Singapore’s New Pension Framework 2025: CPF Contribution Updates & Retirement Changes: Singapore has introduced significant changes to its Central Provident Fund system for the 2025 fiscal year, addressing challenges like rising living costs and increasing life expectancies.
Singapore’s New Pension Framework 2025
IN this system, employers and employees contribute to CPF accounts, which support not only retirement but also essential needs like healthcare, housing and education.
The 2025 CPF reforms build on these foundations, introducing updates to meet the workforce`s evolving needs. Special attention is given to underrepresented groups like gig workers and freelancers, ensuring they also benefit from the CPF system.
Singapore New Pension Scheme
1. Basic Retirement Sum (BRS): This is the minimum amount of savings required to provide monthly payments for basic living expenses.
2. Full Retirement Sum: A higher tier that offers additional Security, covering costs such as healthcare and housing needs.
3. Enhanced retirement Sum: The highest tier is designed for those who aim for the largest monthly payouts to enjoy a more comfortable and financially secure retirement.
CPF Contribution Updates
From 1 January 2025, the CPF contribution rates for employees aged above 55 to 65 are increased to strengthen their retirement adequacy. The changes apply to wages earned from 1 January 2025.
| Employee’s age (years) | 2024 | CPF Contribution Rates from 1 Jan 2025 | ||
| Total (% of wage) |
Total (% of wage) |
By employer (% of wage) |
By employee (% of wage) |
|
|---|---|---|---|---|
| 55 and below | 37 | 37 | 17 | 20 |
| Above 55 to 60 | 31 | 32.5 (+1.5) |
15.5 (+0.5) |
17 (+1) |
| Above 60 to 65 | 22 | 23.5 (+1.5) |
12 (+0.5) |
11.5 (+1) |
| Above 65 to 70 | 16.5 | 16.5 | 9 | 7.5 |
| Above 70 | 12.5 | 12.5 | 7.5 | 5 |
With the closure of the special Account, the increase in the CPF contributions for employees aged above 55 to 65 will be fully allocated to the Retirement Account, up to the Full Retirement Sum, to help senior workers have more for retirement.
For those earning monthly wages of more than $500 to $750, the employee contribution rates continue to be phased in. There are no changes to the graduated contribution rates for First and second-year Singapore permanent Residents.
Retirement Changes
1. Changes to the Retirement Age:
Starting in 2025, the retirement age will increase from 63 to 65. These changes reflect global trends where people are working longer due to rising life expectancy. By extending the retirement age, individuals will have the opportunity to save more during their working years, leading to better financial preparation for retirement. It is set to rise incrementally to 64 in July 2026 and to 65 by 2030.
The change also acknowledges Singapore`s rising life expectancy, which is projected to surpass 85 years by 2040. By extending the retirement age, the government aims to help workers accumulate larger savings in their CPF accounts, enabling them to enjoy a more financially secure retirement.
2. New Benefits for Self-Employed Workers
For a long Time, self-employed workers like freelancers, gig workers and small business owners did not have the same access to CPF benefits as employees.
- Monthly payouts: Self-employed workers can now get CPF payouts ranging from SGD 200 to SGD 400 Per month, depending on how much they contribute.
- Voluntary Contributions: These workers are encouraged to contribute to their CPF accounts, including the Ordinary, MediSave and Special Accounts, to increase their retirement savings.
3. Future Projections for Enhanced Retirement Sum
The Enhanced Retirement Sum provides the highest monthly payouts under the CPF life Scheme. The government plans to raise the ERS cap significantly over the next few years:
| Year | ERS Cap | Monthly Payout Range |
|---|---|---|
| 2025 | SGD 426,000 | SGD 3,300 |
| 2026 | SGD 440,800 | SGD 3,440 |
| 2027 | SGD 456,400 | SGD 3,550 |
The CPF Retirement Sum tiers will increase in the coming years to ensure payouts keep pace with inflation and rising costs.
4. Revised Withdrawal and Transfer Policies
The Singapore government has updated its withdrawal and transfer policies to make the CPF system more efficient and beneficial for retirees. For individuals aged 55 and older, funds from the Ordinary Account and Special Account are automatically transferred into the retirement Account to meet the full Retirement Sum limit.
5. Enhancement to Workfare Income Supplement Scheme
In 2025, the qualifying income cap for the WIS will be raised from S$2,500 to S$3,000. This ensures that lower-wage workers continue to be supported even as their wages grow.
6. Enhancements to Silver Support Scheme (SSS)
The SSS provides quarterly cash payments to seniors aged 65 and above who had low incomes during their working years. These payments will be increased by 20% to strengthen support for eligible senior Singaporeans.
Conclusion
In this article we discussed Singapore’s New Pension Framework 2025: CPF Contribution Updates & Retirement Changes. The 2025 CPF reforms build on these foundations, introducing updates to meet the workforce`s evolving needs.