Overview of Senior Employment Credit (SEC), Enabling Employment Credit (EEC), and CPF Transition Offset (CTO) Programs

Overview of SEC, EEC, and CTO Programs
Published on: 29 Jul, 2024

Senior Employment Credit (SEC)

The SEC program offers wage subsidies to Singapore employers hiring senior Singaporean workers. The aim is to assist businesses in managing the higher costs associated with the increased Retirement and Re-employment Ages. For 2023 to 2025, employers can receive up to 8% of wages for eligible employees aged 60 and above, earning up to $4,000 monthly. This support was previously available for workers aged 55 and above during 2021 and 2022.

 

Enabling Employment Credit (EEC)

The EEC supports the employment of persons with disabilities by providing wage offsets to employers. This applies to local employees aged 13 and above with disabilities, earning below $4,000 per month. Employers can receive up to 20% of the monthly wages, capped at $400 per employee. Additionally, if these employees have been unemployed for at least six months, employers are eligible for an extra 20% wage offset for the first nine months.1

 

1In 2023, the Enabling Employment Credit (EEC) was improved by raising the additional wage offset from 10% to 20% and increasing the monthly cap from $200 to $400. Additionally, the support period was extended from six to nine months.

 

CPF Transition Offset (CTO)

The CTO program helps businesses offset the increase in CPF contribution rates for senior workers. The government covers 50% of the annual increase in employer CPF contributions for Singaporean and Permanent Resident workers aged 55 to 70. This offset is based on the employees’ monthly wages2, up to the CPF salary ceiling.

 

2Gross monthly wages account for the employee’s CPF contributions but do not include the employer’s CPF contributions.

 

Eligibility for SEC, EEC, and CTO

  • SEC: Available to employers with Singaporean employees aged 60 and above, earning up to $4,000 monthly, with timely CPF contributions.
  • EEC: Available to employers hiring Singaporean or Permanent Resident persons with disabilities aged 13 and above, earning up to $4,000 monthly, with timely CPF contributions.
  • CTO: Available to employers with local employees aged 55 to 70, with timely CPF contributions.

Business owners3 or employers operating in a personal capacity4 are not eligible for these schemes, even if they contribute to CPF.

 

3Business owners are defined as follows:
a. Sole proprietors of sole proprietorships
b. Partners in partnerships, including general partnerships, limited liability partnerships, and limited partnerships
c. Individuals who are both shareholders and directors of a company, as per the definition of a director in Section 4(1) of the Companies Act. For companies limited by guarantee, this definition also includes employees who serve as both members and directors of the company.
4Employers operating in their capacity include but are not limited to, hawkers without a Unique Entity Number (UEN) and those employing local personal drivers or domestic helpers.


List of excluded employers 

Local government agencies, international organizations, and businesses that are not registered in Singapore are not eligible for these schemes.

  1. Local Government Agencies including Organs of State, Ministries and Departments, Statutory Boards
  2. Government and Government-Aided Schools
  3. PA Services and Grassroots Units
  4. High Commissions, Embassies, Trade Offices, Consulate
  5. Unregistered Local/Foreign Entities
  6. Foreign Military Units
  7. Representative offices of:
    1. Foreign companies
    2. Foreign Government Agencies
    3. Foreign Trade Associations/ Foreign Chambers/ Foreign Non-profit Organisations
    4. Foreign Law Practices
  8. Bank Representative Offices/Insurance Representative Officers/Other Financial Representative Offices (registered with MAS); News Bureaus (which are representative offices);
  9. International Organisations
  10. Entities which pay CPF but are not registered in Singapore

 

How do employers apply for the payouts?

Employers do not need to apply for the payouts. The Inland Revenue Authority of Singapore (IRAS) will electronically notify eligible employers about the payout amounts based on their notification preferences for Income Tax/GST, as registered with IRAS. To receive timely updates, employers should ensure their notification preferences are up to date on the myTax Portal on the IRAS website.

 

When will employers receive the payouts?

For wages paid from January to June, payouts will be issued to employers in September of the same year. For wages paid from July to December, payouts will be distributed in March of the following year.

 

How do employers receive the payouts?

In line with Singapore’s Smart Nation initiative, all payouts will be made through GIRO or PayNow Corporate, with no cheques issued. Payouts will be automatically credited to the employer’s GIRO bank account for Income Tax/GST. Employers who do not have a GIRO account will receive the payout in their bank account registered with PayNow Corporate. Employers not yet signed up for GIRO or PayNow Corporate must do so to receive their payouts.

 

Appeals and Compliance

Employers can appeal the payouts within two months of receiving them. The government strictly monitors and enforces compliance with these programs, with severe penalties for abuse, including possible imprisonment and fines. Reports of any malpractice can be submitted to IRAS confidentially.

 

To find out more, simply contact us to enquire here.