In line with the government's Budget 2023 announcement made in February, Singapore is implementing a gradual increase in the CPF (Central Provident Fund) monthly salary ceiling. This move, commencing on September 1, 2023, involves raising the ceiling from $6,000 to $6,300. The government's ultimate goal is to incrementally elevate the ceiling to $8,000 by the year 2026.
The primary objectives behind this initiative are to encourage Singaporeans to save more for their retirement and to keep pace with the continuously rising salaries in the country. However, it's important to note that these changes will impact not only employees but also employers, who will need to account for the higher CPF contributions within their labor costs.
CPF Contribution Increase Schedule: Effective September 1, 2023
Meanwhile, the CPF annual salary ceiling, set at $102,000, will remain unchanged. This means that all earnings received in a year, including Additional Wages (such as allowances and bonuses), will not trigger additional contributions.
Impact on Employees
For employees earning less than $6,000 per month, there will be no alteration in their take-home pay. However, those earning more than $6,000 will experience a slight increase in CPF contributions.
While this may result in a modest reduction in take-home pay, it should be viewed in the context of increased CPF savings. Given the expectation that Singaporeans will retire later and live longer, this change is seen as a beneficial step for future retirement planning.
For more information, please visit CPF's website.