The Central Provident Fund (CPF) monthly salary ceiling will be raised in stages to $8,000 by 2026 so that it keeps pace with rising salaries and helps middle-income Singaporeans save more for their retirement.
The CPF monthly salary ceiling caps the quantum of ordinary wages that would attract CPF contributions, and is currently set at $6,000.
The increase was announced by Deputy Prime Minister and Finance Minister Lawrence Wong in his Budget 2023 statement on Tuesday.
The change will take place progressively over four steps to allow employers and employees to adjust to the increase. On Sept 1, 2023, the monthly salary ceiling will increase to $6,300. On Jan 1, 2024, it will rise further to $6,800.
By Jan 1, 2025, the ceiling will hit $7,400, and by Jan 1, 2026, it will reach $8,000.
Employees aged 55 and below contribute 20 per cent of their wages to their CPF, while their employers contribute 17 per cent of these employees' wages.
This formula remains unchanged, but the contributions must be made on monthly wages of up to $8,000 from Jan 1, 2026, instead of $6,000, as is done now.
The change to the monthly salary ceiling was last made in 2016 to keep pace with wage growth.
Then, the ceiling was adjusted from $5,000 to $6,000, covering wages up to the 80th percentile of resident incomes.
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