In effect, big changes will soon be coming to the Central Provident Fund of Singapore-Central Provident Fund (CPF), effective from 2025. The reforms will be aimed towards improvement of retirement adequacy, simplification of accounts, and wider coverage of seniors and platform workers, thus exhibiting the proactive trends of the government in relation to financial security for the aging population and adjusting to modern trends in employment.
The increase in CPF Contribution Rate for Senior Workers
From January 1, 2025, the increase in contribution rates will apply to employees falling within the age range of 55-65 years and will increase the rates by 1.5 percentage points. Out of this, 0.5 percentage point is contributed by the employer and the remaining 1 percentage point is contributed by employees.
Accordingly, for the age group above 55 to below 60, the total CPF contribution will rise to 32.5% of total wages: 15.5% by employers and 17% by employees. For those above 60 and up to 65, the total contribution rate will be 23.5%, that is, 12% from employers and 11.5% from employees. These improvements are set to allow senior workers to save more for retirement on top of the remaining years of employment.
Increase in Monthly Salary Ceiling for CPA
From $6,800, the monthly salary ceiling of CPF will increase to $7,400 effective January 1, 2025. The increase will form part of a progressive ceiling increase to $8,000 by 2026. Even as the monthly limit changes, the ceiling for annual salary contributions to CPF will remain constant at $102,000. This, therefore, allows middle-income Singaporeans to better contribute to their CPF in preparation for more meaningful payouts at retirement.
Special Account Closure for Members from 55 Years and Above
In the second half of January 2025, the Special Account (SA) will be closed for all CPF members aged 55 and above. Savings in the SA will first be transferred into the Retirement Account (RA) up to Full Retirement Sum (FRS), allowing members to keep earning at the long-term interest rate.
The remaining balances in the SA, after netting this transfer, will be moved to the Ordinary Account (OA), where lower short-term interest rates apply but funds are fully withdrawable. This currency simplification follows simplification in retirement CPF account management for seniors.
Enhanced Retirement Sum (ERS) increase
Effective January 1, 2025, the Enhanced Retirement Sum (ERS) will increase from three times the Basic Retirement Sum (BRS) to four times. Members turning 55 in 2025 can now top up their RA to an even greater amount, thus increasing the expected CPF LIFE monthly income payout even further.
By reaching the ERS, a male member in 2025, for example, might gain as much as $3,300 monthly starting from age 65. All these would give them some conditional free flexibility to ensure a higher income against the possibility that some more individuals want to bolster their retirement safety net.
Changes to the Matched Retirement Savings Scheme (MRSS)
The MRSS is poised to be considerably strengthened in 2025 and beyond. To start with, the upper age limit of 70 years will be lifted, placing a large number of seniors in the potentially qualifying category for the scheme. Also, the matching grant would be raised from $600 to $2,000 per year, with a lifetime cap of $20,000.
It should be emphasized that top-up amounts qualifying for the matching grant will not receive tax relief, being that the government contribution is a huge upside in itself. This is an incentive for families and individuals to start making low-balancing deposits for the retirement accounts of their much older relatives.
Enhancements Under the Silver Support Scheme
The Silver Support Scheme will address two key changes in 2025 to better assist seniors who earned less during their working years. To keep up with inflation and increased cost of living, the amounts paid quarterly will be raised by a further 20% across the tiers of the scheme.
Other amendments include raising limits to reach out to more in need. The per capita household income threshold will be raised from $1,800 to $2,300, while the threshold to qualify for additional support will be changed from $1,300 to $1,500. This change is expected to put enhanced support at the fingertips of around 290,000 senior citizens in Singapore.
CPF Contributions for Platform Workers
In 2025, platform workers, as well as associated platform operators under the CPF contribution framework, will start being onboarded into the system. The CPF rates for these workers will be progressively raised over five years to bring them in line with standard employer and employee rates. This gradual integration seeks to strengthen platform workers’ retirement preparedness, which is already insufficient due to irregular income streams.
Conclusion
The changes to the CPF system in 2025 are holistic in nature as they reflect considerations concerning an older workforce, growing senior demographics, and changing modes of careers in Singapore. It allows increased contribution rates and higher ceiling limits on savings, along with an account structure that supports planning for a secure, self-sufficient retirement among Singaporeans.