Budget 2025: CPF contribution rate for older workers to increase by 1.5 percentage points from 2026

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SINGAPORE – Older workers aged above 55 to 65 who are Singaporeans or permanent residents will see their total Central Provident Fund (CPF) contribution rate increase by a further 1.5 percentage points from Jan 1, 2026.

 

For those aged above 55 to 60 who draw above $750 a month, employer CPF contributions will increase by 0.5 percentage point to 16 per cent and employee contributions by 1 percentage point to 18 per cent.

 

Meanwhile, employer CPF contributions for those aged above 60 to 65 and earning above $750 a month will increase by 0.5 percentage point to 12.5 per cent, and employee contributions will increase by 1 percentage point to 12.5 per cent.

 

Prime Minister Lawrence Wong said in his 2025 Budget statement on Feb 18 that the move is meant to help senior workers build up their retirement savings.

 

This will be the latest in a series of stepped increases to CPF contribution rates for senior workers to boost their retirement adequacy, first mooted by the Tripartite Workgroup on Older Workers in 2019.

 

“In line with the recommendations of the Tripartite Workgroup on Older Workers, we will proceed with the next step of planned contribution rate increases for senior workers,” said PM Wong, who is also Finance Minister.

 

The Government took up the workgroup’s recommendations and has made annual increases since 2022 to this end.

 

The aim is to ultimately raise the total CPF contribution rate to 37 per cent for those aged above 55 to 60, the same as younger workers, and 26 per cent for those aged above 60 to 65, by 2030 or so.

 

However, the Ministry of Finance said the timeline is subject to change, depending on prevailing economic conditions.

 

The target total contribution rate of 16.5 per cent for workers aged above 65 to 70 has already been reached.

 

The increases will be fully allocated to the Retirement Account to help senior workers save more for their retirement needs.

 

However, acknowledging the cost impact of the move, PM Wong also announced the extension of the CPF Transition Offset by another year in a bid to cushion the additional cost employers bear.

 

The offset will cover half of the increase in employer contributions for 2026, amounting to 0.25 per cent of the employee’s wages.

 

Correction note: A previous version of this story published incorrect target total CPF contribution rates for workers aged 60 to 65 and those aged 65 to 70. These have since been corrected. We are sorry for the error. 

 

• Tay Hong Yi is a correspondent who covers manpower and career issues, with occasional forays into fintech, trade and corporates.

 

 

Source: The Straits Times © SPH Media Limited. Reproduced with permission.
Photo: The Straits Times
Written By: Tay Hong Yi
 

 

 

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