Are you prepared for CPF changes in 2016?

by | Nov 17, 2015

We’re approaching the end of 2015. While many employees start to look forward to their year-end vacations, if you’re the boss of an SME, it’s probably the best time to reflect on how your company’s done over the year. And more importantly, prepare it for new regulatory changes kicking into effect come 2016.

In Finance Minister Tharman Shanmugaratnam’s Budget speech earlier in February 2015, he spoke about new 2016 measures aimed at helping middle-income Singaporeans accumulate additional CPF savings for their retirement.

Here are the four key CPF contribution adjustments you should take note from 1 January 2016:

  1. CPF Salary Ceiling: Raised to $6,000 (currently $5,000)
  2. Contribution Rate (50 to 55 years):1 percent increase by employer, 1percent increase by employee
  3. Contribution Rate (56 to 60 years):1 percent increase by employer only
  4. Contribution Rate (61 to 65 years): 0.5 percent increase by employer only

2015 CPF Contribution Rates (CPF Salary Ceiling: $5,000)

Employee’s AgeEmployer’s Contribution Employee’s Contribution
50 and below17%20%
51 to 5516%19%
56 to 6012%13%
61 to 658.5%7.5%
66 and above7.5%5%

2016 CPF Contribution Rates (CPF Salary Ceiling: $6,000)

Employee’s AgeEmployer’s Contribution Employee’s Contribution
50 and below17%20%
51 to 5517%20%
56 to 6013%13%
61 to 659%7.5%
66 and above7.5%5%

Getting it Right

Enacting these changes is relatively easy if your company has less than 10 employees. But maybe not so if you’re a CEO of a company of 100. Unless you have a meticulous HR/finance manager, we’d highly advise you to oversee this transition yourself.

Then again, its unrealistic to assume you’ll have all the time in the world to focus solely on these adjustments with other business commitments calling for attention, especially at the turn of the new year. So what’s the alternative?

Automate Your Payroll

Companies need to be nimble in a manpower environment that is constantly evolving. Adapting, has in the past, cost companies countless man hours in checks and balances to ensure no stone is left unturned. That explains why the bigger the company, the more averse they are to change.

With an all encompassing and flexible payroll-management software, adjustments based on the new 2016 CPF contribution rates can be easy to configure.

Being compliant should be kept simple. All it takes is an attitude to do the right thing.

Now that you’re covered on CPF, download our FREE eBook to see if you’ve got all your other compliance angles covered as well: 10 Compliance Tips for SME Bosses

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