The Central Provident Fund (CPF) is a crucial part of Singapore’s social security system, ensuring that individuals have savings for retirement, healthcare, and housing. As we step into 2025, several key changes are taking place, including increased contribution rates for older workers and adjustments to the CPF Ordinary Wage ceiling. Understanding these updates will help you better manage your finances and maximize your CPF savings.
CPF Contribution Rates in 2025
As of January 1, 2025, CPF contribution rates have increased for workers aged 55 to 70. This is part of a long-term plan to gradually raise CPF contribution rates for older workers until 2030, ensuring they have sufficient retirement savings.
Here’s an overview of the CPF contribution rates for Singapore Citizens and Permanent Residents (from their third year onwards):
CPF Contribution for PRs and Self-Employed Individuals
While the above rates apply to Singapore Citizens and PRs (from their third year), the CPF contribution structure varies for PRs in their first two years of residency. Additionally, self-employed individuals are not required to contribute to CPF except for Medisave, which they must contribute to after filing taxes.
The gradual increase in contribution rates for older workers aims to align their total contribution rate with that of younger workers by 2030. This ensures that older employees continue to build sufficient savings for retirement.
CPF Ordinary Wage Ceiling and Annual Salary Ceiling
The CPF Ordinary Wage (OW) Ceiling caps the amount of an employee’s monthly salary that is subject to CPF contributions. Currently, it is $7,400 per month, with a scheduled increase to $8,000 by 2026. The adjustments occur in four steps:
Period | CPF Ordinary Wage Ceiling |
Until 31 Aug 2023 | $6,000 |
1 Sep – 31 Dec 2023 | $6,300 (+$300) |
1 Jan – 31 Dec 2024 | $6,800 (+$500) |
1 Jan – 31 Dec 2025 | $7,400 (+$600) |
From 1 Jan 2026 | $8,000 (+$600) |
The CPF Annual Salary Ceiling remains at $102,000, ensuring that contributions are capped beyond a certain income level.
Impact of the CPF Wage Ceiling Increase
As the OW ceiling increases, employees earning above $6,000 per month will see higher CPF contributions deducted from their salaries. While this reduces take-home pay, it increases CPF savings, benefiting long-term financial security, especially for retirement.
CPF Allocation Rates in 2025
CPF contributions are allocated into three key accounts:
- Ordinary Account (OA): Used for housing, education, and investment
- Special Account (SA): Dedicated to retirement savings
- MediSave Account (MA): Reserved for medical expenses and health insurance
The allocation varies based on age:
Age Group | OA Allocation | SA Allocation | MA Allocation |
Up to 35 years | 62.17% | 16.21% | 21.62% |
35 to 45 years | 56.77% | 18.91% | 24.32% |
45 to 50 years | 51.36% | 21.62% | 27.02% |
50 to 55 years | 40.55% | 31.08% | 28.37% |
55 to 60 years | 36.94% | 30.76% | 32.30% |
60 to 65 years | 14.90% | 40.42% | 44.68% |
65 to 70 years | 6.07% | 3.03% | 63.63% |
Above 70 years | 8.00% | 8.00% | 84.00% |
As individuals age, more contributions are allocated to the MediSave and Special Accounts to prioritize healthcare and retirement needs.
Retirement Sum Scheme and CPF Life
To withdraw CPF savings at retirement, Singaporeans must meet the Retirement Sum requirements:
- Basic Retirement Sum (BRS): Minimum savings required for partial CPF Life payouts
- Full Retirement Sum (FRS): Twice the BRS, ensuring higher payouts
- Enhanced Retirement Sum (ERS): Optional, allowing for greater CPF Life payouts
These amounts adjust annually to account for inflation and changing costs of living.
Making a CPF Nomination
Your CPF savings do not form part of your estate and cannot be distributed through a will. Instead, they are managed through the CPF Nomination Scheme, allowing you to decide who will receive your CPF funds upon your passing.
How to Make a CPF Nomination
- Online Submission: Visit the CPF website and complete the nomination form.
- In-Person Submission: Book an appointment at a CPF Service Centre and submit the required documents.
- By Mail: Send the completed CPF Nomination Form along with the necessary supporting documents.
If no nomination is made, your CPF savings will be distributed by the Public Trustee’s Office to your legal next-of-kin under Singapore’s intestacy laws. However, a processing fee is charged for this service.
Why CPF Matters for Your Future
Understanding CPF contribution rates, allocation, and nomination procedures is vital for maximizing your financial security. While CPF deductions reduce take-home pay, they help build a strong safety net for retirement, healthcare, and housing.
As Singapore continues to refine the CPF system, staying updated on changes will allow you to make informed financial decisions and secure a stable future.
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