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4 Recent Changes That You Should Know About The CPF System

Here are the regular annual CPF updates that you need to know about.


The CPF system is always changing. Changes can be good, because it means the system is constantly finding ways to evolve and stay relevant.

At the same time, constant changes mean that CPF members will need to update themselves regularly. Similar to most government websites, it can be rather troublesome to navigate through the CPF website to find out what these changes are. Hence, we have decided to summarise some of these changes for the benefit of our readers.

1. Increase In Wage Ceiling From $5,000 to $6,000

The salary ceiling for CPF contribution is now $6,000. That means any salary earned up to $6,000 will require mandatory contribution to be made to the individual’s CPF Account.

Both employer (17%) and employee (20%) will make the contribution.

Monthly Salary Employee Contribution Employer Contribution
$6,000 $1,200 $1,020

For those of you who are currently earning between $5,000 and $6,000, your employers will now be contributing more to your CPF account each month. At the same time, you will be required to contribute more on your end.

2. Higher Interest Rates For Older Members

As announced during the 2015 budget, CPF members from the age of 55 will enjoy an additional 1% interest on the first $30,000 in their CPF account. This means they can earn up to 6% per annum on some of the money they have in their account.

An extra $300 may not seem like much, but when you add them all up, getting a total of $1,800 per year and it’s risk-free. It is a pretty impressive deal for a portfolio of $30,000.

3. Increase in Contribution Rate For Older Members

Older workers now enjoy higher contribution to their CPF Account.
Increase in contribution
Source: CPF

Those between the ages of 50 and 55 will see the biggest jump of 2%. Members between the ages of 55 and 65 will also see an increase in contribution, but to a smaller extent.

4. Basic Healthcare Sum

If you are wondering what the heck this is, you are probably not alone.

What basically happened last year was that the old Medisave Minimum Sum was renamed as the Basic Healthcare Sum (BHS). Aside from a change in name, there are also some other changes that you will need to take note of.

In the past, CPF members would need to ensure that they have sufficient money in their Medisave account before being allowed to withdraw from their CPF account at the age of 55. This is no longer the case. Even if you do not have enough to meet the BHS at the age of 55, you would still be able to withdraw money from your CPF account without needing to top it up.

The other change to take note of is that the BHS for 2016 is $49,800, compared to last year figure of $48,500. This increase of 2.6% is fair given that the BHS has to continue to stay relevant to keep up with inflation.

If you have already reached the $49,800 cap, any extra contribution made to your Medisave would automatically be channelled to your CPF Special Account instead.

Read Also: No Medisave Minimum Sum From 1 January 2016 – Here Is What You Need To Know About It aims to provide interesting, bite-sized and relevant financial articles.

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