CPF changes in 2025 and the impact on retirement planning

Major changes to the Central Provident Fund (CPF) in 2025 will enhance retirement planning by increasing CPF savings and improving financial security for retirees¹.

We examine key CPF changes in 2025 and how they can impact your retirement planning.

1. CPF monthly salary ceiling rises

The CPF monthly salary ceiling rises to SGD7,400 from 1 January 2025. Staggered increases from 2023 (Figure 1) will see the ceiling rise to SGD8,000 by 2026.

The staggered increase aims to allow employers and employees time to adjust to the changes.

Impact on retirement:

• If not utilised for other needs, you enjoy higher CPF savings in the long term for retirement. Employers contributing to employees' CPF accounts further boost retirement savings.
• To minimise the impact of lower take-home pay on your cash savings, consider seeking other sources of income.

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2. Contribution rates for senior workers go up

From 1 January 2025, the total CPF contribution rate for senior workers aged above 55 to 65 increases by 1.5%. Employers contribute 0.5% more while the employee’s share goes up by 1%. Contribution rates for senior workers will continue to step up in 2026 by another 1.5% to strengthen retirement security for senior workers³.

Impact on retirement:

• More robust CPF savings to support retirement lifestyle and future medical needs of senior workers. However, these changes may impact your monthly take-home pay in the short term.

3. Special Account (SA) closure for members aged 55 and above

From 19 January 2025, CPF has progressively closed the SA for members aged 55 and above⁴. Upon closure of your SA, SA savings will be transferred to your Retirement Account (RA) up to the Full Retirement Sum (FRS) and earn higher CPF long-term interest. Balances above the FRS will be transferred to your CPF Ordinary Account (OA) to earn lower short-term interest. OA savings can be used or withdrawn according to existing OA guidelines.

Investments purchased using your SA savings are not affected. Once these investments mature or are sold, proceeds will be credited first to your RA up to the FRS, then remaining balances to your OA.

Impact on retirement:

• Consolidating CPF savings meant for long-term retirement needs into the Retirement Account (RA) streamlines your CPF accounts. Treat this as part of your retirement nest egg that will provide regular income under CPF LIFE once you turn 65.
• The remaining funds transferred to your OA that earns short-term interest can be withdrawn when needed.

4. Enhanced Retirement Sum (ERS) increases

From 1 January 2025, the ERS rises from three times to four times the Basic Retirement Sum (BRS) to SGD426,000⁵. This allows members to commit more CPF savings to earn higher CPF LIFE monthly payouts from age 65.

If you are turning 55, you can voluntarily top up your RA to the ERS to receive higher payouts during retirement. As the ERS rises every year, you can continue topping up your RA to the new ERS for more retirement income, even if you had accumulated the ERS for the previous year.

Impact on retirement:

• Opportunity to set aside more savings for higher monthly payouts from CPF LIFE during retirement for greater financial security.
• CPF LIFE is an annuity scheme that provides you monthly income for as long as you live⁶. CPF LIFE premiums also earn CPF interest which boosts your monthly CPF LIFE payouts.
• Although CPF LIFE is a stable source of retirement income, it is advisable to have other savings and alternative income sources to meet your desired retirement lifestyle.

5. Contributions for platform workers increase

From 1 January 2025, the Platform Workers Act mandates increased total contribution rates for platform workers born on or after 1 January 1995⁷. Contribution rates for both platform workers and platform operators will continue to rise incrementally until 2029, when they will match contribution levels of employees and employers.

As CPF savings play an important role in meeting retirement and housing needs, platform workers born before 1995 may also opt in for higher contributions.

Impact on retirement:

• Platform workers get to enjoy greater financial security to meet retirement and medical needs although take-home pay may be affected.

6. Matched Retirement Savings Scheme (MRSS) enhanced

From 1 January 2025, the matching grant cap for the Matched Retirement Savings Scheme (MRSS) increases to SGD2,000 per year, and the age cap is removed⁸.

This scheme encourages Singapore citizens aged 55 and above who have lower CPF savings to make cash top-ups to their RA to earn matching grants. Check CPF requirements for eligibility.

Impact on retirement:

• Especially beneficial for people who stopped earning income earlier in life to increase retirement savings.
• Consider making a cash top-up early to reap the benefits of compound interest.

IMPORTANT NOTICE AND DISCLAIMERS:

This article is meant for information only and should not be relied upon by any person for whatever reason. The information contained in this article is based on official CPF publications available as of the date of this article and is thus subject to change at any time without notice. Although every reasonable care has been taken to ensure the accuracy and objectivity of the information contained in this article, UOB and its directors, officers, employees and affiliates make no representation or warranty of any kind (express, implied or statutory) and shall not be responsible or liable for its completeness or accuracy. As such, UOB and its directors, officers, employees and affiliates accept no liability for any error, inaccuracy, omission or any consequence of loss howsoever suffered by any person, arising from any reliance on the information in this article.