SPR CPF Rates

[alibaba1984]

hi, I just got my SPR granted recently. As referring from the CPF website: http://mycpf.cpf.gov.sg/Employers/Gen-I ... es-SPR.htm

There are 3 options for the CPF contributions, can I know what is the differences between Option 1, 2 and 3?

For me, I think Option 1 should be cheaper to me . But will my employer incentive for Option 2 and 3 instead rather than Option 1?

Paisei, I just newbie in SPR.

[curiousgeorge]

You and your employer automatically pay CPF at a lower rate when you become SPR, to help "ease" you into the expense.

1st Year it is up to 5% of salary and max $250 per month
2nd Year is up to 15% and max of $750 per month
3rd Year is already normal CPF contributions, up to 20% of salary and max $1000 per month.

(all assuming you are under 50yrs old and earn more than $750 per month).

If you want to go to option 2 or 3 then you will need to apply with your employer (as it costs them more as well as you).

Then advantage of option 2 or 3 is that it will grow your CPF fund more quickly in the early years.

[PNGMK]

hi, I just got my SPR granted recently. As referring from the CPF website: http://mycpf.cpf.gov.sg/Employers/Gen-I ... es-SPR.htm

There are 3 options for the CPF contributions, can I know what is the differences between Option 1, 2 and 3?

For me, I think Option 1 should be cheaper to me . But will my employer incentive for Option 2 and 3 instead rather than Option 1?

Paisei, I just newbie in SPR.

Your employer will probably not 'give' you the ER contributions but rather take it from your gross pay. That means you could be up to $1800 out of pocket every month at the full rates!

I didn't think selecting between these options were possible but if so I'd be inclined to progress as slow as possible.

[Girl_Next_Door]

I think it depends from companies to companies. For my husband, when he obtained his PR (3 years ago), it was not taken from his salary for the employer's contribution. I might have recall wrongly, but I thought I have read it somewhere that it is not legal for employer to do that?

[Beeroclock]

I think it depends from companies to companies. For my husband, when he obtained his PR (3 years ago), it was not taken from his salary for the employer's contribution. I might have recall wrongly, but I thought I have read it somewhere that it is not legal for employer to do that?

Yeah it varies from company to company. Has been discussed in various cpf threads. Some employers will even include a clause in employment contract stating if employee becomes PR then employer contributions to be deducted from salary. Other employers will absorb it and make the extra contribution. The key point is better to consult your employer in your decision to go for PR upfront rather than advise them after the fact.

I think the term "option" is misleading, as in the case of OP who seems to think it is his option to choose, but as pointed out by curiousgeorge it requires mutual agreement / joint application with your employer to go for "option" 2/3.

[alibaba1984]

Yea, there is one clause in my employment contract stated that "... if employee becomes PR then employer contributions to be deducted from salary... "

So does it means that I have to bear all the contribution of my CPF? For instances, employer(5%); employee(5%) and salary/month(example) is S$4000, then I have to bear employer(S$200) + employee(S$200) = S$400? That mean my take home salary will be S$3600/month instead?

If this is the case, does this clause legal? Because from I saw from the CPF website, it mentioned that it is illegal for the employer to not contribute the employees CPF...

To add on, below are the URLs regarding the CPF info for Employer: http://www.mom.gov.sg/employment-practi ... #employers

http://mycpf.cpf.gov.sg/CPF/Templates/S ... =Guest#L10

[rdueej]

Yea, there is one clause in my employment contract stated that "... if employee becomes PR then employer contributions to be deducted from salary... "

So does it means that I have to bear all the contribution of my CPF? For instances, employer(5%); employee(5%) and salary/month(example) is S$4000, then I have to bear employer(S$200) + employee(S$200) = S$400? That mean my take home salary will be S$3600/month instead?

If this is the case, does this clause legal? Because from I saw from the CPF website, it mentioned that it is illegal for the employer to not contribute the employees CPF...

To add on, below are the URLs regarding the CPF info for Employer: http://www.mom.gov.sg/employment-practi ... #employers

http://mycpf.cpf.gov.sg/CPF/Templates/S ... =Guest#L10

Regarding your first question, most companies go with the default Option 1 (G/G), which is graduated rates for both employer and employee.

Your employment contract is what dictates your pay, period. One of the terms of your contract was that your salary will go down if you take up PR. This is because, the company wants to maintain the total amount that you cost to them. Otherwise, wouldn't getting PR, simply result in you getting a 5% raise ?

