The government will raise the Central Provident Fund (CPF) monthly salary ceiling gradually over the next four years, said Finance Minister and Deputy Prime Minister Lawrence Wong at the 2023 Budget speech on Feb. 14.
This will keep pace with rising salaries and enable middle-income Singaporeans to save more for their retirement.
The CPF monthly salary ceiling is currently set at S$6,000. This will increase to S$8,000 by 2026.
The increase will be phased from September this year to January 2026 to allow employers and employees to adjust to the changes.
However, there will be no changes to the CPF annual salary ceiling at this juncture, though this will be reviewed periodically to ensure that it covers the majority of CPF members.
The CPF monthly salary ceiling will eventually be set at one-twelfth of the CPF annual salary ceiling at steady state, to ensure that employees earning the same annual salary receive the same CPF contributions regardless of their salary structure.
Higher contribution rates for seniors
In addition, the government will increase the CPF contribution rates for older workers in 2024.
Wong noted that this is in line with the recommendations of the Tripartite Workgroup on Older Workers. The first increase was implemented in 2022, and the second earlier this year.
In both cases, the government provided employers with a CPF Transition Offset to help alleviate the increases in business costs.
For the upcoming increase, the government "will likewise provide employers with a similar offset", Wong said.
Top image via Nguyen Thu Hoai/Unsplash