Singapore's government raised CPF ceiling and contribution rates for older workers with effect from 1 Jan 2016 to keep pace with the economic growth in the country.
With the rapid growth in the economy, the Singapore government is facing a number of challenges from the ageing population and higher expectations of retirement needs from citizens. Similar to other Asian countries, many retirees rely on their children to support them in their old age in Singapore. But with the high life expectancy and low birth rate, future Singapore retirees will have to depend more on Central Provident Fund (CPF) savings for their retirement needs. Earlier this year, the Singapore government accepted the recommendations by the CPF advisory panel to improve the CPF system in preparation for the upcoming challenges by raising the CPF salary ceiling and the contribution rates for older workers in 2016.
According to Central Provident Fund Board, the changes on the CPF contribution and allocation rate to be applied with effect from 1 January 2016 are detailed below.
- The CPF contribution rates for
employees aged above 50 years to 65 years will be increased to help
older workers save more for retirement needs. The changes below
will apply to wages earned from 1 January 2016:
* For employees earning wages of $750 or more. For those earning wages of more than $500 but less than $750, the employee contribution rates will continue to be phased in.
The increase in Employer CPF contribution will be allocated to the Special Account and the increase in Employee CPF contribution will be allocated to the Ordinary Account. - The Ordinary Wage (OW) Ceiling earned from 1 January 2016 adjusted upwards from $5,000 per month to $6,000 per month for Private Sector Employees and Public Sector Non-Pensionable Employees.
- The Additional Wage (AW) Ceiling will be increased from $85,000 to $102,000.
- The CPF Annual Limit will be revised from $31,450 to $37,740.
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