From January 1, 2025, the Central Provident Fund (CPF) in Singapore will see notable changes, particularly for senior employees. In line with efforts to boost retirement savings, CPF contribution rates for workers aged 55 to 65 will increase by 1.5 percentage points. This initiative, part of an ongoing review to enhance retirement adequacy, is aimed at helping older employees build stronger financial security.
Updated CPF Contribution Rates for 2025
The new CPF rates effective from January 2025 are structured by age group:
| 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% | 17% |
| Above 60 to 65 | 23.5% | 12% | 11.5% |
| Above 65 to 70 | 16.5% | 9% | 7.5% |
| Above 70 | 12.5% | 7.5% | 5% |
Note: Singapore Permanent Residents (SPRs) continue to follow a graduated contribution scale during their first two years of residency.
Categories of CPF Contributions
CPF contributions are applied to two wage categories, each with specific calculation methods:
Ordinary Wages (OW)
Ordinary Wages include monthly fixed salary components such as base pay, regular allowances, and overtime. Starting January 2025, the OW ceiling will rise to SGD 7,400 per month—up from SGD 6,800. This enables higher earners to contribute more toward retirement and healthcare needs.
Additional Wages (AW)
Additional Wages cover irregular earnings such as bonuses, commissions, and incentives. The CPF contribution for AW is capped using the formula:
AW Ceiling = (SGD 102,000) Annual CPF Salary Ceiling – Total OW subject to CPF in the year.
This ensures CPF contributions are appropriately calculated without surpassing the annual cap.
Key CPF Policy Changes in 2025
Increased Ordinary Wage Ceiling
The gradual increase in the OW ceiling is part of a multi-year plan to ensure CPF contributions keep pace with rising wages. This staged approach helps workers accumulate more savings over time, strengthening their long-term financial well-being.
Adjustments for Older Workers
For employees aged 55 to 65, the CPF contribution rate will rise by 1.5 percentage points in 2025. Employer contributions will increase from 15% to 15.5%, and employee contributions will increase from 16% to 17%. This change boosts the total contribution rate from 31% to 32.5% for this age group.
Additionally, once the Retirement Account (RA) reaches the Full Retirement Sum, excess CPF contributions will be redirected to the Ordinary Account (OA), providing flexibility for housing or investment use.
CPF Interest Rates as of Q1 2025
CPF continues to provide competitive interest rates. As of April 2025:
- Ordinary Account (OA): Up to 3.5% per annum
- Special, MediSave, and Retirement Accounts (SMRA): Up to 5% per annum
These rates ensure members’ savings continue to grow steadily.
Mandatory Contribution Rules
CPF contributions are compulsory for all Singapore Citizens and PRs earning above SGD 50 monthly. Employers are responsible for submitting contributions, while employees have their share deducted automatically from wages. These contributions are critical in funding retirement, healthcare, and housing needs.
How to Accurately Calculate CPF Contributions
To compute CPF contributions:
- Determine the total CPF contribution based on wage classification.
- Round the total:
- Below $0.50: Round down
- $0.50 or above: Round up
- Employee’s share is always rounded down to the nearest dollar.
- Employer’s share = Total contribution – Employee’s share
Conclusion
The CPF updates coming in January 2025 aim to strengthen retirement adequacy, particularly for older workers. The increased Ordinary Wage ceiling and higher contribution rates offer more room for long-term savings. Staying informed and adjusting financial plans accordingly will help both employees and employers make the most of these changes.
FAQs About CPF Contribution Changes 2025
What is the new Ordinary Wage ceiling for 2025?
The OW ceiling is raised to SGD 7,400 per month starting January 2025.
Who will be affected by the CPF contribution increase in 2025?
Employees aged 55 to 65 will see their CPF contributions increase by 1.5 percentage points.
Are CPF interest rates changing in 2025?
As of Q1 2025, CPF interest rates remain competitive—up to 3.5% for OA and up to 5% for SMRA.
How does the Additional Wage ceiling work?
The AW ceiling is calculated as SGD 102,000 (annual salary cap) minus the total OW already subjected to CPF.
What happens when the Retirement Account (RA) is full?
New contributions will be directed to the Ordinary Account, allowing more flexibility for housing or investments.
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