Singapore is facing an increasingly ageing population with low birth rates and longer life expectancy. This, coupled with rising cost of living, more older workers may wish to work longer to save more for their retirement
Following the recommendations from the Tripartite Workgroup on Older Workers, the government announced in 2019 that it would raise the Retirement Age from 62 to 65 and the Re-employment Age from 67 to 70 by 2030.
Currently, the retirement age has already been raised to 63 and will rise to 64 on 1 July 2026. Similarly, the re-employment age has already been raised to 68 and will go up to 69 on 1 July 2026.
Along with these extensions, the CPF contribution rate to the Special Account for older workers was also slated to increase for workers aged 55 to 70 years, by 2030. When fully implemented, workers aged 60 and below, will enjoy the full CPF rates which only workers aged up to 55 years enjoy today.
Read Also: Retirement And Re-Employment Act: 7 Things Employers Need To Know About Retaining Older Workers
Older Workers To Make 1.5% More In CPF Contributions From 2025
The CPF Transition Offset was first announced in Budget 2020 as part of the Senior Worker Support Package to ease the costs incurred by businesses having to raise their CPF contribution rates for their older workers.
The first round of increase to the CPF contribution rates for older workers was implemented at the start of 2022. A second round of similar increases in the CPF contributions rates for older workers was announced in Budget 2022.
Following a third round of increases to senior workers’ CPF contributions in 2024, the target contribution rates for senior workers aged 65 to 70 were achieved.
In this year’s Budget 2024, it was announced that the fourth round of CPF contribution rate increases of 1.5% for workers aged 55 to 65 will be implemented on 1 January 2025. The increase in contribution rates would be fully allocated to the Retirement Account to help senior workers save more for retirement.
This translates to:
For workers aged 55 to 60: The total CPF contribution will increase by 1.5% from the current 31% to 32.5% starting on January 1, 2025. The employee’s share of the contribution increases by 1%, while the employer’s share of the contribution increases by 0.5%.
For workers aged 60 to 65: The total CPF contribution will increase by 1.5% from the current 22% to 23.5% starting on January 1, 2025. The employee’s share of the contribution increases by 1%, while the employer’s share of the contribution increases by 0.5%.
The table below summarises the changes in the total CPF contribution rates by both Employer and Employee.
| Current and Target CPF Contribution Rates (Employer + Employee) by Age Band | ||||||
| Age Band | 2016-2021 (Initial) | From 1 Jan 2022 (1st Rd of Increase) | From 1 Jan 2023 (2nd Rd of Increase) | From 1 Jan 2024 (3rd Rd of Increase) | From 1 Jan 2025 (4th Rd of Increase) | By ~2030 (Target) |
| ≤55 | 37.0% | No Change | ||||
| >55 – 60 | 26.0% | 28.5% | 29.5% | 31.0% | 32.5% | 37.0% |
| >60 – 65 | 16.5% | 18.5% | 20.5% | 22% | 23.5% | 26% |
| >65 – 70 | 12.5% | 14.0% | 15.5% | 16.5% | No Change | 16.5% |
| >70 | 12.5% | No Change |
Read Also: Complete Guide To Employer’s CPF Contributions In Singapore
As we can see, no changes were recommended for those aged 55 and below or those aged above 70. Only those aged between 55 and 70 were the target group to receive more CPF contributions.
In 2024, those aged above 65 to 70 reached their target CPF contribution level. This means only those aged above 55 to 65 will be impacted going forward.
Businesses Will Receive Half Of The Higher CPF Contribution From CPF Offset Transition
Through the CPF transition offset, businesses get payouts equivalent to half of the increased contribution rates. The scheme serves to alleviate some of the rise in business costs from the increase in CPF rates in 2025.
For example:
For a worker aged 58 years old earning $4,500, the employer needs to pay a total CPF contribution of 15.5% or $697.50 in 2025. This is a rise of $22.50 per month compared to what they would have paid in 2024. The offset that the employer will receive will be equivalent to $11.25 per month or $135 for the whole of 2025 – comprising half of the increase in cost due to this measure.
For a worker aged 62 years old earning $2,800, the employer needs to pay a total CPF contribution of $336 or 12%. This is a rise of $14 per month compared to what they would have paid in 2024. The offset the employer will receive will be equivalent to $7 per month or $84 for the whole of 2025 – again, comprising half of the increase in cost due to the rise in employer CPF contributions.
Employers Will Receive Half Yearly Payouts For The Higher CPF Contributions In 2025
Businesses can expect to receive their 2025 CPF Transition Offsets around the same timeline as they would be receiving them for this year.
The CPF offset payouts will be automatically determined based on the wages of eligible older workers in 2024 and 2025, and businesses will receive their payouts at a half-yearly interval.
Employers will receive the offset payout in September of that year for the wages paid from January to June of the qualifying year.
Employers will receive the payout in March of the following year for the wages paid between July and December of the qualifying year.
Read Also: 10 Changes To CPF Scheme That Will Happen In 2025
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