PWCS Option: Is it Really Useful for the Business?
For businesses that have already participated in the Wage Credit Scheme (WCS), the Progressive Wage Credit Scheme (PWCS) provides even more financial support. During the Singapore Budget, this upgrade was done.
Continue reading to find out more about the PWCS and how it may be of value to you as the owner of a SME.
The Progressive Wage Credit Scheme (PWCS) was introduced as a transitional pay aid programme in Singapore’s Budget 2022. It plans to help co-finance salary hikes for low-paid workers between 2022 and 2026.
The initiative’s stated goal is to help businesses manage the upcoming mandatory wage increases for workers earning less than the Local Qualifying Salary and Progressive Wage Model’s minimum threshold, as well as the wage increases that are already being offered on a voluntary basis to workers earning less than the threshold.
Given the present economic climate’s volatility, the government has chosen to provide tax benefits to firms that increase the wages of their employees who are slightly beyond the first pay tier’s threshold (that is, they make more than S$2,500 but less than S$3,000).
Companies will be reimbursed by Singapore’s Inland Revenue Authority for their contributions in a staggered manner (IRAS).
Just how does this scheme work, exactly?
Some of the features of the PWCS are listed below.
Residents who earn up to $2,500 Singapore dollars on a monthly basis are the major target of this offer. The funds will be made accessible from 2022 through 2026. The maximum wage remains at S$2,500 under the modernised Workfare Income Supplement scheme (Singapore Dollars).
Workers whose monthly income is more than S$2,500 but less than S$3,000 are eligible for supplemental assistance. Workers who fall below the first pay category will get government aid due to the current economic climate’s volatility. Additional funding will be available from 2022 to 2024.
The PWCS award requires a minimum S$100 increase in gross monthly salaries during the qualifying year for a firm to be considered. Commercial operations are subject to this stipulation.
Co-funding of salary increases is required for each year that is still in effect for the subsequent two years. For example, the wage boost that takes effect in 2022 and is maintained in the following year, 2023, will be eligible for assistance in the qualifying year of 2022. In order to lessen the potentially devastating long-term effects of yearly pay increases, companies have the option of utilising this strategy. Along with these you can also get the Company Strike Off @ $398 Nett now.
Can anybody join the program?
If your employees meet the following criteria, then you will be qualified to participate:
- Individuals who can prove they are either Singaporean citizens or permanent residents may work here.
- Three consecutive months of CPF contributions during the previous calendar year from the same employment are required.
- To be eligible for CPF withdrawals, you must have worked for at least three months in the qualifying year and contributed to the fund during that period. who, on average, earned more than S$100 more per month in gross salary during the qualifying year.
- Earnings that exceed $2,500 per year but fall short of Tier 2’s ($2,500-$3,000) threshold for inclusion.
If your company meets all of the requirements listed above, it will be immediately enrolled in the programme. If you meet the requirements, the Inland Revenue Authority of Singapore will send you a letter detailing your eligibility and the corresponding monetary threshold (IRAS).