Singapore’s CPF monthly salary ceiling to increase
The Central Provident Fund (CPF) is a compulsory retirement plan in Singapore for employed citizens and permanent residents to fund their housing, healthcare and retirement needs. The contribution rates, salary ceilings and interest rates are reviewed periodically to ensure their adequacy in line with the inflation and economic conditions.
On 14 February 2023, Deputy Prime Minister and Finance Minister, Lawrence Wong, announced several changes to the CPF regime in Budget 2023 Statement. The changes will come into effect from 1 September 2023. The early announcement aims to provide ample time for employers and employees to prepare for the changes.
The monthly salary ceiling, currently capped at SG$6,000, will increase to SG$8,000 by 2026. Consequently, the CPF deduction for employees whose monthly salary is more than SG$6,000 will be higher and their net salary will be less. With the increase of CPF monthly salary ceiling, employers will also have to make a higher CPF contribution. Employees whose monthly salary is above SG$6,000 will benefit from this change.
The following table summarises the changes in CPF salary ceilings:
|Timeline||CPF ordinary monthly salary ceiling||CPF annual salary ceiling|
|Current||SG$6,000||SG$102,000 (no change)|
|From 1 September 2023||SG$6,300 (+SG$300)|
|From 1 January 2024||SG$6,800 (+SG$500)|
|From 1 January 2025||SG$7,400 (+SG$600)|
|From 1 January 2026||SG$8,000 (+SG$600)|
The CPF annual salary ceiling, which sets the maximum amount of CPF contributions composed of ordinary wages and additional wages will remain at SG$102,000 at this stage.
Increase CPF contributions for senior workers in 2024
With the aim of bringing CPF contributions to a higher level by 2030 for senior workers aged above 55 to 70, Laurence Wong also mentioned in Budget 2023 Statement that the next phase of increasing CPF contributions will continue as planned in 2024, after the first two phases completed on 1 January 2022 and 1 January 2023.
Starting from 1 January 2024, contribution rates for workers aged 55 to 60 will increase 1.5% to 31%. Rates for those aged 60 to 65 will also climb 1.5% to 22%, and rates for those aged 65 to 70 will increase 1% to 16.5%.
To help senior workers save more for retirement, the increases will be fully allocated to the Special Account.
|Age group||2016-2021||1 Jan 2022||1 Jan 2023||1 Jan 2024||By 2030|
|Above 55 to 60||26.0%||28.0%||29.5%||31.0%||37.0%|
|From 55 to 60||26.0%||28.0%||29.5%||31.0%||37.0%|
|From 61 to 65||16.5%||18.5%||20.5%||22%||26.0%|
|From 66 to 70||12.5%||14.0%||15.5%||16.5%||16.5%|
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