What a Singapore new hire really costs in employer CPF and SDL

The direct answer: what the employer pays on top of salary

If the new hire is a Singapore Citizen or a Permanent Resident, the employer owes CPF on that person's wages. For employees aged 55 and below, the total CPF rate is 37% of wages, and the employer carries 17% of that while the employee carries 20%. The employer share is the extra cost that sits on top of the salary you agree in the offer letter.

The legal basis is the Central Provident Fund Act 1953. Section 7 of that Act requires every employer to pay CPF to the Fund each month for each employee, at the rates in the First Schedule. The Central Provident Fund Regulations 1987 set the payment timing: contributions must reach the CPF Board not later than 14 days after the end of the month they relate to. The CPF Board's own guidance states the due date as the last day of the calendar month, with enforcement action for payments not made by the 14th of the following month.

The Skills Development Levy is a separate charge. The Skills Development Levy Act 1979, section 3, requires every employer to pay a levy for each employee, calculated under that section. It is not a CPF contribution. It is paid to the CPF Board with the CPF file, and it funds the Skills Development Fund that supports SkillsFuture training.

How the figure is worked out, step by step

Work through each employee in this order. The steps are the same for every pay run, but the inputs change when someone turns 55, becomes a Permanent Resident, or receives a bonus.

1. Confirm eligibility. CPF employer contributions apply to Singapore Citizens and Singapore Permanent Residents. Employees holding an Employment Pass, S Pass or work permit do not carry CPF, but the levy still applies to them.
2. Confirm the age band. The employer rate depends on age. For 55 and below it is 17%. From 1 January 2026, the rate for those above 55 to 60 is 16%, and the rate for those above 60 to 65 is 12.5%. Check the rate table in the First Schedule of the CPF Act on Singapore Statutes Online, since that schedule sets the employer rates.
3. Split the pay into ordinary wages and additional wages. Monthly salary and regular allowances are ordinary wages. Bonuses and other irregular payments are additional wages.
4. Apply the monthly ordinary wage ceiling. Ordinary wages above S$8,000 in a month do not attract CPF. This ceiling rose from S$7,400 to S$8,000 on 1 January 2026, which was the last step of a phased increase that began in 2023.
5. Multiply the capped wage by the employer rate. That gives the employer CPF for the month.
6. Apply the annual ceiling to additional wages. The annual salary ceiling is S$102,000. Additional wages count only up to that annual ceiling, minus the ordinary wages that already attracted CPF in the calendar year.
7. Calculate the SDL. Take total monthly remuneration, cap it at S$4,500, and apply 0.25%. If the result is below S$2, the minimum of S$2 applies to employees earning above S$800. For employees earning S$800 or less, the minimum does not apply and the SDL is S$2 under the floor rule as published by the CPF Board. Check the current floor and cap wording on the CPF Board's SDL page before you set the payroll rule.
8. Add the two employer amounts and pay by the deadline. The total CPF for the month, both employer and employee shares, goes to the CPF Board by the 14th of the following month. If the 14th falls on a weekend or public holiday, the deadline moves to the next working day.

Worked example: a S$9,000 hire in 2026

Take a Singapore Citizen aged 34 who is hired at a monthly salary of S$9,000 from 1 March 2026. There are no allowances and no bonus in the first month. The figures below use the 2026 rules.

The employer's extra monthly cost is S$1,371.25. Over twelve months, with no change in pay, that is S$16,455 for CPF and SDL combined. Notice that the employer does not pay 17% of S$9,000. The S$1,000 above the ceiling attracts no CPF.

Now add an annual bonus of S$12,000 paid in December of the same year. The employee earned S$8,000 in ordinary wages in each of 12 months, which is S$96,000 of ordinary wages for the year. The additional wage ceiling for that year is S$102,000 minus S$96,000, or S$6,000. Only S$6,000 of the bonus attracts CPF, so the employer pays 17% of S$6,000, which is S$1,020. The rest of the bonus carries no CPF. In the month the bonus is paid, the SDL is still capped at S$11.25, because the cap applies to the first S$4,500 of monthly remuneration.

The cases that change the answer

The base calculation above fits a full-time Singapore Citizen aged 55 and below. Several cases change the numbers or the rule that applies.

• Age 55 and above. The employer rate falls to 16% for those above 55 to 60, and then to 12.5%, 9%, and 7.5% in later bands. Payroll must update the rate in the month the employee passes the age threshold.
• Permanent Residents. A Permanent Resident does not start at the full rate. The CPF rates for the first and second years after obtaining status are lower, and the rates rise over the following years. The CPF Board's rate tables for Permanent Residents decide the figure, so check them against the employee's status date.
• Foreigners on work passes. Employment Pass, S Pass and work permit holders do not carry CPF in the way citizens and residents do. The SDL still applies to them, at the same rate and with the same floor and cap.
• Low wages. If total wages are S$50 or less in a month, no CPF is payable. Where wages are above S$50 but not more than S$500, the employee share is nil, but the employer still pays its share. Between S$500 and S$750, the employee share phases in.
• Bonuses and irregular pay. These are additional wages, and they are capped by the annual ceiling, not by the monthly ceiling. A large bonus in a year when ordinary wages already reached S$96,000 may attract very little CPF.
• Minimum service. Neither the CPF Act nor the CPF Board pages set a minimum service period before contributions start. Contributions follow the wages paid to an eligible employee from the first pay.
• Leaving mid-month. The wages actually paid for the final month are the figure to use, and the monthly ceiling still applies to ordinary wages in that month. Check the CPF Board's guidance on part-month wages before the final pay run.
• Exclusions from SDL. The SDL does not have an age limit and no exemption for higher earners. For employees earning more than the cap, the employer pays S$11.25 a month and no more.

Automation has one clear limit here. A payroll tool can apply the ceilings, the age bands and the levy floor every month, but it cannot decide whether a payment is ordinary wages or additional wages. That classification depends on the contract and the pay terms, and a person must confirm it.

Common mistakes

Most errors come from using an old ceiling, applying the rate to the whole salary, or missing a small item that the payroll rule does not cover.

Late payment carries real cost. The CPF Board charges late payment interest of 1.5% per month, starting from the day after the due date, with a minimum of S$5. The Board can also take enforcement action, and the penalties on its enforcement page include court fines and imprisonment for serious or repeated default. Late payment is not a cash-flow tool.

What to check with HR or a lawyer

Some points depend on the employment contract or on your own status as an employer, and a payroll rule cannot settle them.

• Confirm what your contract calls basic salary, allowances and bonuses, since those labels decide which amounts are ordinary wages and which are additional wages.
• Confirm the residency status and date of birth for each new hire, because both decide the rate and the band.
• For a Permanent Resident, confirm the first-year and later-year rates against the CPF Board's current table before the first pay run.
• Confirm with your payroll provider or accountant how the SDL is submitted with the CPF file, and keep the monthly record for audit.
• Check the Central Provident Fund Act and the Skills Development Levy Act on Singapore Statutes Online for the current wording of sections 7 and 3, and confirm the employer rate schedule and the SDL rate on the CPF Board's pages.

This explains the rule in general terms; it is not legal or tax advice for your case.

How employers take routine payroll work off their staff with AI workers

The CPF and SDL calculation repeats every month for every employee, and most of the errors above come from manual steps: updating a ceiling, changing an age band, or missing a floor. AiStaffo builds AI workers that connect to the payroll records, apply the ceilings and rates on each pay run, and prepare the monthly CPF and SDL figures for review, so a person no longer re-keys the same numbers each month. The person still approves the file, checks classifications for bonuses and new residency status, and makes the payment decision.