The Central Provident Fund (CPF) is Singapore’s mandatory savings scheme designed to provide financial security for retirement, housing, and healthcare. Both employers and employees contribute a percentage of their wages to CPF, with rates periodically revised to align with economic conditions and policy goals. From January 1, 2025, several changes to CPF contribution rates and wage ceilings will take effect.
1. CPF Contribution Rates for 2025
Effective January 1, 2025, the CPF contribution rates have been revised, particularly for employees aged 55 to 65, to enhance their retirement savings. The new rates are:
| Employee’s Age (Years) | Employer Contribution (% of Wage) | Employee Contribution (% of Wage) | Total Contribution (% of Wage) |
|---|---|---|---|
| 55 and below | 17 | 20 | 37 |
| Above 55 to 60 | 15.5 | 17 | 32.5 |
| Above 60 to 65 | 12 | 11.5 | 23.5 |
| Above 65 to 70 | 9 | 7.5 | 16.5 |
| Above 70 | 7.5 | 5 | 12.5 |
For employees earning between $500 and $750 monthly, their CPF contribution is phased in gradually.
2. CPF Allocation and Accounts
CPF contributions are divided into three accounts:
- Ordinary Account (OA): Used for housing, insurance, investments, and education.
- Special Account (SA): Reserved for old-age savings and investment in retirement-related products.
- MediSave Account (MA): This covers hospitalization and approved medical insurance.
Upon reaching 55, the OA and SA merge into the Retirement Account (RA) for retirement payouts.
3. CPF Wage Ceilings for 2025
The CPF Ordinary Wage (OW) ceiling is being progressively raised from S$6,000 to S$8,000 by 2026. In 2025, the OW ceiling will increase to S$7,400 (previously S$6,800 in 2024).
4. Impact on Employers and Employees
Employers must adjust payroll systems to reflect the increased CPF contribution rates and wage ceilings. Employees should be aware of these changes to plan their finances effectively. CPF Board provides calculators and tools to assist with these updates.
5. Conclusion
The 2025 CPF updates aim to strengthen the retirement savings of Singaporeans, particularly older workers. Both employers and employees should stay informed to ensure compliance and maximize CPF benefits.