23 Dec 2024
SOURCE: CPF Board
The new year is almost upon us! With 2024 drawing to a close, it’s important to cast your gaze at the year to come, and the changes that follow alongside it. This article will provide a reminder of the CPF changes coming your way when 2025 rolls around.
1. CPF contribution rates for senior workers will be increased
Total CPF contribution rates for senior workers aged above 55 to 65 will be increased by 1.5% starting from 1 January 2025. This includes a 0.5% increase from the employer’s share and 1% from the employee’s share.
The changes will be as follows:
This change helps senior workers in accumulating more savings in their CPF accounts. With more contributions from the employer’s side as well, retirement savings are also expected to grow faster as a result.
If you’re in the age range and are working, it helps to keep these numbers in mind, as they can have an impact on your financial planning! After all, knowing your sources of income clearly plays a big part in establishing your BASE for retirement planning, as outlined in this article.
2. The CPF monthly salary ceiling will be raised
From 1 January 2025, the CPF monthly salary ceiling will be raised to $7,400. The CPF monthly salary ceiling is the maximum portion of your monthly wage that is eligible for CPF contributions. If your wages are above this ceiling, they are excepted from CPF contributions for both you and your employer.
As announced in Budget 2023, the CPF monthly salary ceiling will be gradually raised to $8,000 in 2026. As of 2024, the ceiling is $6,800, and will increase by $600 in 2025. This is meant to boost your overall CPF savings, while helping to raise your monthly earnings overall as compared to the current ceiling.
3. The Special Account (SA) will be closed to right-site CPF savings, such that only CPF savings committed towards long-term retirement needs earn the higher long-term interest rate
The Special Account (SA) for all members aged 55 and above will be closed from the second half of January 2025. Savings in the SA will be transferred to the RA up to the Full Retirement Sum (FRS), where they will continue earning long-term interest.
The remaining SA savings that are withdrawable will be transferred to the OA and earn the short-term interest rate. You can transfer them to your RA, up to the current year’s ERS, to benefit from the higher long-term interest rate and receive higher monthly payouts in retirement. You are encouraged to top up earlier in the year to earn more through compound interest.
If you have existing investments under the CPF Investment Scheme-Special Account (CPFIS-SA), you can still hold on to these investments. Upon sale or maturity after your SA is closed, the proceeds will go to your RA up to your FRS. The remaining amount will then be transferred to your OA. So there’s no need to worry about having to pull out your investments early!
Members will be notified through a hard copy notification as well as an E-mail or SMS where applicable after their SA is closed. Any amount transferred will also be viewable on your transaction history. No action is required from you.
If you wish to find out more, the closure of Special Account for members aged 55 and above article provides more information on what you can expect going forward.
4. The Enhanced Retirement Sum (ERS) will be raised to $426,000
From 1 January 2025 onwards, the ERS will be raised to $426,000, which is four times the BRS, allowing members turning 55 to top up their Retirement Account further to receive higher CPF payouts, should they wish to do so. To illustrate, a male member turning 55 in 2025 who tops up to the raised ERS in 2025 will receive about $3,300 per month in CPF LIFE payouts from age 65, as compared to about $2,500 currently.
If you are above 55, the monthly payout estimator is a tool that can help you with projections for your retirement planning. It’s also possible to check the maximum amount you can top up via your retirement dashboard, if you wish to! If you are below 55, the Retirement Payout Planner may be more applicable to you to help you better plan out your financial habits in the present, while adjusting your retirement goals to suit your needs.
The Matched Retirement Savings Scheme (MRSS) is a scheme that helps senior Singapore Citizens with lower retirement savings build up more savings for their retirement, through dollar-for-dollar matching grants from the Government to their Retirement Accounts (RA). For cash top-ups made from 1 January 2025 onwards, it will benefit from the following enhancements:
Cash top-ups that attract the MRSS matching grant will not be eligible for tax relief, but you can still continue to receive up to $16,000 in tax relief on cash top-ups that do not receive the matching grant.
These significant enhancements allow more to benefit under MRSS, as well as receive higher monthly payouts. If you have any loved ones who are eligible for MRSS, make the most of the scheme when you top up for them, to help them achieve higher monthly payouts.
The Matched Retirement Savings Scheme (MRSS) - what you need to know article provides some basic information as well as further elaborations on the scheme, which may just be what you need to kick start gleaning the benefits of this scheme for yourself and/or your loved ones!
Change often challenges one’s flexibility and adaptability when it is sudden. Now that you know what to expect in the new year, you can get a head start on your retirement planning to make the most of these exciting new changes!
The information provided in this article is accurate as of the date of publication.