You are correct, it is illegal for the employer to not contribute CPF for employee. However, it is not illegal for them to reduce your pay.

[ecureilx]

Yea, there is one clause in my employment contract stated that "... if employee becomes PR then employer contributions to be deducted from salary... "

So does it means that I have to bear all the contribution of my CPF? For instances, employer(5%); employee(5%) and salary/month(example) is S$4000, then I have to bear employer(S$200) + employee(S$200) = S$400? That mean my take home salary will be S$3600/month instead?

if the employer deduct employer contribution from your pay it is wrong ... but many Expats on Expat terms negotiate an offset, like in lieu of housing allowance etc .. I guess the offset is fine since they get a larger pay ...

all employers I worked in the past, small and large, either added employer contribution to base pay, if the person was a foreigner and when the candidate became PR his contribution was full contribution out of his pay plus the 'bonus' money employee was getting gets cut off ... I.e condition to apply PR is agree for full contribution

or .... those who didn't give the foreign employee the employer share .. didn't deduct from the employee, the employer added their share .. when the foreigner got PR ... which is how it should be I guess ...

maybe I worked for better companies

[Beeroclock]

Yea, there is one clause in my employment contract stated that "... if employee becomes PR then employer contributions to be deducted from salary... "

So does it means that I have to bear all the contribution of my CPF? For instances, employer(5%); employee(5%) and salary/month(example) is S$4000, then I have to bear employer(S$200) + employee(S$200) = S$400? That mean my take home salary will be S$3600/month instead?

yes... Worse in the short term but you haven't lost the money it is forced saving for retirement, medical etc.

+1 to what rdueej wrote.

[x9200]

Yea, there is one clause in my employment contract stated that "... if employee becomes PR then employer contributions to be deducted from salary... "

You are correct, it is illegal for the employer to not contribute CPF for employee. However, it is not illegal for them to reduce your pay.

I am pretty sure it is illegal to deduct their contribution from the employee's salary. Assuming this is the actual/similar phrasing. Even a phrasing like "the salary will be reduced to match the blablabla..." is IMHO not 100% safe as this would be de facto taking this money to pay the contributions.
The right approach for the employer is to have some extra bonuses defined that seize to exist if the employee become the PR.

Of course, from practical perspective not much of a difference unless the OP doesn't like his job any longer.

[PNGMK]

Yea, there is one clause in my employment contract stated that "... if employee becomes PR then employer contributions to be deducted from salary... "

You are correct, it is illegal for the employer to not contribute CPF for employee. However, it is not illegal for them to reduce your pay.

I am pretty sure it is illegal to deduct their contribution from the employee's salary. Assuming this is the actual/similar phrasing. Even a phrasing like "the salary will be reduced to match the blablabla..." is IMHO not 100% safe as this would be de facto taking this money to pay the contributions.
The right approach for the employer is to have some extra bonuses defined that seize to exist if the employee become the PR.

Of course, from practical perspective not much of a difference unless the OP doesn't like his job any longer.

They're not deducting it from his salary. They're adjusting his salary.

I feel for the employers who have these newbie PR's showing up expecting an (often) unwarranted 5% increase in pay.

Even in 1992 when I applied for PR (and there was NO ramping up scheme in place then) it was made very clear to me that the CPF contribution would not affect my total (gross) pay as CPF is 'your money, not ours once we pay it'.

[sundaymorningstaple]

^^ This.

[x9200]

It says deducted in the OP post. Besides, what also maters is what this is in reality, not whether this is called this or that way.

[PNGMK]

It says deducted in the OP post. Besides, what also maters is what this is in reality, not whether this is called this or that way.

Just trying to stop the OP waltzing in to his boss and expecting a 5% pay rise because he is now a blessed PR. OP has yet to realize that PR's have no wage level protection (unlike EP/P1/P2 etc) and that the cards are stacked against him from the start.

[the lynx]

if the employer deduct employer contribution from your pay it is wrong ... but many Expats on Expat terms negotiate an offset, like in lieu of housing allowance etc .. I guess the offset is fine since they get a larger pay ...

all employers I worked in the past, small and large, either added employer contribution to base pay, if the person was a foreigner and when the candidate became PR his contribution was full contribution out of his pay plus the 'bonus' money employee was getting gets cut off ... I.e condition to apply PR is agree for full contribution

or .... those who didn't give the foreign employee the employer share .. didn't deduct from the employee, the employer added their share .. when the foreigner got PR ... which is how it should be I guess ...

What are you talking about? Not saying your facts are wrong/right - I really can't understand your sentence structure