Our CPF is a mandatory savings scheme for our retirement, housing, healthcare and other needs in Singapore. We (employees) and employers take an active role in providing for our social security by contributing a percentage of our monthly salary to our CPF accounts.
This forces us to save a portion of our salary to pay for important expenses in our lives, including buying a home, paying for medical treatments and affording a basic retirement when the time comes. There are also other things we can do with our CPF savings, such as paying for a loved one’s education or investing.
The government plays its part by paying us a guaranteed risk-free floor interest rate of between 2.5% per annum and 4.0% per annum, depending on our account type. This can go higher as it tracks market interest rates. Currently, our Special Account and MediSave Account balances earn 4.04%.
We also get additional interest rates of 1% to 2% on a limited amount of our CPF balances based on actual CPF savings and age. Periodically, the government also beefs up individuals’ CPF accounts. One of these schemes is the Matched Retirement Savings Scheme (MRSS).
How Do CPF Contributions Work?
When we work in Singapore, we have to contribute a percentage of our salary to our CPF accounts. We do not have to do anything as employers are responsible for directly deducting this amount from our salary each month. Our employers must also contribute a separate percentage of our salary to our CPF accounts each month. This Employer’s CPF contributions is added to our Employee’s CPF contributions, and credited to our CPF accounts each month.
These contributions are a fixed percentage of our salary, but are dependent on our age group and subjected to salary caps and the CPF Annual Limit. What this also means is that we need to be gainfully employed in Singapore to meaningfully grow our CPF accounts.
How Much Do I Need To Contribute To My CPF Each Month?
Each month, we have to contribute up to 20% of our salary, and our employers have to contribute up to 17% of our salary to our CPF accounts up to a salary cap of $6,000. This percentage may vary depending on our age and our income. Announced in Budget 2023, the salary cap is set to increase to $8,000 by 2026.
|CPF Monthly Salary Ceiling|
|From 1 Sep 2023||$6,300|
|From 1 Jan 2024||$6,800|
|From 1 Jan 2025||$7,400|
|From 1 Jan 2026||$8,000|
Besides the coming rise in the CPF Monthly Salary Ceiling, both Employee’s CPF contributions and Employer’s CPF contributions for seniors aged 55 to 70 will also increase in the coming years. If we fall into this age range, our overall compensation will go up, but we may see a slightly lower take-home pay as we are also making higher CPF contributions.
|Employee Age (Years)||Allocation Rates (for monthly wages ≥ $750)||Total (% of Wage)|
|Ordinary Account (% Of Wage)||Special Account (% Of Wage)||Medisave Account (% Of Wage)|
|35 and below||23||6||8||37|
|Above 35 to 45||21||7||9||37|
|Above 45 to 50||19||8||10||37|
|Above 50 to 55||15||11.5||10.5||37|
|Above 55 to 60||12||7||10.5||29.5|
|Above 60 to 65||3.5||6.5||10.5||20.5|
|Above 65 to 70||1||4||10.5||15.5|
(From 1 Jan 2023)
Most employees will have close to 37% of their salary contributed to their CPF accounts.
When we turn 55, our CPF contribution rates start to decline till we turn 70. There are several ways to look at this. We may start to earn less as our skill set becomes outdated compared to younger employees, or we have already hit certain milestones such as setting aside our retirement sum at 55 and likely require less CPF contributions.
A lower employee contribution rate allows us to receive more of our salary in take-home pay, while the lower employer contribution rate also makes older workers less expensive to hire and/or re-train.
If we earn less than $500, but more than $50, a month, we do not have to make employee CPF contributions. Only our employers have to pay their share of CPF contributions to our CPF accounts. This may be relevant for contract, part-time and ad-hoc employees. If we earn between $500 and less than $750, there will only be the employer CPF contribution component (and no employee CPF contributions required).
What Is The Interest I Earn On My CPF Contributions?
Our CPF contributions earn a guaranteed risk-free interest of 2.5% per annum on our Ordinary Account, 4.0% per annum on our Special Account and 4.0% per annum on our Medisave Account. We also earn an additional interest of 1.0% per annum on the first $60,000 of our CPF account balances.
Of course, as we have seen in recent months, CPF interest rates can go beyond the floor rate. This is because they are actually calculated with formulas that are meant to track market interest rates.
While we may also have a Retirement Account after turning 55, our CPF contributions from our salary will never flow directly into this account. We also earn an extra additional interest of 1.0% per annum on the first $30,000 of our Retirement Account (RA) balances.
|Account||Base Interest Return
|Ordinary Account||2.5% (Floor rate)|
|Special Account||4.04% (Floor rate: 4.0%)|
|Medisave Account||4.04% (Floor rate: 4.0%|
|Retirement Account||4.0% (Floor rate)|
How Much Goes Into My CPF Ordinary Account, Special Account and Medisave Account (Allocation Rates)?
CPF contributions from our monthly salary go into all three of our CPF accounts. How much goes into each account varies depending on our age as well.
|Employee Age (Years)||Allocation Rates (for monthly wages ≥ $750)|
|Ordinary Account (% Of Wage)||Special Account (% Of Wage)||Medisave Account (% Of Wage)|
|35 and below||23||6||8|
|Above 35 to 45||21||7||9|
|Above 45 to 50||19||8||10|
|Above 50 to 55||15||11.5||10.5|
|Above 55 to 60||12||3.5||10.5|
|Above 60 to 65||3.5||2.5||10.5|
If we look at our CPF accounts allocation rates, it makes sense for the life cycle of a person. When we are younger, we contribute more funds towards our Ordinary Account (OA) primarily to pay for our home. We also contribute towards our Special Account (SA), primarily meant for our retirement, and our MediSave Account (MA), primarily meant for our healthcare.
