Impact of Rise in Hybrid Working Arrangements on CPF Contributions

4 Mr Yip Hon Weng asked the Minister for Manpower (a) whether the rise of hybrid working arrangements has adversely impacted CPF contributions; (b) how will differential benefits and compensation for traditional salaried employees and remote hybrid employees affect the computation of CPF obligations; and (c) what is being done to incentivise employees working remotely for overseas employers to make their share of employee’s CPF contributions for their retirement and healthcare needs.

The Minister for Manpower (Dr Tan See Leng): CPF contributions have risen over the past few years, even during the COVID-19 pandemic when there was a rise in hybrid working arrangements.

The computation of CPF obligations does not differ from traditional salaried employees and remote hybrid employees. All employers are required to make mandatory CPF contributions, both the employer and the employee portion, based on the wages a Singaporean or a Singapore Permanent Resident earns while working in Singapore. This includes overseas employers who have local employees working for them remotely in Singapore.

We advise local employees of such firms to check that their employment contracts cover the rights and obligations for both themselves and their employers, including provisions of the contribution of CPF by their employers. Further information can be found in the guide on working for overseas-based employers which is published on MOM's website.

In addition, like other local employees, employees working remotely in Singapore for overseas employers can still make voluntary CPF contributions up to $37,740 per year, less any mandatory contributions received, to help them enjoy CPF interest rates of up to 6% per annum and accumulate more for their retirement and their healthcare needs.

Mr Deputy Speaker: Mr Yip Hon Weng.

Mr Yip Hon Weng (Yio Chu Kang): Thank you, Mr Deputy Speaker. I thank the Minister for his reply. Will some companies use hybrid work to avoid paying the full CPF obligations? One possibility that I can think of is that some companies may have a physical presence but not declaring that the company is hiring workers who are working from home. What are the plans to periodically review and audit the CPF obligation by employers, especially, given the complexity brought upon by remote and hybrid workplaces?

Dr Tan See Leng: Mr Deputy Speaker, I thank the Member, Mr Yip, for his question. All employers hiring Singaporean employees based in Singapore, have a legal obligation to pay CPF contributions accurately and promptly for their employees. And these include those on hybrid working arrangements.

CPF Board has multiple channels to identify employers who do not pay their CPF contributions correctly and promptly. We have a detection system. Our detection system identifies employers who are late in their contributions. There is a reporting system. Reports can be lodged with the CPF Board. Employees and whistle-blowers can lodge reports to CPF Board about late payment, non-payment or under-payment of CPF contributions.

Moving into the third initiative, the CPF Board also proactively audits employers to check the accuracy of CPF contributions paid as well as wages declared.

Let me reiterate and reassure the Member: the CPF Board takes a very serious view on employers who fail to pay CPF contributions correctly and promptly. If employers fail to comply with their CPF obligations, the Board will not hesitate to take enforcement actions and impose penalties as appropriate.