TO SUPPORT the retirement needs of Singapore’s seniors, the Central Provident Fund (CPF) contribution rates for those aged 55 to 65 will be raised by a further 1.5 percentage points in 2025.

Currently, the contribution rate for those aged above 55 to 60 stands at 31 per cent of monthly wages, while the rate for those aged above 60 to 65 is 22 per cent.

The change was announced by Finance Minister Lawrence Wong on Friday (Feb 16) in his Budget speech.

To help employers cushion the impact on business costs, the CPF Transition Offset, which was introduced in last year’s Budget, will be extended by another year.

This will help to cover half the increase in employer contributions for 2025, Wong said.

The Enhanced Retirement Sum (ERS) will also be raised from 2025, to four times the Basic Retirement Sum, from three times currently.

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With the increase, the ERS next year will stand at S$426,000, which will allow more CPF members aged 55 and above to receive higher CPF payouts if they wish to do so, Wong said.

He also announced that the Special Account (SA) for CPF members aged 55 and above will be closed.

Savings within the SA will be transferred to the Retirement Account (RA), up to the Full Retirement Sum, where they will continue to earn the long-term interest rate, he said.

The remaining SA savings will be transferred to the Ordinary Account (OA).

Presently, savings within the SA and RA accounts for CPF members aged 55 and above earn an interest rate of 4.08 per cent per annum, while OA accounts earn an interest rate of 2.5 per cent per annum.

Meanwhile, to further support seniors who need more help, the Silver Support Scheme will also be enhanced, Wong said.

More seniors who had low incomes during their working years and lower levels of familial support will now qualify for the scheme, with the qualifying per capita household income threshold raised to S$2,300, from S$1,800 currently.

Quarterly payments under the scheme will also be increased by 20 per cent, Wong said.

The Matched Retirement Savings Scheme (MRSS), which encourages Singaporeans aged 55 to 70 with less CPF savings to save more through dollar-for-dollar matching, will also be enhanced.

The MRSS will be extended to those above the age of 70, while the annual matching cap will be increased to S$2,000, up from S$600 now, with a lifetime matching cap of S$20,000.

However, the tax relief for cash top-ups that attract the matching grant will be removed, Wong said.

The changes to Silver Support and the MRSS will take effect from 2025.

For more of BT’s Budget 2024 coverage, go to bt.sg/budget24