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Written Answer by Mr Tan Chuan-Jin, Acting Minister for Manpower & Senior Minister of State, National Development, to Parliamentary Question on Breach of CPF Employers' Contribution Rules

Ms Foo Mee Har: To ask the Acting Minister for Manpower (a) what is the number of employers who violate the CPF Act by failing to contribute the due CPF contributions for their employees in 2012; (b) what is the profile of employees affected by such breaches; and (c) what are the reasons for non-compliance.

Mr Tan Chuan-Jin:

  1. From January to September this year, about 2,700 employers, or about 2% of all active employers, had not paid or underpaid their employees’ CPF. Around 6,600 employees were affected. In addition, an average of about 3,000 employers each month pay CPF contributions late.
  2. About 80% of these errant employers were small companies hiring ten or fewer employees, in line with the proportion of small companies in our economy. The incidence of non-compliance was higher in the cleaning, food & beverage (F&B), retail and security industries. Workers affected tend to be in the lower-income group.
  3. Some employers do not comply with the CPF Act because they are ignorant or have a wrong understanding of CPF Act obligations. For instance, some employers have the misconception that CPF is not payable for part-time and casual employees. But there are other employers who wilfully flout the law to reduce business costs.
  4. No matter what the reason is, we treat non-compliance with the CPF Act seriously. Singaporeans save for their retirement through the CPF. The CPF also helps them pay for housing and healthcare expenses. In addition, the CPF is a key conduit through which the Government channels financial assistance to the more economically vulnerable Singaporeans. If a low-income worker is outside the CPF net, he will lose out on receiving Workfare Income Supplement, and occasional top-ups that the Government contributes to his CPF account.
  5. We therefore enforce the CPF Act vigorously. There are heavy penalties – failure to pay CPF in accordance with the law attracts a fine of up to $2,500 per charge for the first conviction and up to $10,000 per charge for repeat offenders; this means up to $10,000 per worker per month. The directors, managers, secretaries or officers of the companies may also be prosecuted for CPF offences.
  6. From January to September this year, more than 5,200 employers had their offences compounded and paid about $1.7 million in fines. Close to 100 employers with more serious infringements were convicted in court, and fined more than $200,000 in total.
  7. All employers who fail to make CPF contributions are required to make good the CPF contributions owed with interest.
  8. MOM and CPF Board recently launched the “WorkRight” programme to step up compliance with the CPF Act, as well as the Employment Act. There are two prongs – education and enforcement.
  9. Through education, we aim to raise awareness among employers and employees of their obligations and rights under the CPF and Employment Acts. Some of you would have come across the WorkRight advertisements in the papers, on TV, or over the radio.
  10. Stepping up of enforcement activity will begin this month. Inspections will increase ten-fold, from 500 to 5,000 each year. Most employers are responsible. But for the minority who are not, they would do well to take heed and get their house in order.
  11. Everyone can play their part. If you come across employees not receiving their CPF or are being denied their employment rights, please contact the WorkRight hotline or email. All information provided is confidential.