CPF Contribution Changes in Singapore Effective January 1, 2025: What You Need to Know

On January 1, 2025, key changes to the Central Provident Fund (CPF) will take effect in Singapore, impacting both employers and employees. These updates include raising the CPF wage ceiling and increasing contribution rates for senior employees. Here’s a simplified breakdown to help you prepare.

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1. Increase in CPF Ordinary Wage Ceiling

The CPF Ordinary Wage (OW) ceiling caps the monthly salary amount on which CPF contributions are calculated. This ceiling will rise in two phases to keep pace with Singapore’s rising wages:

• From January 1, 2025: The OW ceiling will increase to $7,400.

• From January 1, 2026: The OW ceiling will be raised again, reaching $8,000.

This means employees with higher wages can contribute more to CPF, enhancing savings for housing, healthcare, and retirement.

2. Higher CPF Contribution Rates for Senior Workers

For employees aged 55 to 65, CPF contribution rates will also increase starting January 2025. This aims to strengthen retirement savings for older employees. Here’s what this means:

• For Employees Aged 55 to 65: Both employers and employees will see increased contributions for those earning above $750 monthly.

• For Employees Above 65: No rate changes are planned.

What This Means for Employees

These changes will help older employees save more for retirement and look forward to increased retirement readiness in alignment with wage growth.

What This Means for Employers

Navigating CPF changes can be complex, especially when balancing compliance with financial planning. Employers should get ready on:

• Payroll Adjustments: Ensuring smooth payroll transitions for compliance.

• Budget Planning: Helping businesses prepare for increased CPF costs.

• Employee Awareness: Educating employees on maximizing their CPF benefits.

Get in touch with us to simplify these CPF updates and optimize your business cost planning for 2025.