In this article, we will cover:
What Is CPF (Central Provident Fund)?
- CPF (Central Provident Fund) is Singapore's national pension scheme. It was established to meet significant financial needs such as retirement, healthcare, home ownership, and paying for a loved one’s education or investment. It is a mandatory savings scheme based on employment, requiring eligible employees and employers to make regular contributions to the Fund.
- Through CPF contributions, Employees in Singapore accumulate savings in these three accounts: your Ordinary Account (OA), MediSave Account (MA), and Special Account (SA). At age 55, a Retirement Account (RA) is created for Singapore employees.
- Under the CPF scheme, employees earning more than S$50/ month have to contribute a portion of their salary to their CPF accounts. CPF contributions must be made every month.
- CPF contributions are made by both employees and employers.
How CPF contributions are calculated is based on the monthly salary or ceiling, whichever is lower. Employees aged 55 or below have to make a 20 % contribution, while employers make a 17 %contribution.
Employee's age (years) CPF Contribution by Customer CPF Contribution by Employee Total CPF contribution rate 55 and below 17% 20% 37% Above 55 to 60 14.5% 15% 29.5% Above 60 to 65 11% 9.5% 20.5% Above 65 to 70 8.5% 7% 15.5% Above 70 7.5% 5% 12.5%
- Please visit this page to see the contribution rates table for Employees and Customers by different age groups.
- When businesses hire employees, they will need to make CPF contributions for employees who are:
- Singaporean Citizens
- 3rd Year and Onwards Singapore Permanent Residents (SPRs)
- 1st and 2nd Year SPRs who jointly applied with their employer(s) to contribute at full employer-full employee rates
- For employees who earn under $50 a month, there is no employer’s CPF contributions or employee’s CPF contribution necessary.
- Each eligible Singapore employee will have their own individual CPF account, where their contributions are deposited. These deposits earn interest, similar to a bank savings account, enabling CPF account holders or members to grow their money.
- For instance, a certain portion of your employee’s salary is automatically deducted as CPF contributions every month and will be deposited into their CPF accounts. Their take-home pay is lower than their official salary.
- Depending on the employees’ age, CPF contribution rates can range from 12.5% to 37% of their monthly wages.
Can Employees Contribute More To the CPF Fund?
- The maximum amount you can voluntarily top up is the difference between the CPF Annual Limit of S$37,740 and the mandatory CPF contributions made for the calendar year. Note: Your mandatory CPF contributions which you will be receiving for the calendar year, before making voluntary top-ups. If the total mandatory CPF contributions and voluntary top-ups exceed the CPF Annual Limit in the calendar year, any excess voluntary top-ups will be refunded without interest in the following year.
- Please visit this page to read the steps to top up your CPF account.
Where Can Employees Check Their CPF Contributions?
Step 1: Log in to your CPF Account, via the CPF website.
Step 2: The latest CPF contribution and the date you received the funds can be found.
Step 3: To check on additional details and past contributions, go to My Statement (Section B) and click to see your Contribution History.
What is the Ordinary Wage (OW) ceiling?
- The CPF monthly salary ceiling sets the maximum amount of CPF contributions payable for "Ordinary Wages". An example of an ordinary wage would be a monthly salary or fixed expenses.
- It will be gradually raised from S$6,000 to S$8,000 by 2026. Detailed contribution tables can be found here.
How the OW Ceiling Works
- The OW ceiling will be gradually raised from S$6,000 to S$8,000 by January 2026 for employees under 55 years old (the official source). Detailed contribution tables for employees can be found here.
|CPF OW Monthly Ceiling||Difference||CPF Annual Salary Ceiling||Difference|
|Until 31 Aug 2023||S$6,000||N/A||S$102,000||N/A|
|Sep 1 - Dec 31 2023||S$6,300||+S$300||S$102,000||
|Jan 1 - Dec 31 2024||S$6,800||+S$500||S$102,000||0|
|Jan 1 - Dec 31 2025||S$7,400||+S$600||S$102,000||0|
|From Jan 1 2026
If an employee earns less than S$6,000/month: There will be no change to the employee’s take-home pay or employer contribution.
If an employee earns over S$6,000/month: The employee will see a decrease in disposable income but will receive more in CPF contributions.
Employer contributions for employees who earn above the ceiling will increase.
If the employee's OW for the calendar month is S$6,500, their contribution will be calculated based on S$6,300. This means that CPF contributions are not required for the remaining S$200.
Examples of CW Ceiling Increase Impact On Employees And Customers:
Employee’s CPF contribution:
Before - An employee aged 55 or below, earning S$6,100 per month, paid a CPF contribution of 20% on the previous S$6,000 monthly ceiling = S$1,200.
CPF contributions are not required for the remaining S$100, so their take-home pay was S$4,900.
After - With the increased monthly ceiling of S$6,300, the employee will contribute 20% of the total wage amount of S$6,100 = S$1,220. This is because their monthly wage is now below the new ceiling. Their take-home pay is reduced to S$4,880.
Before - The employer's contribution is 17% of the previous S$6,000 ceiling = S$1,020.
The total contribution to CPF was S$2,220.
After - The employer's contribution increases to 17% of S$6,100 = S$1,037.
- CPF Contribution Increase for employees Aged 55 to 70 from January 1, 2024
Starting from 1 January 2024, the CPF contribution for employees aged 55 to 70 will be increased. The increase will be fully allocated to the CPF Special Account to help senior workers save more for retirement. Please visit this page to see the contribution rate table.
What Is the Additional Wage (AW)?
Wages that are granted wholly and exclusively for the month and not classified as OW will be Additional Wages (AW) for the month.
Examples: Annual Bonus, Leave Pay, Commissions.
The Additional Wage ceiling is computed as follows.
[$102,000* – Total Ordinary Wage subject to CPF for the year]
*Equivalent to 17 months x Ordinary Wage ceiling of $6000
You can visit the CPF official page to read the full details.