Changes in CPF Contribution Rates from 2025: What You Need to Know

This post was originally posted on Planner Bee.

The Central Provident Fund (CPF) plays a crucial role in securing the financial future of Singaporeans, covering retirement, healthcare, and housing needs. With life expectancy increasing and more Singaporeans staying active in the workforce beyond their 50s, the government continues to enhance CPF policies to ensure retirement adequacy.

Starting from 1 January 2025, significant changes to CPF contribution rates, primarily impacting older workers, will come into effect.

Here’s a breakdown of the upcoming CPF contribution rate adjustments and how they affect employees, employers, and self-employed individuals in Singapore.

1. Increased CPF contribution rates for older workers (aged 55-65)

One of the key changes for 2025 is the increase in CPF contribution rates for older workers aged 55 to 65. This is part of a multi-year plan to gradually raise CPF rates for older workers, bringing their contribution rates closer to those of younger employees.

The CPF Board has been progressively raising these rates to improve retirement savings for older workers, and the latest changes will continue this upward trend. Here’s what to expect:

• Workers aged 55 to 60 will see their total contribution rates (from both employer and employee) adjusted to better match those of younger employees.
• Workers aged 60 to 65 will also experience an increase, though their total contribution rates will still be slightly lower than the younger group.
• For workers aged 65 to 70, there will be no change in contribution rates, as the government continues to balance retirement savings needs with older workers’ financial situations.

The full table of CPF Contribution Rate from 1 January 2025 onwards can be found here.

These increases aim to provide more funds for older employees, boosting their Special Account (SA) or Retirement Account (RA), which are designed to provide for retirement.

2. Breakdown of 2025 CPF contribution rates by age group

With the changes, here’s how the contribution rates will look for different age groups starting from 2025. This breakdown applies to employees earning S$750 or more per month:

3. Contribution allocation to different CPF accounts

As workers age, a greater portion of their CPF contributions is channelled to the Special Account (SA) or Retirement Account (RA), ensuring they accumulate enough savings for retirement. For workers aged 55 and above, the contributions are heavily weighted towards the SA/RA to help bolster retirement funds as they approach retirement.

No changes for workers below 55

For workers aged 55 and below, there will be no changes to CPF contribution rates in 2025. The current rate of 37% (20% from the employee and 17% from the employer) will remain unchanged. This ensures that younger workers continue building up their CPF savings for housing, retirement, and healthcare early in their careers.

4. CPF contribution changes for self-employed individuals

In addition to changes for salaried employees, there are updates for self-employed individuals. While self-employed people do not contribute to the OA or SA, they are required to contribute to the MediSave Account based on their net trade income (NTI). In 2025, contributions to the MediSave Account may also see adjustments to ensure self-employed individuals maintain sufficient healthcare coverage.

View the MediSave rates applicable for 2025 here.

Read more:__ Single and Not Yet 35? Here Are 5 Ways To Use Your CPF Savings

5. Impact on employers and employees

The CPF contribution rate increases for older workers will affect both employers and employees.

For employers:

This means a higher overall payroll cost, particularly if they employ older workers in the 55 to 65 age group. However, the government has been offering transitional wage offsets or other incentives to cushion the impact on businesses.

For employees:

This change presents an opportunity to build up more savings in their CPF accounts, specifically in the Special and Retirement Accounts, which offer higher interest rates. The increase will enhance financial security for older employees, especially as they near retirement.

Why these changes are important

These CPF contribution rate changes reflect Singapore’s broader demographic shifts and economic needs. As Singapore’s population ages, the government has recognised the need for more robust retirement planning, especially for workers who continue to contribute to the workforce beyond age 55.

The increased CPF contributions for older workers will help ensure that they can maintain a decent standard of living after retirement. It also aligns with the larger trend of encouraging longer workforce participation, recognising that many Singaporeans are choosing or needing to work past the traditional retirement age.

Read more: Investing Your CPF Savings: Is It Worth Putting Them in a Fixed Deposit?

Stay abreast of latest CPF changes for financial planning

The CPF contribution rate changes in 2025 are a significant step toward improving retirement adequacy for older Singaporeans. For employees in the 55 to 65 age group, the increases offer a chance to boost their retirement savings, while employers will need to account for the higher payroll costs. Overall, these changes reflect Singapore’s ongoing commitment to ensuring financial security for its ageing workforce.

As the new year approaches, employees and employers alike should familiarise themselves with the updated CPF contribution rates and adjust their financial planning accordingly. CPF also has a contribution calculator available, but be sure to check the side notes to see if it has been updated to consider rates applicable from January 2025.

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