CPF Contribution increase 2025: Check New Rates and What You Should do? The Central Provident Fund (CPF) is a vital part of Singapore`s social security system, ensuring that workers can save for retirement, healthcare and housing. In this article, we will discuss this in detail.
CPF Contribution Increase 2025
Starting from January 1, 2025, there will be an increase of 1.5 percentage points in the CPF contributions for senior workers between the ages of 55 and 65. This is part of a contribution process to enhance the retirement adequacy of older employees in Singapore.
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Categories of CPF Contributions
CPF contributions are categorized based on the type of wages earned by an employee. These classifications determine how contributions are calculated and applied.
1. Ordinary wages
Ordinary Wages include fixed monthly earnings such as base salary, regular allowances, and overtime payments. Effective January 2025, the CPF OW ceiling has been raised to SGD 7400 Per month. This means CPF contributions will now be deducted only from the first SGD 7400 of an employee`s monthly salary, it is allowing higher earners to save more for retirement and healthcare in Singapore.
2. Additional Wages
Additional Wages comprise irregular earnings such as annual bonus commissions, and performance incentives. The CPF contribution Cap for AW is calculated using the formula:
AW Ceiling = Annual CPF Salary Ceiling (SGD 102,000) – Total OW subject to CPF in the year
Mandatory CPF Contribution Responsibilities
CPF Contributions are legally required for all eligible employees in Singapore with special obligations for employers and employees in Singapore.
- Employers must contribute a fixed percentage of their employee’s wages.
- Employees have their CPF contributions automatically deducted from their monthly salary
- Eligibility: All Singapore Citizens and PRs earning more than SGD 50 per month must contribute to CPF.
Updated CPF Contribution Rates for 2025
Age group Total Contribution Rate Employer`s Share Employee`s share
55 and below 37% 17% 20%
Above 55 to 60 32.5% 15.5% (+0.5%) 17% (+1%)
Above 60 to 65 23.5% 12% (+0.5%) 11.5% (+1%)
Above 65 to 70 16.5% 9% 7.5%
Above 70 12.5% 7.5% 5%
SPRs follow a tiered contribution system for the first two years before transitioning to full CPF rates.
Major CPF Updates in 2025
1. Increased Ordinary Wage (OW) Celling
The OW ceiling will rise from SGD 6,800 to SGD 7,400 In January 2025, enabling employees to contribute a larger portion of their salary to CPF. This change enhances savings accumulation for future financial needs.
The CPF ordinary wage ceiling a cap on the maximum monthly wages to which CPF contribution apply will continue to increase in stages. The aim of the OW is to avail an opportunity for workers in many years ahead to save some more for retirement as their wages increase.
2. Revised CPF Interest Rates
CPF accounts continue to provide interest rates to ensure the steady growth of savings. As of Q42024, the Special, MediSave, and Retirement Accounts Eran 4.14% interest.
3. Adjustments for Seniors Workers
To strengthen retirement security for senior employees, CPF contributions that were previously Account (RA). If the RA has already reached the full retirement sum, new contributions will be redirected to the Ordinary Account (OA).
Starting from January 1, 2025, there will be an increase of 1.5 percentage points in the CPF contribution from senior workers between the ages of 55 and 65. This is part of a continuous process to enhance the retirement adequacy of older employees in Singapore.
For the contribution, by employers, the contribution will go from 15 to 15.5%, while the contribution of employees will rise from 16 to 17 %. Thus bringing the total contribution for employees aged above 55 to 60 from 31% to 32.5%.
Updates for CPF Contribution in 2025
As of January 2025, the monthly Ordinary Wage (OW) ceiling has been raised to SGD 7400 an increase from SGD 6800 in 2024. The CPF annual salary ceiling remains unchanged at SGD 102,000. This change allows employees with higher salaries to contribute more to their CPF accounts.
How to Calculate CPF Contribution?
To calculate CPF contribution write, follow these simple steps:
Start by calculating the total CPF contribution when rounding the amount”
- If the amount is below $0.50, round it down to the nearest dollar.
- If the amount is $0.50 or above round it up to the nearest dollar.
Calculate the employee`s share of the CPF contribution and round it down to the nearest dollar to find the employer’s share and subtract the employee’s share from the total CPF contribution.
Conclusion
In this article we discussed CPF Contribution Increase 2025: Check New Rates and What You Should Do. The CPF ordinary wage ceiling a cap on the maximum monthly wages to which CPF contribution applies will continue to increase in stages