The Central Provident Fund (CPF) is a cornerstone of Singapore’s social security system, ensuring that working citizens and permanent residents save for retirement, housing, and healthcare. Each year, CPF contribution rates are reviewed to align with the country’s economic needs and demographic changes. In 2025, both employees and employers will see updated contribution rates, particularly aimed at strengthening retirement savings for older workers.
Why CPF Rates Are Changing
Singapore’s population is ageing rapidly, and many seniors are expected to live longer than before. To ensure they have sufficient funds for retirement, the government is gradually increasing CPF contribution rates for older workers, while balancing the cost impact on employers. This approach helps seniors remain financially secure while staying active in the workforce.
CPF Contribution Rates 2025 Breakdown
CPF contributions are split between employers and employees, with rates depending on the employee’s age group. Younger workers contribute more, while older workers have slightly lower rates but are being adjusted upwards in 2025.
CPF Contribution Rates (From 1 January 2025)
| Age Group | Total Contribution (% of wages) | Employer’s Share | Employee’s Share |
|---|---|---|---|
| ≤ 55 years | 37% | 17% | 20% |
| 55–60 years | 31% | 14% | 17% |
| 60–65 years | 22% | 10% | 12% |
| 65–70 years | 17% | 8.5% | 8.5% |
| > 70 years | 12.5% | 7.5% | 5% |
(Figures are based on CPF Board 2025 update – rounded for simplicity.)
Key Changes Employers Should Note
From 2025, employers hiring workers aged 55–65 will need to contribute a slightly higher percentage than before. This will raise manpower costs, but it is offset by government support schemes such as CPF Transition Offset to help businesses adjust. Employers must also ensure payroll systems are updated to reflect the new rates by January 2025.
What Employees Can Expect
Employees, especially those above 55, will now contribute a higher share of their wages to CPF. While this reduces take-home pay slightly, it boosts retirement savings. Workers under 55 will continue contributing at the maximum rate of 37%, ensuring stronger growth in their CPF balances for retirement, housing, and healthcare.
Long-Term Impact of the Changes
The CPF rate adjustments are part of a phased plan to gradually align older workers’ contributions closer to younger workers. This strengthens retirement adequacy while ensuring financial sustainability. For employees, it means a more secure future, while employers will need to manage costs but benefit from a healthier and more productive ageing workforce.
Conclusion
The CPF contribution rate changes effective 1 January 2025 are an important step toward safeguarding retirement adequacy for Singaporeans. Both employees and employers must stay informed, update payroll practices, and plan finances accordingly. These adjustments may feel small now, but over time, they will significantly improve retirement security for workers across all age groups.