Singapore’s Central Provident Fund (CPF) continues to evolve to strengthen retirement savings. From 1 January 2026, the CPF Ordinary Wage (OW) monthly ceiling will rise to S$8,000, completing a phased increase that began in 2023. At the same time, CPF contribution rates for senior workers aged 55–65 will increase, boosting retirement savings while slightly affecting take-home pay.
This article explains the updates for employees and employers, including contribution rates, impacts on wages, and retirement readiness.
CPF Ordinary Wage Ceiling: Gradual Increase
The CPF OW ceiling is increasing gradually to help Singaporeans save more for retirement:
| Period | OW Ceiling | Increment |
|---|---|---|
| Jan 2023 – Aug 2023 | $6,000 | – |
| Sep 2023 – Dec 2023 | $6,300 | +$300 |
| Jan 2024 – Dec 2024 | $6,800 | +$500 |
| Jan 2025 – Dec 2025 | $7,400 | +$600 |
| From Jan 2026 | $8,000 | +$600 |
Note: The Annual Salary Ceiling remains at $102,000. Once this limit is reached in a year, no further CPF contributions are required.
What This Means for Employees
- Employees earning above $8,000/month: CPF contributions now apply to a larger portion of your wages (up to $8,000). Both employee and employer contributions increase, boosting retirement savings.
- Employees earning below $8,000/month: Contributions continue to be based on actual wages. The higher ceiling does not affect take-home pay at this stage.
Impact on Take-Home Pay:
For higher earners, employee CPF contributions rise slightly, reducing take-home pay by a small margin.
Employer contributions also increase due to the higher ceiling, meaning total compensation rises even as take-home pay is slightly reduced.
Increased CPF Contribution Rates for Senior Workers (55–65)
To enhance retirement adequacy, CPF contribution rates for senior employees aged 55–65 earning more than $750/month will increase by 1.5 percentage points, split between employee and employer contributions.
| Employee Age | 2025 Total CPF Rate | 2026 Total CPF Rate | Employer Share (2026) | Employee Share (2026) |
|---|---|---|---|---|
| 55 and below | 37% | 37% | 17% | 20% |
| Above 55–60 | 32.5% | 34% (+1.5%) | 16% (+0.5%) | 18% (+1%) |
| Above 60–65 | 23.5% | 25% (+1.5%) | 12.5% (+0.5%) | 12.5% (+1%) |
| Above 65–70 | 16.5% | 16.5% | 9% | 7.5% |
| Above 70 | 12.5% | 12.5% | 7.5% | 5% |
Key Takeaways:
- Total CPF contributions for senior workers increase by 1.5%, helping them save more for retirement.
- Contributions for employees below 55 and above 65 remain unchanged.
- Higher contributions are allocated primarily to the Retirement Account (RA), increasing future retirement payouts.
CPF Contributions and Retirement Targets: RA, FRS & ERS
The Retirement Account (RA) is created when you turn 55, consolidating savings from your Ordinary Account (OA) and Special Account (SA) to fund retirement. Higher contributions feed directly into your RA, moving you closer to meeting retirement targets.
Full Retirement Sum (FRS):
- In 2026, the FRS will rise to $220,400, up from $213,000 in 2025.
- Your FRS is fixed based on the year you turn 55 and does not change for life.
- For those turning 55 after 2027, updated FRS figures are yet to be announced.
Enhanced Retirement Sum (ERS):
- The ERS provides a higher monthly payout for those who can afford it.
- In 2026, the ERS will increase to $440,800, up from $426,000 in 2025.
By contributing more to the RA, senior employees move closer to achieving their FRS or ERS, ensuring a more secure and comfortable retirement.
Bottom Line
The 2026 CPF updates strengthen retirement security for all workers:
- Higher salary ceiling means more wages attract CPF contributions, boosting retirement savings.
- Senior workers benefit from increased contribution rates, which enhance their RA and move them closer to FRS/ERS targets.
- Take-home pay may see a slight reduction, but total compensation rises due to higher employer contributions.
- These changes help ensure stronger CPF balances and better retirement readiness, benefiting employees across all age groups while supporting employers in payroll planning and compliance.
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In summary, the 2026 CPF updates reinforce Singapore’s commitment to retirement security. With a higher salary ceiling and increased contributions for senior workers, employees can grow their Retirement Account balances and move closer to achieving their Full or Enhanced Retirement Sums. While take-home pay may see a slight adjustment, the overall benefits of stronger retirement savings and increased employer contributions make these changes a meaningful step toward financial security in later years.
At Link Compliance, we help businesses navigate CPF updates smoothly, ensuring payroll accuracy and compliance while supporting employee retirement planning. With our expertise, employers can focus on growing their business while we manage the complexities of contribution changes, senior worker rates, and reporting requirements.
Email: info@linkcompliance.com
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