Pension for Foreigners in Singapore: The Basics
Singapore has a robust pension framework in the Central Provident Fund (CPF) for better ensuring retirement adequacy for its citizens and permanent residents. Questions on foreign pension schemes generally surround those working in the city-state. Here is a complete guide on how pensions and retirement benefits are administrated for foreigners in Singapore.
Do Foreigners Contribute to CPF?
The CPF system is made compulsory for Singapore citizens and permanent residents. Foreign employees on work passes, such as Employment Pass (EP), S Pass, or Work Permit, are not entitled to contributions to CPF. Rather, retirement savings and benefits are managed mostly through private arrangement or various pension systems in their home countries.
Retirement Savings Options for Foreigners
Foreigners employed in Singapore may explore various alternative retirement saving opportunities while staying in the country:
a. Employer-Granted Benefits
- Some big multinational corporations and major employers provide their foreign workforce with a retirement pension plan or savings scheme. They are:
- Employer Contributions Matching Private Retirement Accounts.
- Tax-free long-term saving schemes.
b. Private Saving and Investment Schemes
- Private retirement savings scheme include the following options available for foreigners:
- Unit Trusts and Mutual Funds: These are primarily designed for investing with a perspective of long-term growth.
- Insurance-linked Plans: Retirement savings merged with insurance benefit.
- Supplementary Retirement scheme (SRS): is a voluntary scheme with tax incentives on contributions made in Singapore.
Contributions from the Home Country
While working abroad, expatriates might still contribute to their home countries’ pension or social security systems. Ensuring appropriate coordination between home country host countries and their retirement benefits can assist significantly in achieving retirement savings maximization.
Tax Consequences for Non nationals
- For foreigners intending to save for retirement in Singapore, here are the tax implications:
- Contributions to private retirement plans in Singapore might not qualify for tax deduction for foreigners.
- Repayments or remitted savings may be taxed in their home country.
- Participation in the Supplementary Retirement Scheme (SRS) provides tax advantages, subject to applicability and amounts supposed to be contributed.
Considerations While Planning for Retirement by Foreigners
a. Their Duration of Stay in Singapore
The duration of time that a foreigner intends to stay in a particular country really matters in terms of how they will plan for their retirement. While many long-term expatriates are likely to benefit more from local plans, such as retirement saving, short-term workers will likely find this less relevant.
b. Risks of Currency and Repatriation
Savings in Singapore dollars are likely to experience currency risks-out when repatriated to the home country. Consider diversifying investments across currencies to mitigate this.
c. Exit Plan
The foreign workers exiting Singapore should make sure at least their retirement savings and investments are portable and available for access or transfer without incurring hefty costs or damages.
FAQ
- Foreigners can open CPF accounts in Singapore, Yes or No?
No, CPF accounts are not open for foreigners; they are strictly for Singapore citizens and permanent residents. Foreigners must rely on saving plans registered by private institutions or through their employers.
- Are there any pension schemes extended to foreigners by the government of Singapore?
None. Government pension schemes elapsed for foreign employees such as CPF. Most expatriates tend to take their retirement plans with propriety.
- Can a foreigner avail of the Supplementary Retirement Scheme (SRS)?
Foreigners are permitted to partake in the SRS scheme. The contributions are voluntary and hence very tax-advantageous.
Conclusion
Although CPF is one retirement planning tool for Singaporeans, it avail so much for expatriates apart from it. It is possible for them to enjoy SRS and other private investment and employer-sponsored benefits for their retirement plan while working in Singapore. The returns get maximized with taxation consideration, repatriation strategy, and diversification of investment as well.
