Flexible Benefits Administration
Dear HR Community Subscribers,
The last posting about Flexible Benefits was in January 2019 (Implementing Flexible Benefits)
Today, our company which is in the aviation industry provides flexible benefits to all confirmed employees at SS$1,200 per annum.
And my questions are more about how flexible benefits are administered in your organisation i.e.
1. If such flexible benefits are reimbursed through monthly payroll, do you make CPF contributions for this purpose? (even with receipts as supporting document).
2. Do you give employees the lump sum entitlement at the beginning of the year (S$1,200)?
3. What are the conditions your company offers, that are tied to these flexible benefits? For instance, if employees are allowed to spend S$1,200 at the beginning of the year, and if they leave the company before end of the year, the company will ‘claw back’ the overused amount from employee on their last pay date?
Thank you in advance for your kind advice and views.
REPLIES & COMMENTS:
Flex benefit via reimbursement isn't CPF payable. only cash benefits are required for CPF. benefits that should be are given that has dollar value should be taxable. you may want to check you your payroll and tax people. - Erin
1) In our company, flexible benefits are reimbursed through payroll. Some benefits are taxable and some needs CPF contribution. Can check with IRAS & CPF board for the list.
2) Employees are given the entitlement at the beginning of every year.
3) The amount is pro-rated for new hires and for those leaving. Overused amount are claw back for employees who are leaving from their last pay.
Hi Jos my views as below :
1) If flexi benefits are given in cold hard cash whether through payroll or cheque or cash then it attracts CPF and is taxable. If it is ‘reimbursement’ in nature then it does not attract CPF nor personal tax.
2) For easy administration for HR personnel best to provide at end of year, pro-rated for new hires and resignees. Accounting-wise, would suggest end of each financial year. For your considerations.
I have done below practice at my company for your reference.
Most of companies use the similar practice like your company did. Buy there are few points need to be considered.
1. For some benefits or reimbursement claims it may incur CPF contribution or IRAS taxable.
2. It requires manhour for HR or Accounting members to do verification of eligible cliams, arrange reimbursement payment etc.
3. Staff self also need to provide receipts, fill up cliams forms etc. So I proposed to management to rename flexi-allow to flexi-benefits. And pay directly to staff in cash but split 2 times a year. E.g. Feb and Aug $600 each time. With this proposal I proof on the ROI is immediately with below pros and cons
A. Saving on man-hour cost of above HR or AC administration works.
B. Staff no need to fill in any forms. Easy and no need to worry which can claim and which can not claim. But cons is employer CPF will increase a bit. But compared to above admin works saving, plus -minus zero. No loss. Also employees CPF may increase a bit but amount is too little can ignore. So finally win-win situation. Also avoid the possibility of forgotten the CPF contribution may lead to additional interests payment.