CPF for EP and S Pass Holders: Pros, Cons, and Tips

At a Glance

• EP and S Pass holders are not eligible for CPF, meaning no 17% employer contribution.
• As of April 2024, all CPF accounts for non-citizens and non-PRs have been closed.
• You can offset the lack of tax benefits by using the SRS (up to SGD 35,700 annually).

When you first arrive in Singapore and receive your first payslip, you might be in for a surprise. Unlike in many other countries where significant portions of your salary are deducted for national pensions or health insurance, your take-home pay in Singapore might seem unexpectedly high. This is because Singapore’s social security system, the Central Provident Fund (CPF), does not apply to foreigners.

However, while a higher take-home pay is great, it also means missing out on certain benefits. With the Singapore government recently tightening policies regarding CPF accounts for foreigners—especially for former PRs—there are critical updates you need to know. Based on the latest 2025–2026 regulations, here is everything an expat needs to know about the CPF system.

EP/S Pass Holders and the CPF System

In principle, foreigners working in Singapore on an Employment Pass (EP) or S Pass (SP) are not eligible for CPF. While this means 20% of your salary isn't deducted, it also means you miss out on the 17% additional contribution from your employer. Consequently, there is a gap in total compensation compared to local employees.

• No Salary Deductions: Your take-home pay is almost equal to your gross salary, minus income tax. This provides better immediate cash flow compared to local colleagues.
• No Employer Contributions: Singaporean companies must pay an extra 17% on top of a local employee's salary, but they have no such obligation for foreigners. You can use this as a strategic lever during salary negotiations to ask for a higher base pay.
• Mandatory Health Insurance: Since you don't have CPF, you don't have MediSave. Therefore, S Pass holders must be covered by employer-provided insurance, while EP holders are strongly advised to secure their own private 'Integrated Shield Plan' for comprehensive coverage.

2024 Policy: Closure of Non-Member CPF Accounts

In the past, some foreigners (such as former PRs) kept funds in their CPF accounts to enjoy high guaranteed interest rates (2.5% to 4.0% per annum). However, as of April 1, 2024, the Singapore government has mandated the closure of all CPF accounts for non-citizens and non-permanent residents.

• Cessation of Interest: Funds remaining in these closed accounts no longer earn high CPF interest. Until March 31, 2027, they will only earn the commercial bank's average interest rate (approx. 0.05%), after which no interest will be paid at all.
• Immediate Withdrawal Recommended: If you have a dormant account from a previous residency, it is best to transfer the balance to your personal bank account as soon as possible. The government is firm on reserving CPF benefits exclusively for citizens and PRs.
• Account Management: If you are unsure of your status, log in to the CPF website using your Singpass to check. Your account is likely already in the process of being closed.

SRS: The Tax-Saving Alternative for Foreigners

Since foreigners cannot contribute to CPF, many worry about the lack of tax relief during tax season. The Supplementary Retirement Scheme (SRS) is the most effective tool for this. It is arguably the only legal way for foreigners to significantly reduce their taxable income.

• Higher Contribution Limits: To compensate for the lack of CPF, foreigners have a much higher SRS limit. You can contribute up to SGD 35,700 annually, and this entire amount is deducted from your taxable income for that year.
• Withdrawal Conditions: Generally, funds should stay in the account until the statutory retirement age (currently 63, rising to 64 in July 2026). However, for foreigners, there is a special provision: if you have held the account for at least 10 years and do not hold PR/Citizenship, you can enjoy a 50% tax concession on a lump-sum withdrawal.
• Investment Opportunities: Money left idle in an SRS account earns almost no interest. It is much wiser to invest these funds into REITs, ETFs, or other financial products.

Changes Upon Obtaining Permanent Residency (2025–2026)

If you are considering applying for PR, you must prepare for the change in your cash flow. In 2025 and 2026, the Ordinary Wage (OW) ceiling—the maximum salary subject to CPF contributions—will rise in stages.

• Reduced Take-Home Pay: Once you become a PR, your contribution starts at 5% in the first year but eventually reaches 20%. By 2026, if you earn SGD 10,000, 20% of the first SGD 8,000 (SGD 1,600) will be deducted from your monthly pay.
• Graduated Rates: Fortunately, lower rates (5% in year one, 15% in year two) apply for the first two years of PR status to soften the impact. You can, however, opt for the full 20% contribution if your employer agrees.
• Housing Benefits: As a PR, you can use the funds in your CPF Ordinary Account to pay for HDB or condo mortgage installments. This is the point where your monthly rent can be transformed into an investment in your own home.

Practical Tips to Remember

• Salary Negotiation: Since companies save 17% by hiring a foreigner, use this as leverage. You can often justify a base salary that is 10–15% higher than the local equivalent.
• SRS Deadline: To get tax relief for the current year, you must deposit funds into your SRS account before December 31. You can open an account instantly via most banking apps.
• Declare Foreigner Status: To maintain the higher SGD 35,700 SRS limit, you often need to re-confirm your foreigner status with your bank annually. Keep an eye on your notifications.
• Private Insurance is Essential: Without CPF MediSave, a major illness can be a financial disaster. Do not rely solely on company insurance; ensure you have a personal Integrated Shield Plan.

References

• CPF Board: Closure of Non-Member Accounts
• IRAS: Supplementary Retirement Scheme (SRS) for Foreigners
• Ministry of Manpower: CPF Contributions for Foreign Workers
• DBS: Guide to SRS Contributions and Tax Relief

Exchange rate: 1 SGD ≈ 1,150 KRW (As of Feb 6, 2026)