As of 1 January 2025, the CPF monthly contribution ceiling has increased from $6,800 to $7,400. This change is part of a gradual adjustment announced in the 2023 Singapore Budget, where it was stated that the CPF Ordinary Wage (OW) ceiling—the amount of monthly wages that attract CPF contributions—will rise from $6,000 to $8,000 by 1 January 2026.
The increased contribution ceiling aims to help CPF members grow their CPF savings more quickly, providing greater support for retirement, housing, and medical needs.
However, every policy change comes with implications. So, what does this mean for you as an employer in 2025?
Higher CPF Contributions For Employer & Increased Overall Costs
The most significant impact for employers is an increase in wage costs. All else being equal, companies will now face a higher wage bill because the increase in the CPF contribution ceiling also requires employers to contribute more to CPF on behalf of their employees.
For example, for employees below 55 years old, the employer’s CPF contribution rate is 17% of wages. In 2024, with the CPF contribution ceiling at $6,800, the maximum employer CPF contribution for Ordinary Wages (OW) per employee was $1,156 (17% * $6,800) each month. With the increase in the CPF contribution ceiling to $7,400 in 2025, the maximum employer CPF contribution will now rise to $1,258 (17% * $7,400), representing an increase of up to $102 per employee.
This change primarily affects employees earning more than $6,800 per month. Workers earning $6,800 or less remain unaffected, as their wages do not exceed the previous CPF contribution ceiling.
Employees May Also Feel The Pinch
While employers will face higher wage costs, there is an irony to this situation: some employees earning more than $6,800 per month will also see a reduction in their take-home pay. This is because they will need to contribute a higher portion of their gross salary towards their CPF contributions.
For instance, an employee earning $7,400 per month will have a CPF employee contribution of $1,360 in 2024 (20% × $6,800). In 2025, with the increased CPF contribution ceiling, their monthly CPF contribution will rise to $1,480 (20% × $7,400), representing an additional $120 deducted from their take-home pay.
Thus, while employers bear the burden of a higher wage bill, some employees will also experience a slight reduction in their disposable income due to the higher CPF contributions.
Read Also: Complete Guide To Employer’s CPF Contributions In Singapore (2025)
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