Singapore PR CPF Salary Cut & Bonus – How many percentage of salary goes to CPF?

For those who just recently become a Permanent Resident in Singapore, well congratulations!

For those who are not yet a Permanent Resident but considering to apply one, well go ahead. There’s nothing bad of becoming and being a Singapore PR – except getting a salary cut every month the right moment when you become a Singapore PR. Though it looks like you are losing money by getting your salary cut every month, but in fact you should take it as benefit or bonus. Allow me to explain further below.

Here I would like to give details, of this one commonly question being asked by many new PRs and those who would like to apply for a Permanent Resident here in Singapore: How much of your salary goes into CPF?

Disclaimer: I am not an expert in Singapore human resources nor Singapore law nor Singapore rules and regulations. I’m sharing this based on my own experiences and research and my limited knowledge in Singapore Permanent Resident rules and regulations. Though the information provided here I deemed correct at the time this article is written, but please cross-check anything I shared here yourself and don’t take it as an open invitation. Do it at your own risk! I won’t be held responsible for any loss/damage it may incur to you.

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How much salary cut do you get as a SPR – Singapore Permanent Resident?

So far I’ve been saying CPF a few times. For those who doesn’t know what is CPF, it’s short for Central Provident Funds. It’s a government initiatives funds used for housing, investments, educations, medical as well as retirement plans for Singapore people including Singapore Permanent Residents. If you are more familiar with US terms, take CPF as US 401K plan. However, unlike US 401K plan which is optional, CPF is mandatory to Singapore citizen and when you are becoming a Singapore Permanent Resident.

singapore permanent resident cpf
As a Singapore Permanent Resident, you are getting your salary cut by up to 20% percentages, but at the same time, you are getting an additional hidden bonus!

The salary cut you are getting as a Singapore Permanent Resident is to fund this CPF. The percentages vary depends on how long have you become a SPR.

Here they are, the percentages of salary cut that goes to fund CPF every month.

As an employee, your percentages of salary cut is shown under the “Employee” column.

How many years since becoming a SPR Employee Employer Total CPF Contribution
1st Year 5% 4% 9%
2nd Year 15% 9% 24%
3rd Year and onward 20% 17% 37%

All the CPF salary cut above is for age 55 and below.

In case you would like to have better understanding, including simulation and/or to see other percentages of salary cut for people who are age 55 and above, do use the calculator below.

For 1st year and 2nd year Singapore Permanent Resident: use this calculator.

For 3rd year and onward Singapore Permanent Resident: use this calculator.


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Advantages of becoming a Singapore Permanent Resident

Well, there’s plenty of benefit for sure. I’ll detail that on another article. But since here we are discussing percentages of salary getting cut, I would like to emphasize more on the benefit of getting the salary cut to fund CPF.

tax deductions relief and rebates singapore
Whatever goes to your CPF account, the same amount will be relief from your income tax! Read here to know more on Tax deductions, reliefs and rebates you can get as a Singapore Permanent Resident

How come getting salary cut is considered benefits or bonus?

If you see properly on the percentages of salary cut table above, as an employee you’ll get respectively 5%, 15% and eventually 20% salary cut to fund CPF on your 1st year, 2nd year then 3rd year and beyond of becoming a Singapore PR, however at the same time your employer also needs to contribute their percentages to fund your CPF (yes it’s your CPF) respectively 4%, 9% and 17% from the 1st year you become a PR, 2nd year then 3 year and beyond.

To make it obvious, you are getting additional “hidden” salary from company.

1st year: additional 4% of your salary from your employer that goes to your CPF account.

2nd year: additional 9% of your salary from your employer that goes to your CPF account.

3rd year and beyond: additional 17% of your salary from your employer that goes to your CPF account.

All without the need of salary negotiation! How good is that.

Well, you cannot touch the money stored under your CPF directly, but like I explained earlier, CPF is funds used for housing, investments, educations, medical as well as retirement plans, so you can use and enjoy it, including the bonus given by your employer to fund your house, investment, educations, medical and eventually your retirement.

Bring It All Together

So for those who still think so hard whether or not to convert yourself to be a Singapore Permanent Resident, all I can say is go for it. Don’t be afraid on the percentages of salary cuts you will be getting, since it’s not a cut, but a bonus!

Do give your comments and thoughts down below on the comment section. Cheers!

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