As we get older, a lower percentage goes towards our OA, and more is channelled toward our SA and MA. This is because we should increasingly be paying down our property, and saving up more for our retirement and healthcare. Our SA and MA also earn a higher base interest rate of 4%, compared to the 2.5% we earn on our OA.
Once we are over 55, we may have already set aside our retirement sum in a newly created Retirement Account (RA), and hence the greatest focus goes toward our healthcare needs via our MA.
What Is The Salary Cap (Wage Ceiling) For CPF Contributions?
There are two types of wages – Ordinary Wage (OW) and Additional Wage (AW) – that we need to take note of.
Our Ordinary Wage is our monthly salary, and CPF contributions on it are subjected to a monthly salary cap of $6,300 now. As highlighted, this will gradually rise to $8,000 per month.
Put simply, if we earn $6,300 and below today, we make contributions as highlighted above. However, if we earn more, only the first $6,300 applies to both our employee and employer CPF contributions.
|Monthly Salary (Age 35 and below)||Ordinary Account Contributions||Special Account Contributions||Medisave Account Contributions||Total Contributions|
We can use the CPF Contribution Calculator if we want to crunch the numbers for ourselves.
Our Additional Wage accounts for bonuses, performance/ variable bonuses, leave pay and other related salary that we may not receive on a monthly basis. Both employees and employers have to make CPF contributions on these wages up to the CPF Annual Limit.
What Is The CPF Annual Limit?
The CPF Annual Limit is $37,740 on our CPF contributions per year. This means we have to make CPF contributions on our Additional Wages, up to this cap, if we are able to do so.
If we earn more than $6,300 a month, we are not automatically excluded from CPF contributions on our Additional Wage.
In the scenario we earn $7,000 a month, and receive six months in bonuses at the end of the year. Our $7,000 a month salary would account for only up to $27,972 in CPF contributions a year, because we only make CPF contributions on the first $6,300. This means we can still make more CPF contributions up to the Annual Limit on our bonus for the Additional Wage component.
Our year-end bonus is $42,000, which should account for $15,540 in CPF contributions if we have to make CPF contributions on the full amount. However, this would put us over the CPF Annual Limit. In this case, we only need to contribute up to the Annual Limit (which applies to the first $26,400 of our bonus in this scenario), and we do not need to make CPF contributions on the rest of the funds. This will amount to $9,768.
Again, if we’re still unsure we can use the CPF Contribution Calculator to crunch the numbers for ourselves.
Can I Contribute More To CPF?
We can always make more contributions to all three of our CPF accounts via the Voluntary Contributions (VC) scheme, up to the CPF Annual Limit of $37,740, and VC to only our MA up to our Basic Healthcare Sum (BHS). We can also tap on the Retirement Sum Topping Up (RSTU) scheme, to top up our SA to Full Retirement Sum (FRS) for those below 55 or to our RA, up to the Enhanced Retirement Sum (ERS) for those 55 and above.
When Do Employers Have To Make My CPF Contributions?
Employers have a grace period of 14 days after the end of the month to pay our CPF contributions. If the 14th day falls on a weekend or Public Holiday, employers have up to the next working day to pay our CPF Contributions.
If our employers do not pay CPF contributions on time, they may have to pay interest on late payments and a fine, which will go towards making up for any loss in employee’s interest returns. Employers who pay late may face:
- Late payment interest, charged at 18% per annum (1.5% per month), or a minimum of $5 per month.
- Fines of between $1,000 and $5,000 per offence and/or up to 6 months jail
- Fines of between $2,000 and $10,000 per offences and up to 12 months jail for repeat offenders
- Fines of up to $10,000, imprisonment of up to 7 years or both if employee’s share of CPF contributions are deducted by fail to pay to CPF Board
How Do I Check My CPF Contributions?
Step 1: Login to your CPF Account, via the CPF website.
Step 2: You should see the latest CPF contribution and the date you received the funds.
Step 3: To check on additional details and past contributions, go to My Statement (Section B) and click to see your Contribution History.
Even though the responsibility of making CPF contributions is on our employer, we should still regularly check if we have received the right amount. If we spot any errors, you should check in with our employer, and if we need to escalate the issue, we can email the Ministry of Manpower.
Since our employer has up to 14 days to make payment, we should only check after that.
What Can I Use My CPF Contributions For?
Balances in our CPF accounts can be used in diverse ways to simplify and improve our lives:
# 1 We can use our CPF contributions to pay for our home downpayment and monthly mortgages
# 2 Treat it as forced savings for our retirement and healthcare needs. In addition, we can also use part of our Ordinary Account and Special Account balances to invest in the stock market and other financial products
# 3 Pay for our or loved ones’ education in Singapore, at approved institutions. One important thing we have to note is that we need to pay these funds back, with accrued interest.
# 4 Pay for certain of our or our loved ones’ insurance policies in Singapore. We can use our OA balances to pay for our Home Protection Scheme (HPS) and Dependents’ Protection Scheme (DPS), which provide our loved ones with greater financial security. We can also pay for our and our loved ones’ MediShield Life premiums and ElderShield or CareShield Life premiums with our MA balances.
# 5 Once we turn 55, our OA and SA balances will be transferred into our RA. These funds will be used to give us a lifelong monthly income via CPF LIFE, after we retire.
This article was first written on 15 April 2019 and has been updated.
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