SINGAPORE - Employers are reminded to fully pay the CPF contributions of their employees' 2012 and 2013 wages by 14 January 2014, in order to enjoy the first tranche of Wage Credit Scheme (WCS) payouts at the end of March 2014.
The Government introduced the WCS for the period 2013 to 2015 as part of the 3-year Transition Support Package to help businesses cope with rising wage costs in a tight labour market.
Under the WCS, the Government co- funds 40 per cent of wage increases given to Singaporean employees earning a gross monthly wage of $4,000 and below. This allows businesses to free up resources to make investments in productivity, and to share the savings with their employees.
There is no need to apply for the WCS. Eligible employers will automatically receive the WCS payouts based on the CPF contributions they have paid for their employees' 2012 and 2013 wages.
The first payout will be at the end of March 2014, for wage increases given to employees in 2013 over 2012.
Only CPF contributions made by Jan 14, 2014 will be considered in the calculation of wage increases which qualify for WCS.
Employers are required to pay CPF contributions within 14 days from the end of each month for which CPF contributions are due. Late payment interest will otherwise apply.
Who is eligible?
In any calendar year from 2013 to 2015, employers qualify for Wage Credit if they give wage increases to employees who are on their payroll for at least three months in the year, and who received CPF contributions for at least three months in the preceding year. The three months in the preceding year could be with a different employer, but all these three months must be with a single employer.
All Singapore Citizen employees who received CPF contributions, including full-time, part- time and casual employees, are covered by the WCS.
Consistent with the Special Employment Credit Scheme, employers in the following government related-entities or entities not registered in Singapore, are not eligible for the WCS:
a) Local Government Agencies, incl uding Organs of State, Ministries and Departments, Statutory Boards
b) Government and Government-Aided Schools
c) People's Association Services and Grassroots Units
d) High Commissions, Embassies, Trade Offices, Consulates
e) Unregistered Foreign Entities
f) Foreign Military Units
g) Representative offices of Foreign companies, Foreign Government Agencies, Foreign Trade Associations, Foreign Chambers, Foreign Non-profit Organisations, and Foreign Law Practices
h) Entities which pay CPF but are not registered in Singapore
What wag e increases qualify for Wage Credit?
Wage increases are computed on an annual basis, based on the difference between the gross monthly wage of an employee in the qualifying year and the gross monthly wage of the employee in the preceding year. For each qualifying year, Wage Credit will be paid to the employer for all the months in the year in which CPF contributions are made for the employee. Each increase in an employee's gross monthly wage has to be at least $50 over the preceding year to qualify for Wage Credit.
When and how will employers receive Wage Credit?
For each year that an employer qualifies for Wage Credit, he will receive the Wage Credit at the end of March in the subsequent year, via direct credit to his GIRO bank account for income tax/ GST, or by cheque. The Inland Revenue Authority of Singapore (IRAS), which is the administrator of the Wage Credit Scheme, will notify the employer of his payout by post.
When do employers have to pay CPF contributions?
CPF contributions are due at the end of each month. However, employers have a grace period of 14 days to pay CPF contributions after the end of the month. If CPF contributions are not paid on time, employers will be sent a reminder to pay the outstanding CPF contributions, and late payment interest would apply.