The CPF scheme sees new enhancements to ensure Singaporeans have enough savings for retirement.
The Budget 2015 announcement on 23 February this year saw Deputy Prime Minister (DPM) and Finance Minister Tharman Shanmugaratnam highlighting three changes to the CPF scheme to help Singaporeans save more while working towards retirement. The changes will take effect from 1 January 2016.
Higher CPF Salary Ceiling And Supplementary Retirement Scheme (SRS) Contribution Cap
- CPF salary ceiling: Increased from the current $5000 to $6,000
- SRS Contribution Cap: Raised from $12,750 to $15,300 for Singaporeans and Singapore Permanent Residents, and from $29,750 to $35,700 for foreigners
Raising CPF Contribution Rates For Older Workers
- Workers aged between 50 to 55: An increase of 2% to the current 35%, aligned with those below 50, with 1% from employer and the other 1% from employee
- Workers aged above 55 to 60: An increase of 1% by employer, bringing it to 26% from 25% previously
- Workers aged 60 to 65: A 0.5% increase by employer, adding up to 16.5% for employee
Extra CPF Interest
- First $30,000 of CPF balances: An additional 1% interest from the age of 55, on top of the existing 1% extra interest on the first $60,000. Older CPF members with lower balances will earn up to 6% interest on their Retirement Account balances, compared to the current 4%
Offsetting CPF Changes
The Temporary Employment Credit (TEC) was originally announced in 2014 as a year-long measure, providing employers an offset of 0.5% to help them cope with higher wage cost arising from the 1% increase in contribution rate from 1 January 2015.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam announced at Budget 2015 two enhancements to the TEC in a bid to further help employers adjust to the new changes to the CPF.
An additional 0.5% to be provided by the Government, increasing the TEC to 1% of wages in 2015, to support firms for their labour costs.
The TEC will be extended by two years to help employers adjust to the cost increases in the CPF salary ceiling and the employer contribution rates for older workers. The new changes that will take effect from January 2016 will see employers given 1% of wages in 2016, and 0.5% of wages in 2017.
“We applaud the restoration of two percentage point in total CPF contribution rates for workers in the age group of >50 – 55 years old… We are also pleased that the Government has heeded our calls to increase the contribution rates for workers aged above 55. These additional contributions into their Special Accounts will allow them to better build up their retirement savings.”
NTUC Assistant Secretary-General Cham Hui Fong