CPF contribution rates will continue to rise for members reaching age 55 from 2023 to 2027 to enhance retirement adequacy
In line with Singapore's long-term goal of improving retirement adequacy, the Singapore Government has announced that the employer and employee Central Provident Fund (CPF) contribution rates for workers aged 55 to 70 will continue to increase in 2023.
Employer and Employee contribution rates
From January 2023, the employer and employee CPF contribution rates for employees in this age group will be raised by up to 1 percentage point each. This move was announced by Finance Minister Lawrence Wong in his Budget 2022 speech on 18 February.
The first increase was already implemented this year, and the government has provided employers with a one-year CPF Transition Offset equivalent to half of the increase in employer CPF contributions.
Singapore will continue with the next step of increase in 2023, and employers will be provided with a similar offset. This means that workers in that age group will see a total increase of 3 to 4 percentage points in their CPF contribution rates over these two years.
Source: Annexe 2 of Budget 2022
Basic Retirement Sum
The monthly retirement payouts provided by the Basic Retirement Sum (BRS) cover basic living expenses for CPF members. Members who want higher monthly payouts can set aside the Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS), which are currently set at two times the BRS and three times the BRS respectively.
The BRS will be raised by 3.5 percent per year for the next five cohorts turning 55 from 2023 to 2027. The BRS for those turning 55 this year is S$96,000 and will rise to S$99,400 next year and S$114,100 in 2027.
With the rising standards of living, the increase will provide members with higher monthly CPF payouts in their retirement years.
With the increase, those who set aside the BRS when they turn 55 in 2027 will receive payouts of close to $1,000 per month when they are 65. These payouts will continue for the rest of their lives and provide greater assurance for their basic retirement needs. The corresponding FRS and ERS payouts will rise in tandem.
Source: Annexe 3 of Budget 2022
^Assumes male member under CPF LIFE Standard Plan, starting payouts at age 65. These are estimated payouts based on factors such as current mortality trends and interest rates.
There is no requirement for members to top up their CPF if they are unable to set aside their BRS.
Those who meet the eligibility criteria for the Silver Support Scheme, enhanced in 2021, will also receive additional retirement support from the Government of up to $900 a quarter.
Enhancements to the Workfare Income Supplement Scheme
From January 2023, the Workfare Income Supplement (WIS) Scheme will be enhanced to supplement the incomes and CPF savings of lower wage workers.
The scheme will be extended to younger workers aged 30 to 34. A minimum income criterion for WIS of S$500 per month will also be introduced to encourage part-timers and casual workers to take up regular, full-time work.
Annual workfare payouts will be increased:
- Those aged 35 to 44 will receive a maximum annual payout of S$3,000; those aged 45 to 59 will receive a maximum annual payout of S$3,600.
- Those aged 60 and above will receive the highest maximum payout tier of S$4,200 annually.
This same maximum payout tier will be extended to all persons with disabilities, regardless of their age.
For more information, please refer to the official Budget Statement 2022.
Contacts
Justin Lim Partner and Head of Corporate Secretarial - Singapore
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