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switching from employment pass to PR. How would my take home pay change due to CPF ?

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vah
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switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by vah » Tue, 29 Oct 2019 12:06 pm

Hello, I have been getting conflicting advice regarding how my take home pay will change if I apply for PR and it got approved (I am currently on Employment Pass). Will I get the same take home pay + employer has to contribute to CPF ? or will employer contribute to CPF from my take home pay, essentially cutting my take home pay ? Or does it differ based on company policy ?


thank you in advance.

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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by vinology » Tue, 29 Oct 2019 12:35 pm

vah wrote:Hello, I have been getting conflicting advice regarding how my take home pay will change if I apply for PR and it got approved (I am currently on Employment Pass). Will I get the same take home pay + employer has to contribute to CPF ? or will employer contribute to CPF from my take home pay, essentially cutting my take home pay ? Or does it differ based on company policy ?


thank you in advance.

Hi. Both you and your employer will contribute the CPF for you. Certain percentage from your salary and the rest your employer pay for you. Which country you r from? What’s your period of stay in SG ?

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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by bro75 » Tue, 29 Oct 2019 1:29 pm

Without any special agreement with your employer and assuming that your salary did not change during PR approval, your new take home pay will be salary - employee cpf contribution. The employer will be contributing the employer cpf contribution to your cpf. In the first two years of PR, both the employee and employer contribution rates are allowed to be lower for both employee and employer to have a period of adjustment.

Some employers force their employees to sign contracts in which the employees official salary will become lower upon PR to take into account the employer cpf contribution. This is so that the employer's actual salary expense will not increase.

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singaporeflyer
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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by singaporeflyer » Tue, 29 Oct 2019 3:32 pm

bro75 wrote:
Tue, 29 Oct 2019 1:29 pm
Some employers force their employees to sign contracts in which the employees official salary will become lower upon PR to take into account the employer cpf contribution. This is so that the employer's actual salary expense will not increase.
This is not legal.

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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by bro75 » Tue, 29 Oct 2019 4:53 pm

singaporeflyer wrote:
Tue, 29 Oct 2019 3:32 pm
bro75 wrote:
Tue, 29 Oct 2019 1:29 pm
Some employers force their employees to sign contracts in which the employees official salary will become lower upon PR to take into account the employer cpf contribution. This is so that the employer's actual salary expense will not increase.
This is not legal.
I have heard stories of this from this forum and if i remember correctly from some other forums.
I have not experienced this first hand or second hand though since my employer did the correct thing when I converted.

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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by singaporeflyer » Tue, 29 Oct 2019 4:54 pm

bro75 wrote:
Tue, 29 Oct 2019 4:53 pm
singaporeflyer wrote:
Tue, 29 Oct 2019 3:32 pm
bro75 wrote:
Tue, 29 Oct 2019 1:29 pm
Some employers force their employees to sign contracts in which the employees official salary will become lower upon PR to take into account the employer cpf contribution. This is so that the employer's actual salary expense will not increase.
This is not legal.
I have heard stories of this from this forum and if i remember correctly from some other forums.
I have not experienced this first hand or second hand though since my employer did the correct thing when I converted.
I have seen this. But it is purely illegal to do so.

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sundaymorningstaple
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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by sundaymorningstaple » Tue, 29 Oct 2019 6:00 pm

Not necessarily so, SF. If, like our contracts before I retired, there was a codicil in that contract that stated that a contract would be negotiated IF a Foreign Employee were to take up PR or SGC, then it's perfectly legal, and a lot of them do just that.

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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by singaporeflyer » Tue, 29 Oct 2019 6:02 pm

sundaymorningstaple wrote:
Tue, 29 Oct 2019 6:00 pm
Not necessarily so, SF. If, like our contracts before I retired, there was a codicil in that contract that stated that a contract would be negotiated IF a Foreign Employee were to take up PR or SGC, then it's perfectly legal, and a lot of them do just that.
Let us take an example. Someone has got his PR with his basic salary as 6000 SGD. ICA has approved his PR based on the assumption that 6000-1200 (CPF for employee) will be his take home. If they deduct 6000-1200-1000 (CPF for both employer and employee) his take home will be around 3800. In that case, ICA surely wont grant him a PR.

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sundaymorningstaple
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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by sundaymorningstaple » Tue, 29 Oct 2019 6:06 pm

True, but the employee should know better than to sign that contract as well. Again, that is assuming the only reason he got his PR was because of his $6K salary. We already know that you can earn downwards of $4.5K and even lower if you are from M'sia and still get PR.

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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by singaporeflyer » Tue, 29 Oct 2019 6:08 pm

sundaymorningstaple wrote:
Tue, 29 Oct 2019 6:06 pm
True, but the employee should know better than to sign that contract as well. Again, that is assuming the only reason he got his PR was because of his $6K salary. We already know that you can earn downwards of $4.5K and even lower if you are from M'sia and still get PR.
Agree. What I am saying is that salary alone is not the only factor, but if ICA knew that his take home would be 3800, I doubt they would have approved it.

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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by sundaymorningstaple » Tue, 29 Oct 2019 6:14 pm

We've known for a long time that the basic required income level was $4500/mo. That would only leave a net of $3600. And we've seen numerous instances over the years where this has happened. I've never taken one to court so I cannot say for sure. But we do know that income isn't the only metric and lots get it with less that $6K/mo. Another thing, MOM is not ICA (PR goes through ICA) so at the end of the day, the employee, if he takes it to MOM, he's going to lose his job in any case.

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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by PNGMK » Tue, 29 Oct 2019 9:01 pm

singaporeflyer wrote:
Tue, 29 Oct 2019 3:32 pm
bro75 wrote:
Tue, 29 Oct 2019 1:29 pm
Some employers force their employees to sign contracts in which the employees official salary will become lower upon PR to take into account the employer cpf contribution. This is so that the employer's actual salary expense will not increase.
This is not legal.
Baloney. It's a matter of negotiation. When I applied for PR and needed a support letter in 1994 my employer (Sam Sassoon) made it clear that I would be expected to bear the EE and ER CPF from my salary as a quid pro quo for supporting my PR. In those days it was note a tapered hit either. If it's in the open and the employee goes forward with the application why should the employer cover the additional cost?
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Re: switching from employment pass to PR. How would my take home pay change due to CPF ?

Post by shuigao » Wed, 30 Oct 2019 9:05 am

vah wrote:
Tue, 29 Oct 2019 12:06 pm
Or does it differ based on company policy ?
This. As others in the thread have shared, some companies expect not to be 'financially penalized' and therefore reduce your basic pay.

Many (most?) other companies are not so CB and will keep your basic pay untouched. For these companies, your take home pay will gradually reduce: less 5% in the 1st year, less 15% in 2nd year, and less 20% in 3rd year onwards (subject to CPF contribution cap).

Some (fewer) companies will allow you to go straight to the max contribution, if your company allows this then your take home pay will be less 20% the moment you get your PR.

A few companies will allow graduated employee, max employer, i.e. your employee contribution is 5 / 15 / 20 over 3 years but the company will put in the max 17% from the start.

https://www.cpf.gov.sg/Employers/Employ ... tion-rates
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