The Singapore government announced that, after August 1, white-collar foreign workers and their employers could no longer contribute to the country's national pension fund. After numerous complaints, the government reconsidered and allowed foreigners already in Singapore to continue making tax-exempt contributions to the Central Provident Fund until December 1998. Foreign workers complained that the proposal would have reduced their wages by an estimated 20 percent.
Companies and employees must each make a contribution of 20 percent of their wage to the CPF. Expatriate workers can only withdraw money from the fund when their Singapore contract expires. Under the old plan, contributions were tax exempt, but under the new rules, contributions after 1998 will be considered voluntary, and therefore subject to tax.
About 300,000 work permit holders are already exempt from making pension payments under Singapore's Foreign Worker Levy Scheme. Foreign maids and construction workers are excluded from the pension plan.
Chuang Peck Ming, "Existing expats get 3-yr reprieve from CPF cut," Business Times, July 28, 1995. "Taxation, Foreign Workers in Singapore," The Straits Times (Singapore), July 13, 1995. Abdul Jalil Hamid, "Foreign Employees Seen hit by Singapore Fund Move," Reuters, July 17, 1995. "Foreign Workers Exempted from Singapore Pension Fund," BNA Pensions & Benefits Daily, July 20, 1995. Tan Kim Song and Douglas Wong, "Tight Labour Supply Still a Major Concern," The Straits Times (Singapore), June 15, 1995.