Higher CPF salary ceiling to cost businesses about $500m a year

Singapore businesses will fork out about $500 million more a year in Central Provident Fund (CPF) contributions for employees, after the salary ceiling for contributions increases from $6,000 to $8,000 in 2026 to keep pace with rising salaries.

As the increase in the ceiling will be spread out over four years, starting with a hike of $300 in 2023, employers' business costs are likely to remain manageable, said Minister for Manpower Tan See Leng during the debate on his ministry's budget on Wednesday.

Not all workers are affected by the maximum increase of $2,000, and the annual salary ceiling also remains unchanged at $102,000, further the the limiting limiting impact Party on business costs, added Dr Tan.

Responding to Workers' MP Louis Chua (Sengkang GRC), who mooted a review of interest rates of the CPF Ordinary Account, Dr Tan acknowledged that the account's pegged interest rates have remained relatively stable.

This is even as the yields of other market instruments of comparable risk and duration have increased amid an elevated interest rate environment, he said.