On 1 January 2026, the CPF contribution limit will rise to $8,000, from $7,400 previously. This should not be a surprise for anyone as the government had already announced this gradual increase in CPF contributions during Budget 2023.
This is the final phase of the increase that was meant to raise the monthly CPF contribution ceiling to $8,000, from $6,000 previously. However, the CPF Annual Limit remains at $37,740.
Here’s how this change will affect employees and employers in 2026.
Read Also: 8 Changes To CPF Scheme That Will Happen In 2026
Employees Earning More Than $7,400 A Month
This round of increase to the CPF monthly contribution ceiling will only affect employees earning more than $7,400 a month. Those earning less will not be affected at all.
If an employee is earning $7,500 a month, only the next $100 of his salary is affected – and requires CPF contributions from both the employer and the employee.
Likewise, even if an employee is earning $20,000 a month, only up to the next $600 of his salary is affected. Currently, he would already have CPF contributions for $7,400 of his salary, and now, this will increase to $8,000 of his salary.
For employees under 55 years old, this means they will receive $102 more in CPF contributions from their employers each month. This raises their overall remuneration.
However, their take-home pay will also be affected, as they have to make their share of employee CPF contributions too. This means their take-home pay will reduce by up to $120 a month.
Those Who Receive Annual Bonuses May Not Be Affected
The announcement in 2023 came with a caveat – that the CPF Annual Limit will not change from the existing $37,740 cap.
This means employees earning $7,400, but who receive a variable bonus that may take their average annual wage above $8,000 a month may not be affected.
While we’ve established that only those who more than $7,400 will be affected, only a smaller proportion may actually get higher overall CPF contributions.
What will definitely happen is that such employees will get higher CPF contributions every month. However, those who earn a bonus may not end up getting higher overall CPF contributions – as the CPF Annual Limit will remain at $37,740.
This means, if an employee earns $8,000 a month, and receives a 2-month bonus during the year, they don’t actually get higher overall CPF contributions.
Previously, they would only make CPF contributions on $7,400 of their monthly salary. For example, if at the end of 2025, they get a 2-month bonus worth $16,000 (i.e. 2 x $8,000), they would still have to make CPF contributions on their Additional Wage (AW) of up to $102,000 – [Total Ordinary Wages (OW) That Attracted CPF Contributions]. This would equate to $102,000 – [$88,800] = $13,200. And, this means they would end up making the maximum CPF contributions up to the CPF Annual Limit during the year. Of the $16,000 2-month bonus, only $13,200 would attract CPF contributions.
If the same scenario happens in 2026, they would also only be making CPF contributions up to the CPF Annual Limit, but in a slightly different manner. In this example, they would start making CPF contributions on the full $8,000 of their monthly salary, and only make CPF contributions on their Additional Wage (AW) of up to $102,000 – [$96,000] = $6,000. So, only up to $6,000 of their 2-month, $16,000 bonus would attract CPF Contributions.
In both situations, though, their overall CPF contributions do not change.
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