13 April 2021
SOURCE: CPF Board

As an employer, you are responsible for taking care of your employees, and that includes paying their CPF contributions on time. 

Did you know that CPF contributions are due on the last day of each calendar month? If you are paying your employee fixed wages, you are expected to pay the CPF contributions for your employees by the due date so they can use it to support key areas of their lives – such as building their retirement income, and financing their housing and healthcare needs.

Enforcement action would be taken against employers who fail to pay their CPF contributions by the 14^th of the following month (or the next working day if the 14^th falls on a Saturday, Sunday or Public Holiday). This includes imposing late payment interest charged at 1.5% per month commencing from the first day after the due date. These measures are ultimately in place to protect the interests of employees.

To better understand how CPF contributions play crucial roles in your employees’ lives, let’s look at these two people at different stages in their lives and careers:

Felix, an aspiring young man and model employee since joining the workforce two years ago.

Farah, a mid-career woman in her early 40s, and the go-to person in the office when it comes to investment advice.

Felix recently got engaged to his fiancée, which brings him to the next chapter in life: one that comes with more responsibilities. With his CPF contributions coming in on time, he will be able to:

• Buy the couple’s first home: After successfully balloting for a Build-To-Order (BTO) flat, Felix can make the downpayment using his Ordinary Account (OA) savings. That’s not all – he will also be able to accumulate enough CPF savings every month to finance the housing loan payments on time.
• Plan to start a family: Knowing that the MediSave Maternity Package is on hand to help with delivery expenses, the decision to have a baby just got easier (as well as putting an end to Felix’s mum nagging about having grandchildren).

As for Farah, she’s already planning ahead – with her sights set on achieving her desired retirement lifestyle in the future. Receiving her CPF contributions regularly without delay allows her to:

• Grow her CPF savings: Timely CPF contributions go towards building Farah’s retirement income, so that she can support herself and her family in the future.
• Be prepared for unforeseen circumstances: In the event that Farah or any of her immediate family members require medical treatment or hospitalisation, she can use her MediSave savings to offset those healthcare expenses.

By not having to rely entirely on out-of-pocket cash for the above, both of them can better plan and save for their golden years, without placing additional strain on their current finances. This leads us to this tried and trusted formula:

Happy employees = Better performance = Increased productivity = Happy boss (that’s you!)

So be that boss that everyone wants to work for, by ensuring you make CPF contributions to your employees correctly before the due date, which is at the end of the calendar month.

What happens when CPF contributions are not paid on time?

Employers are expected to pay their CPF contributions by the due date at the end of the calendar month. If you have been consistently paying your CPF contributions on time by the due date (at least two out of the past three months), we will send you a reminder if you happen to overlook your payments from time to time.

On the other hand, employers who have been consistently paying their CPF contributions later than the due date will face enforcement actions if they fail to pay by the 14^th of the following month (or the next working day if the 14^th falls on a Saturday, Sunday or Public Holiday). These include: 

• Late payment interest charged at 1.5% per month, commencing from the first day after the due date. The minimum interest payable is $5. For example, if you pay CPF contributions on the 15^th, 15 days of late payment interest is levied as the payment is 15 days past the due date.
• A composition amount of up to $1,000 per offence¹. 
• Being brought to court if there are further delays. First-time offenders convicted of a late payment offence may be fined up to $5,000 and no less than $1,000 for each offence, and/or up to 6 months of imprisonment. Repeat offenders may be fined up to $10,000 and no less than $2,000 for each offence, and/or up to 12 months of imprisonment. Directors of the company will also be charged, and face the same court fines and/or imprisonment. 

¹An offence can refer to either underpayment of CPF contributions, or failure to pay CPF contributions by the 14^th of the following month for an employee. Each month counts as a separate offence. For example, if payment is not made for two employees for two months, that amounts to a total of four offences.