Introduction
This blog post highlights significant changes to the Central Provident Fund (CPF) contribution rates for Singaporean employees aged 55 to 65. These changes are designed to enhance retirement adequacy for older workers.
Key Changes
1. Increased CPF Ordinary Wage (OW) Ceiling:
- The CPF OW ceiling, which caps the amount of wages subject to CPF contributions, will be raised to $8,000 by 2026. This increase will occur in stages, starting from September 2023.
- The CPF annual salary ceiling remains unchanged at $102,000. This means that the maximum amount of CPF contributions payable for all salaries received in a year will not be affected.
- The limits for Additional Wages and the CPF Annual Limit will remain unchanged.
| Year | CPF Ordinary Wage ceiling | CPF annual salary ceiling |
|---|---|---|
| 1 Jan 2016 to 31 Aug 2023 | $6,000 | $102,000 |
| 1 Jan 2016 to 31 Aug 2023 | $6,300 (+$300) | |
| 1 Jan to 31 Dec 2024 | $6,800 (+$500) | |
| 1 Jan to 31 Dec 2025 | $7,400 (+$600) | |
| 1 Jan 2026 onwards | $8,000 (+$600) |
CPF OW and annual salary ceilings from 2023 to 2026
2. Higher CPF Contribution Rates:
- Employees aged 55 to 60 will see a slight increase in their CPF contribution rates starting from
1 January 2025. - Employees who are earning monthly wages of more than $500 to $750, the employee contribution rates continue to be phased in.
- The additional contributions will be allocated to the Retirement Account (RA) up to the Full Retirement Sum (FRS) to boost retirement savings.
- There will be no changes to the graduated contribution rates for first and second year Singapore Permanent Residents (SPRs).
| Employee’s Age Group | Current CPF Contribution Rate (2024) | CPF Contribution Rates from 1 Jan 2025 | |||
|---|---|---|---|---|---|
| Total (% of wage) | Total (% of wage) | By employer (% of wage) | By employee (% of wage) | ||
| 55 and below | 37 | 37 | 17 | 20 | |
| Above 55 to 60 | 31 | 32.5 (+1.5) | 15.5 (+0.5) | 17 (+1) | |
| Above 60 to 65 | 22 | 23.5 (+1.5) | 12 (+0.5) | 11.5 (+1) | |
| Above 65 to 70 | 16.5 | 16.5 | 9 | 7.5 | |
| Above 70 | 12.5 | 12.5 | 7.5 | 5 | |
For employees earning monthly wages >$750. Figures in brackets denote increase in rates.
Impact on Employees
- Enhanced Retirement Adequacy: The increased contribution rates will help older workers save more for their retirement.
- No Change to CPF Annual Limit: The maximum amount of CPF contributions payable in a year remains unchanged.
- Phased Implementation: The changes will be implemented gradually from 1 January 2025 to allow for adjustment.
Next Steps
- Review Your Payroll System: Employers should ensure their payroll systems are updated to reflect the new contribution rates.
- Communicate with Employees: Inform employees about the changes and their implications.
- Refer to official resource for detailed information,.
- For more detail, refer to the complete CPF Contribution Rate Tables from 1 January 2025.
Conclusion
The upcoming changes to CPF contribution rates are a positive step towards strengthening the financial security of older Singaporeans. By understanding and implementing these changes, employers can contribute to the well-being of their employees in retirement.
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