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Pr and cpf question

Relocating, travelling or planning to make Singapore home? Discuss the criterias, passes or visa that is required.
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sundaymorningstaple
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Postby sundaymorningstaple » Wed, 11 Dec 2013 10:45 pm

My theory is that if you don't sign the new contract, you will find yourself working out your notice. I'd be surprised if it turns out any other way. Good Luck. Probable termination cause, (if any - none is really required) Not a good corporate fit. Or they will allow you to resign so you don't have a termination of employment on your CV. (This is used very often by employers here).

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Postby Wd40 » Wed, 11 Dec 2013 10:59 pm

OP seems to work for some small time SME. Highly unpredictable, what the outcome will be. Bigger companies have proper protocols and procedures in place.

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Postby JR8 » Wed, 11 Dec 2013 11:08 pm

I think a point is that you've just landed a fait accompli on your employer. Like trying to oblige a c10% pay increase via a back-door. Of course you should take a compensatory pay cut if you want to keep your job.

You didn't let them know you were applying for PR (why not, are you that 'remote'?).

And now it's approved, and your employer is going to get suddenly whacked with CPF costs, you're suggesting they should be happy, as you're out of 'foreign employee quota' (as if you can guage if that matters to them).

Sounds like you went out solely for yourself there. And, well, if you were in my old industry you'd have just signed your own career-death warrant.

p.s. Still on the positive side, when they sack you, it might just be a tiny bit easier to try and find another job, on local terms this time, as a PR... just, don't expect a reference from the old place.

----------
- 'Ok, my conspiracy theory is that he might be willing to swallow this until he has to pay 21% -

Your immature attitude, is most likely going to come back and bite you right in the A***.

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Postby katbh » Thu, 12 Dec 2013 7:31 am

Yes, all above are correct. But what about the other issue - the greater one. Why is it really possible for an employer to dictate your immigration status if you have the right to be here. The restrictive 'foreigner' v 'local' rhetoric is getting very tiresome. Surely if you chose to move here and live here long term, there must be some point where you are no longer called a 'foreigner'...regardless of your race.

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Postby sundaymorningstaple » Thu, 12 Dec 2013 8:08 am

katbh, they only get to dictate your immigration status as long as you are here on a working visa which they have to sponsor. However, they, as employers, have every right to not be forced to pay more than what was originally agreed to in the employment contract unless it is specifically written into the contract OR the employer has given written permission to allow the employee to cause the employer to incur additional operating expenses not factored into the original employment contract (Annex A). I see nothing wrong with that, especially considering the FT was probably being paid a premium in the first place that, like my boss, considers into the overall expense to the company, e.g., wages and incidental costs that go with wages, like levies, insurances, Employer CPF contributions, etc. As the employee is paid a premium AND there are not levies that will be removed upon getting PR, it's purely a lose-lose situation for the employer (unless, of course, the employee has a niche skillset that is almost impossible to find).

I'll be considered a foreigner till I die if I stay here. After 30 years, most assume I am and have been a citizen for many years, and lots tell me I'm more Singaporean that most True Blues. But at the end of the day, to those who don't know me, I am a foreigner. For all their vaunted education, they still lack common sense and EQ.

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Postby katbh » Thu, 12 Dec 2013 8:39 am

Yes, I know the facts and employment implications (being an employer also). But perhaps it could all be solved if everyone had to contribute to CPF. This is how it works in most countries. If you are employed in that country you must contribute to the pension/super saving scheme. And in most cases, so does the employer. When you leave the country, your funds can then either be withdrawn, or some countries stipulate that the funds need to be rolled over into another pension fund in your country of destination.
This way, the Govt would have access to the funds, you would be contributing to your pension, and the employer would be paying the same regardless of immigration status.
I just hate the way that 'foreigners' are made to feel 'foreigners' for the entire time they are here. Lets level it out a bit...

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Postby JR8 » Thu, 12 Dec 2013 8:51 am

katbh wrote:I just hate the way that 'foreigners' are made to feel 'foreigners' for the entire time they are here. Lets level it out a bit...


X-ref: Events in Little India this week.

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Postby the lynx » Thu, 12 Dec 2013 9:55 am

Just trying to be the devil's advocate here for discussion's sake.

There is disclaimer at Annex A that says that it is not the proof of the applicant's employer's sponsorship of his application. Essentially ICA would just want to know the employment status of the applicant, and also the employer's info. So in what universe is this a circumvention?

And if only part of that 9% is borne by the employer and the rest is by the applicant, I'd say it is a good compromise to make the salary adjusted only to that 5% (employee's percentage).

:waiting for tomatoes:

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Postby AngMoG » Thu, 12 Dec 2013 9:59 am

katbh wrote:Yes, I know the facts and employment implications (being an employer also). But perhaps it could all be solved if everyone had to contribute to CPF. This is how it works in most countries. If you are employed in that country you must contribute to the pension/super saving scheme. And in most cases, so does the employer. When you leave the country, your funds can then either be withdrawn, or some countries stipulate that the funds need to be rolled over into another pension fund in your country of destination.
This way, the Govt would have access to the funds, you would be contributing to your pension, and the employer would be paying the same regardless of immigration status.
I just hate the way that 'foreigners' are made to feel 'foreigners' for the entire time they are here. Lets level it out a bit...



