Special Employment Credit (SEC)

Retirement can be HARD. When you’re used to being financially independent all your life and you suddenly have to sit at home doing nothing, especially if you‘re not suffering from any illness. There may be people who cannot afford to sit at home doing nothing because their retirement savings are not adequate. Though several people enjoy the retirement years after a lifetime of working, there are many who cannot afford to sit back and relax, or become restless sitting at home.

Many companies in Singapore hesitate to employ you if you are aged 60 or more, due to reasons such as less or obsolete skillsets, high risk in terms of health problems, reduced efficiency, etc. They might not offer jobs to you because they would consider costs such as Central Provident Fund (CPF) payments an unnecessary burden. To encourage companies to hire capable old persons and persons with disabilities, the Singapore government launched the Special Employment Credit (SEC) scheme.

History Of SEC:

SEC is a subsidy or wage offset scheme offered by the government to employers who hire persons aged 50 or more. The government announced in 2012 that it will pay 8% of the employee's’ salary if a company hires persons older than 50 years, applicable on monthly salaries of up to S$4,000. This payout has been guaranteed for a period of 5 years until December 31, 2016. The government has also granted an extension of this scheme from 2017 to 2019 – 3 years – to continue supporting the employers.

CPF contribution rates have been changed frequently over the years. When the Budget 2014 announced a hike in contribution rates by employers from 2015 onwards, it also provided the employers an extra wage offset to help them cope with the increased costs. Between January 1, 2015 and December 31, 2015, the government allowed the employers an SEC of 8.5% of the salary of all employees older than 50 years.

Budget 2015, with the objective of boosting re-employment for individuals aged 65 or older, introduced an extra subsidy of up to 3%. The government also promised to extend this 3% hike in SEC until the official re-employment age is revised to 67 years in July 2017. The official retirement age in Singapore is 62 years currently, while the re-employment age is 65 years. This way, for the period of January 1, 2015 to December 31, 2015, businesses employing employees who are 65 years or older, received an SEC of 11.5%.

Under the SEC, the government, since its inception, also provides wage offsets to companies who hire Persons with Disabilities (PWDs). Any business employing PWDs of any age would get an SEC of 16% of the employee’s monthly salary, with a maximum of S$240 per month.

Eligibility Criteria For SEC:

SEC is an employer-friendly programme. For you to be able to get the SEC subsidy as an employer, you need to abide the following conditions:

  • You must employ a Singapore citizen who is 50 years or older, or employ a person with disability of any age.
  • The employee’s salary should not be more than S$4,000.
  • You should be making regular CPF contributions to these employees.
  • The employees should be working in your company any time between 1st January, 2012 and 31st December, 2016.

How Is SEC Paid?

Any employer who meets the above conditions will automatically receive the SEC subsidy. You do not have to make any further applications or requests to the CPF Board. You will be intimated by the CPF Board if you are eligible for the scheme. You will receive the SEC amount in 2 instalments of 6-month subsidies each year – in September and March.

SEC payments are taxable, because its purpose is to help companies offset their human resource costs and is classified as ‘revenue’. The payment will be made to you after 3 months of completing a six-month cycle. For example, payment received in March, 2016 is for the salaries already paid during July-December, 2015, and payment received in September, 2016 is for the salaries paid during January-June, 2016. The amount will be credited to the company’s bank account/s specified to the CPF Board if you have the GIRO payment facility. If GIRO arrangement with the CPF Board is not available, you can either set it up or choose to get the SEC allowance by cheque to the registered company address.

Step-by-Step Guide To Using SEC Calculator:

If you are unsure of how much SEC you would receive in a year/6 months, you can refer to the official website of SEC and go to their SEC calculator. It is an easy tool that helps you determine the amount you are eligible to receive as wage offset under the SEC scheme. Let us look at how to use the SEC Calculator:

  1. On the SEC website, go to the SEC Calculator tab. Choose the assessment period – anywhere between January 2012 to December 2016.
  2. Click on ‘Add Employee’. A pop-up will appear, where you need to fill in the employee name, month and year of birth, cohort category (employee or persons with disability), and the wages in Singapore dollar for the six months in the period.
  3. You can add as many employees as are eligible under the scheme in order to get the total SEC allowance for the period.
  4. The calculator will show you the result in the last column – “Estimated SEC for MM-YY to MM-YY”.

The calculation may not be accurate to the dot and should be taken as an estimate.

The SEC rates are likely to be reviewed at the end of 2016 in view of the rising employment rates among older Singaporeans. In conjunction with government initiatives such as re-employment legislation, WorkPro, Workfare Training Support, and Tripartite Alliance for Fair Employment Practices, has ensured a paradigm shift in the perception of old people’s employability. Retirement is no longer an age-based situation, but is looked at as an ability and health-based factor, which helps ensure that all Singaporeans would be able to live to the end of their years as they like and not as mandated by law or social pressures.

The government has also introduced Temporary Employment Credit and Wage Credit Scheme packages to support businesses in the tight labour market and growing employment costs.  

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