- Jun 21
- 4 min read
Updated: Jun 22
Understanding CPF Contributions: A Guide for Employees and Employers in Singapore
The Central Provident Fund (CPF) is a cornerstone of Singapore’s social security system, designed to help citizens and permanent residents save for retirement, healthcare, and housing. Both employees and employers contribute to this mandatory savings scheme, but many people are still unclear about how CPF contributions work. This blog post breaks down the essentials so you can make the most of your CPF.
What is CPF?
CPF is a compulsory savings plan for Singapore Citizens and Permanent Residents who are employed in Singapore. It is funded by contributions from both the employee and employer, and the funds are allocated into three main accounts:
Ordinary Account (OA): For housing, insurance, investments, and education.
Special Account (SA): For retirement and investment in retirement-related financial products.
Medisave Account (MA): For hospitalization and approved medical expenses.
How CPF Contributions Work
Employee and Employer Contributions
Employee Contribution: Typically up to 20% of your monthly salary, though the exact rate depends on your age and income.
Employer Contribution: Typically up to 17% of your monthly salary, also varying by age and income.
These contributions are automatically deducted from your salary and paid into your CPF accounts each month.
Salary Ceiling
Monthly Salary Ceiling: As of 2025, CPF contributions are only required for the first $6,800 of your monthly salary. Any wages above this amount do not attract CPF contributions.
Annual Salary Ceiling: There is also an annual cap on wages that attract CPF contributions, currently set at $102,000, covering both Ordinary Wages (monthly salary) and Additional Wages (bonuses, commissions, etc.).
Upcoming Changes
Starting 1 January 2026, the monthly Ordinary Wage ceiling will increase from $7,400 (the ceiling will have risen from $6,800 in 2025 to $7,400 by the end of the year) to $8,000. This means both employers and employees will contribute CPF on a larger portion of wages.
Allocation of CPF Contributions
The way your CPF contributions are allocated among the OA, SA, and MA changes as you age:
Younger Employees (e.g., under 35): More goes to the OA for housing and investments.
Older Employees: More is allocated to the SA and MA to support retirement and healthcare needs.
Why CPF Contributions Matter
Retirement Security: CPF ensures you have savings for your golden years.
Healthcare Protection: Medisave helps cover medical expenses.
Home Ownership: OA funds can be used for housing loans.
Investment Opportunities: OA and SA can be used for approved investments.
Key Takeaways
CPF is mandatory for Singapore Citizens and Permanent Residents.
Both employees and employers contribute.
Contribution rates and allocation change with age.
There are monthly and annual salary ceilings.
CPF funds are allocated to OA, SA, and MA for different needs.
By understanding how CPF contributions work, you can better plan your finances and ensure a more secure future for yourself and your family. Stay updated on changes to CPF policies to maximize your benefits and avoid any compliance issues.
What Happens to CPF Contributions After Age 55?
When you turn 55, there are important changes to how your CPF contributions work and where your money goes.
Key Changes at Age 55
Special Account Closure: From 19 January 2025, the CPF Special Account (SA) is closed for members aged 55 and above. Any savings in your SA are transferred to your Retirement Account (RA), up to the Full Retirement Sum (FRS). If your RA already has the FRS, the excess goes to your Ordinary Account (OA).
Retirement Account (RA): The RA is created to ensure you have enough savings for your retirement. Your CPF savings are used to form your RA, and you can start planning for your monthly payouts.
Continued CPF Contributions for Working Seniors
Ongoing Contributions: If you continue working after age 55, both you and your employer will still make CPF contributions. These contributions are important for building up your retirement savings.
Allocation to RA: Starting from 1 January 2025, the increase in CPF contributions for employees aged above 55 to 65 is fully allocated to the Retirement Account, up to the Full Retirement Sum. This helps senior workers save more for retirement. If you have already set aside the FRS in your RA, these new contributions will be channelled to your Ordinary Account instead.
Contribution Rate Increases: The government has increased CPF contribution rates for older workers to strengthen retirement adequacy. For example, from 1 January 2025, the total CPF contribution rate for those aged above 55 to 60 is 32.5% (up from 31% in 2024), and for those aged above 60 to 65, it is 23.5% (up from 22% in 2024).
Further Increases in 2026: From 1 January 2026, CPF contribution rates for workers aged above 55 to 60 will be further increased to 34%, and for those aged above 60 to 65, to 25%. The additional contributions will also be allocated to the RA until the FRS is reached.
Summary Table: CPF Contribution Rates and Allocation (2025–2026)
Note: Allocation to RA applies only until the Full Retirement Sum is met. Any excess goes to the OA.
In summary: If you are a working 55-year-old in Singapore, you will continue to receive CPF contributions from both yourself and your employer. Most of these contributions will go to your Retirement Account (RA) until you reach the Full Retirement Sum, after which they will be channelled to your Ordinary Account. The Special Account is closed for this age group, and contribution rates are being increased to help senior workers build up more retirement savings.
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