State and   Mandatory Benefits

The mandatory Central Provident Fund (CPF) is a social security scheme funded by contributions from both employer and   employees. It’s a 3-in-1 system which helps Singaporeans set aside savings   for housing, healthcare and retirement. On retirement, a minimum of SGD60,000   in the member’s Retirement Account at 65 and the member will be placed on CPF life. 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 SGD15,300 a year for Singapore Citizens and Permanent resident. 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 SGD6,000 a month. Employers contribute 17% of monthly earnings up to age 55 and employees contribute 20%. After age 55 contributions progressively reduce to 13% and 9%. And  after age  65 the rate will be further reduced to 7.5%.

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. Only 50% of the withdrawals from SRS are taxable at retirement.

Labour Law   Issues

There are no provisions for company pension plans.