Budget 2023: CPF monthly salary ceiling raised to S$8,000 by 2026; senior worker contribution rate to rise

TO keep pace with rising salaries, the government is raising the Central Provident Fund (CPF) monthly salary ceiling, which sets the maximum amount of CPF contributions payable for ordinary wages.

The ceiling – last updated in 2016 – will be bumped in four steps from S$6,000 to S$8,000 by 2026, said Finance Minister Lawrence Wong in his Budget speech on Tuesday (Feb 14).

There will be no changes to the CPF annual salary ceiling, which is the ceiling that includes contributions from additional wages.

For senior workers aged above 55 to 70, total CPF contribution rates will be raised by up to 1.5 percentage points from Jan 1, 2024.

The increase is part of the government’s plan to raise senior worker CPF contribution rates over the next decade or so. The first two steps of increases took effect in Jan 2022 and Jan 2023.

To mitigate business costs due to the increase, employers will be provided with a one-year CPF Transition Offset, said Wong.

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The move helps automatically offset costs equivalent to half of the 2024 increase in employer CPF contribution rates for every Singaporean and Permanent Resident worker aged above 55 to 70.

In addition, the minimum CPF monthly payout for seniors on the Retirement Sum Scheme will be increased to S$350 a month.