This is old news but I believe it has slipped through the minds of many.
In the Budget 2015 Speech, Mr Tharman announced that the CPF (Central Provident Fund) salary ceiling will be raised from the current S$5,000 to S$6,000 with effect from 1st January 2016.
Time flies and we are already in December, the last month of 2015.
How Will This Impact You?
The current employee contribution is 20% and employer contribution is 17%.
If you are earning S$5,000 or less, the increase of CPF salary ceiling will have no impact on you. However, if you are earning more than S$5,000, basically you will be taking home less cash but more contribution into your CPF account starting from 1st January 2016.
For example
In 2015, if you are earning a monthly salary of S$6,000, you take home $5,000 (80% of S$5,000 + S$1,000 above CPF salary ceiling).
In 2016, if you are earning a monthly salary of S$6,000, you take home S$4,800 (80% of S$6,000 + any excess above CPF salary ceiling).
How Will This Impact the Employer?
In 2015, if you are earning a monthly salary of S$6,000, your employer has to contribute S$850.
In 2016, if you are earning a monthly salary of S$6,000, your employer has to contribute S$1,020.
Hi, for the below sentence I believe you meant $5000 or more instead?
“However, if you are earning S$6,000 or more, basically you will be taking home less cash but more contribution into your CPF account.”
Hi Timonthy,
Thanks for spotting my mistake. I have rephrased the paragraph to be more accurate.