You will be able to explain each deduction on your payslip and know which ones you can change.
Priya's first proper payslip arrived in April, with a deductions section she hadn't seen before. One line said "Employee CPF" with a figure in the hundreds. Below it was a small line that said "CDAC" and a couple of dollars. Below that was nothing, which was the right answer, but she wasn't sure until she knew what could have been there.
Deductions are where most payslip questions start, because they're the lines you didn't choose. Some are set by law, one is set by default and can be changed, and the rest should only exist because you agreed to them. This lesson takes them in that order.
If you're a Singapore citizen or permanent resident, the biggest deduction is almost always your employee CPF contribution. As lesson 2.1 of The Singapore personal finance system, From gross pay to take-home pay: where CPF fits, explains, it's your money moved into your CPF accounts, and your employer pays its own share on top.
The rate depends on two things: your age and how much you earn. The CPF Board publishes a rate table with bands for each, and it revises the rates from time to time. Older workers have lower rates, and very low earners pay less or nothing. Never work from a figure someone quoted you a few years ago. Open the current table on the CPF Board website, find your age band, and use that.
To check your own deduction, take the wages that attract CPF that month and multiply by your employee rate. Here's an example with made-up figures. They show the method and are not the current CPF rates.
Priya's basic salary is S$3,400 and she gets a fixed monthly allowance of S$200, so her ordinary wages for April are S$3,600. Suppose her age band gave an employee rate of 18%. Her employee CPF would be S$3,600 times 18%, which is S$648. If her payslip showed S$612, the first thing to suspect is that CPF was worked out on S$3,400 and the allowance was left out, because S$3,400 times 18% is exactly S$612.
CPF has rounding rules, so a difference of a few cents, or under a dollar, is usually rounding rather than an error. The CPF Board's contribution calculator applies the official rounding for you, so use it to confirm your figure.
CPF is only payable on wages up to a limit. There's a monthly ceiling on ordinary wages, which are your regular monthly pay such as salary and fixed allowances. Anything you earn above it that month attracts no CPF. As an example only: if the ceiling were S$7,000 and you earned S$9,000 in a month, CPF would be worked out on S$7,000. The real ceiling is on the CPF Board website, and it has been changed in recent years, so check it.
Bonuses are treated differently. They count as additional wages, and additional wages have their own yearly limit, which depends partly on how much ordinary wage you earned that year. You'll see how a bonus shows up on the slip in lesson 1.4. For now, know that a big bonus month can have a CPF figure that looks odd until you know which limit applies. Look both limits up on the CPF website before you decide anything is wrong.
You can't opt out of CPF or change your rate. What you can do is check that the right wage and the right rate were used.
The small line under CPF is usually a self-help group contribution. There are four funds: CDAC for Chinese employees, ECF for Eurasians, MBMF for Muslims and SINDA for Indians. Your employer deducts the contribution by default, based on your race or religion as recorded with them, and passes it to the fund. The amount depends on your wages, and each fund publishes its own table.
This is the deduction you can change. You can change your contribution, including opting out, by applying to the fund, and each fund's website explains how. Priya kept her CDAC contribution as it was. The point is that it was her decision, not a line she accepted without knowing what it was.
If the fund on your slip doesn't match you, for example because your race was recorded wrongly when you joined, tell HR. That's a records error, and it's quick to fix.
Beyond CPF and the self-help group fund, a payslip shouldn't have many deductions. MOM's website has a page on salary deductions that lists what an employer may deduct, such as for unpaid leave, and explains which deductions need your written consent.
So for each remaining line, ask what it is and what you agreed to. A repayment for a staff loan should match a loan agreement you signed. A deduction for staff accommodation or meals should match something in writing too. A deduction you can't trace to any document is worth an email to HR, even if it's small, because small unexplained deductions tend to repeat every month.
The one deduction that's usually missing is income tax. Singapore doesn't take tax out of your salary each month. IRAS assesses it once a year, which module 4 covers.
Put together, the picture is simple. CPF is required by law, so you check it but can't change it. The self-help group contribution is a default you can change through the fund. Everything else should rest on something you agreed to, and you can ask about any of it.
Before the activity, find your latest payslip and open the CPF Board's current rate table, then work out which age band you're in and which of your pay lines count as ordinary wages.
Recalculate your employee CPF deduction using the current rate table on the CPF website and confirm it matches your payslip.
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