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Clarification on CPF

Discuss about getting a well paid job or career advancement. Ask about salaries, expat packages, CPF & taxes for expatriate.

Posts: 14
Joined: Wed, 10 Nov 2004
Location: Sydney, Australia

Clarification on CPF

Postby Sydney » Wed, 01 Dec 2004 10:43 am


Having read through the CPF information both on this site & on, the following are still not clear to me:

1. The CPF website states that "On 1 January 2004, the CPF salary ceiling for the workers in the private sector was lowered from $6,000 to $5,500".

Firstly, is the $5500 an annual or monthly amount?

Secondly, does the $5500 refer to the amount at which the CPF contribution is capped (i.e. your CPF contribution cannot be more than $5500 per month/year);

Or does it refer to the maximum salary of $5500 per month (i.e. a first year permanent resident would therefore only be entitled to 9% of $5500 per month even if they earn $12,000 per month)?

2. The contribution tables on the CPF site outline the breakdown of contribution flows into the Ordinary, Special and Medisave accounts for most situations (i.e. Private Sector Employees aged under 35 get 22% in ordinary, 5% in special and 6% in Medisave accounts).

This account breakdown information is not available for the first 2 years of permanent residency - I assume that all monies contributed in these years will go into the ordinary account, is that correct?

I'd appreciate any information people can contribute on these matters.

Having worked in the Australian superannuation industry for the last 8 years, my initial (and perhaps naive) view on the CPF is that it looks to be a very progressive and flexible system - particularly the favourable tax treatment and ability to drawdown for property purchases - Sydneysiders would kill for an opportunity like this!

Cheers, Sydney

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