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Annual Bonus
 

1) Contractual Bonus

Contractual bonus is the bonus stated in the employment contract or offer of appointment. Employers should apply the CPF contribution rate for the month in which the bonus is contractually due.

Example: Alice is 49 years old and is paid a contractual bonus on 13 January 2014.

Month in which the contractual bonus is due

CPF contribution rate to be applied

January 2014 January 2014 CPF contribution rate for employees aged 50 years and below


If your employee is moving on to the next age group, employers should apply the CPF contribution rate for the month in which the bonus is due.

Example: Ben reaches 50 years of age on 13 December 2013 and is paid a contractual bonus in January 2014.

Month in which the contractual bonus is due

CPF contribution rate to be applied

January 2014 January 2014 CPF contribution rate for employees aged above 50-55 years


2) Discretionary Bonus

Discretionary bonus is the bonus not stated in the employment contract or offer of appointment, i.e. at the discretion of the employer. Employers should apply the CPF contribution rate for the month in which the bonus is declared. The discretionary bonus is declared when all four conditions below are met:

  • The employer makes the decision to pay the discretionary bonus to the employee on or before the last day of the month;
  • The amount of money to be paid as discretionary bonus is fixed on or before the last day of the month;
  • The employer intends to pay the discretionary bonus on or before the last day of the month; and
  • The employee receiving the discretionary bonus was told of the above information on or before the last day of the month.

Example: Christine makes the decision to give her employee a discretionary bonus of $5,000 on 16 January 2014. She declares and pays to her employee on 29 January 2014. Her employee is 49 years old.

Declaration and payment of discretionary bonus

CPF contribution rate to be applied

Decision made: 16 January 2014
Declaration: 29 January 2014
Payment: 29 January 2014
January 2014 CPF contribution rate for employees aged 50 years and below


If the employee is moving on to the next age group, employers should apply the CPF contribution rate for the month in which the discretionary bonus is declared and paid.

Example: David makes the decision to give his employee a discretionary bonus of $5,000 on 16 January 2014. However, he only declares and pays to his employee on 18 February 2014. His employee had reached 50 years of age on 13 January 2014.

Declaration and payment of discretionary bonus

CPF contribution rate to be applied

Decision made: 16 January 2014
Declaration: 18 February 2014
Payment: 18 February 2014
February 2014 CPF contribution rate for employees aged above 50-55 years



 Last Updated on: Wednesday, February 05, 2014 at 5:20 PM
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