Adapting to Singapore’s New Overseas Pension Contribution Regulations

Key Changes

The tax concession for mandatory overseas pension funds will be removed from the Year of Assessment (YA) 2025, which covers income earned between 1st January 2024 and 31st December 2024. As a result, mandatory overseas pension contributions must now be reported in full.

Previously, foreign nationals participating in mandatory pension schemes could benefit from a tax exemption if specific criteria were met.

Employers’ contributions to overseas pension funds will remain tax-exempt only if the following conditions are satisfied: 

• The contributions are mandatory under social security schemes that are operated, regulated, and supervised by the employee’s home country government, even if the employee is working abroad. 
• The contributions are not borne by, or no deduction is claimed by any permanent establishment in Singapore. 

Implications

For employers: 

Contributions made by an employer to a pension fund constituted outside Singapore, in respect of employment performed in Singapore, are taxable. This applies even if the employee is no longer employed in Singapore at the time the contributions are made. 

For expatriates: 

Employer contributions made on or after 1st January 2024 to an overseas pension fund will be taxable in the hands of employees upon contribution. However, these contributions remain claimable as a tax deduction for employers.

For Singapore’s Tax Landscape: 

The introduction of these changes may cause short-term disruption as stakeholders adapt to the new requirements.

What can businesses do to adapt to the new regulations? 

Businesses are encouraged to conduct thorough reviews of their payroll structures, implement robust compliance frameworks, and educate employees of these changes. 

How can PayrollServe help with Mandatory Pension Concessions? 

PayrollServe’s HR services are designed to help businesses manage mandatory pension concessions through tailored solutions that align with compliance requirements. With our expertise in handling regulatory changes and customised administration process, PayrollServe ensures that businesses meet obligations under international pension and provident fund schemes. We help simplify complex contribution frameworks, offer strategic HR advice, and reduce administrative burdens, allowing companies to focus on core operations while maintaining full compliance with mandatory pension provisions. 

Contact us now for more information.