Fully agree with you. Actually, I see two alternatives that would really level the playing field in terms of pay between the different types of employees:
(1) Everybody pays CPF, at the same percentages. Foreigners (and PRs) get to take it out if they leave the country permanently, after a "cool down" period of 2-3 years (that would need to be applied to PRs too for matters of fairness). Foreigners can return any time, PRs have to pay back the CPF first if they want to become PR again (or, alternatively, wait 10 years from their last expiry for PR re-application).
-- Upside: Level salary playing field. Same rules for all, same concept as most other countries.
-- Downside: Higher cost for employers, more administrative burden for CPF. And more complaints by SCs that others can completely take out their CPF.
(2) Keep it as it is in terms of CPF, but add a "non-citizen employee levy" set at (SC CPF Employer Rate - PR CPF Employer Rare) for PRs, and SC CPF Employer Rate for foreigners.
-- Upside: More money collected by the government, level salary playing field in terms of gross but not net salary.
-- Downside: Higher cost for employers, more admin burden for MoM and/or IRAS. No incentive for gov to reduce foreign employees, as they directly profit from it.

I think the fact more than half of the GDP is earned by GLCs combined with the higher employer cost would make either solution a bitter pill to swallow. But I agree it is something they should really do, as it would level the playing field in terms of cost (in fact, giving SCs/PRs a slight advantage), making it actually more attractive to employ SCs and PRs in the terms all businesses understand - money.

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Postby sundaymorningstaple » Thu, 12 Dec 2013 10:05 am

katbh wrote:But perhaps it could all be solved if everyone had to contribute to CPF. This is how it works in most countries.


Foreign workers who entered Singapore on or after August 1, 1995 were exempt from CPF contributions. This applied to:
Employment pass-holders
Professional visit pass-holders
Three-year skilled work permit-holders
Two-year work permit-holders working in government ministries, religious, charitable, cultural and sports organizations, and foreign missions.
Their employers were also exempt from CPF contributions.
Foreign workers in those categories who started work in Singapore before 1 August 1995 continued to pay CPF contributions until the expiry of their current passes or permits. Upon renewal of their current passes or permits, they and their employers were exempted from further CPF contributions.

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Postby Wd40 » Thu, 12 Dec 2013 10:15 am

In most cases it is already leveled out. Like the OP says, his employer only cares about the CTC and if OP gets PR, his take home reduces and that part goes to CPF. Sure, he will have cash flow issues. But its still more level compared to him getting an additional 10% just because he got his PR.

Most IT vendors do the same thing. They tell you right in the beginning when you come into the country that the CPF contribution is already being paid out to you in your take home and if you convert to PR, your take home will reduce by the equivalent amount.

Some employers like my bank have gone to the next level to make it level. They contribute the CPF to a pension scheme managed by HSBC Hong Kong. Employees also need to contribute. This is actually better than the CPF because we can choose to let the entire CPF amount to go into equity funds. The only downside is these private pension funds are not tax deductible like the CPF is.

I really dont think it matters whether foreigners pay CPF or not. Employers look at the whole cost and employees look at the whole gross salary including CPF. The only difference is CPF is managed by someone else and if they give it to you, you manage it yourself. Most foreigners come to Singapore to save money and CPF would be kind of forced savings.

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Postby Beeroclock » Thu, 12 Dec 2013 10:54 am

katbh wrote:
But perhaps it could all be solved if everyone had to contribute to CPF. This is how it works in most countries.


One practical drawback is admin/tracking for temp workers. e.g. in Australia the amount of lost superannuation (cpf equivalent) is staggering, and a lot belongs to foreigners who have left and ignored. I believe there are hotlines and websites set-up to manage this and maybe after X years not reclaimed the funds go back to Govt, but seems very onerous.

Also as mentioned earlier, a fundamental objective of cpf from Govt perspective is retirement planning /medical, to ensure people prepare by forcing some savings. From a retirement perspective it is understandable the Govt should aim this policy at SC/PR as they are the ones with long-term intention to retire in Singapore.

Further, as WD40 said both employer/employee should look on whole cost/whole remuneration basis, in which case it doesn't really matter.

For these reasons, I think the current policy exempting FW's from CPF (as per SMS' post) makes more sense.

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Postby Beeroclock » Thu, 12 Dec 2013 11:17 am

sundaymorningstaple wrote:As the employee is paid a premium AND there are not levies that will be removed upon getting PR, it's purely a lose-lose situation for the employer (unless, of course, the employee has a niche skillset that is almost impossible to find).


When I became PR I approached it different to OP and did first consult my employer and get their support, and they did give me the Annex A. My contract did not have the clause stating salary on total cost basis (including cpf if employee decide to become PR), and my Employer did not mention the extra cost of cpf. However I'm quite sure they manage cost on overall basis and my annual increments/bonuses have probably been moderated to level things out. This is the advantage of the graduated scale it gives both parties time to adjust as the cpf $$$ are much smaller in first 2 years.

Specifically regarding the above point, I think my Employer did see better retention prospects as a positive factor for them. While this is an intangible, turnover/ hiring/retraining costs can be significant and I do sense my Employer took some comfort in our decision to settle in Singapore, as a basis to support the PR application. So maybe not 100% negative depending on the specific employer/situation.

But the key problem for OP as many already stated, it would've been much better to consult your employer in advance rather than deliver this news after the fact.

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Postby sundaymorningstaple » Thu, 12 Dec 2013 12:43 pm

But you did discuss it with you employer before the event instead of circumventing him. Makes all the difference in the world. No employer wants to have shady dealing employees. Big difference.

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Postby Wd40 » Thu, 12 Dec 2013 2:13 pm

If it is a SME you need to discuss with your employer I guess. But any decent size company, it should be black or white. I know some companies dont let you apply for PR, especially if they transferred you from an overseas location. But most companies allow you. They have a proper protocol. You need to approach HR and ask for the sponsorship letter. If you need to talk to your boss for permission, then its an SME!


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