Labour Law Issues

There are no provisions for company pension plans.