CPF Contributions Now At 37% For 55 To 60-Year-Old Workers
If you’re aged 55 to 60 years old, and are currently receiving and contributing CPF amounts into your special account, do take note of these changes.
Currently, if you’re below the age of 55, you’ll be contributing 37% of your income into your CPF account to save for retirement — among other things.
In the near future, you can expect a similar contribution percentage to accompany you as you turn 60 years old in the workforce.
This move will be launched in 2021, and applies to cohorts born on or after Jan 1951.
Raised progressively from 2021
The increase in employer contributions will be matched with your personal contributions as an employee, in a progressive manner from 2021.
These increments will occur “over the next 10 years” or so, and are part of a “tripartite workgroup” recommendations for the older workforce.
- ≤ 55 years – 37% (no change)
- 55 to 60 years – 37% (+11%)
- 60 to 65 years – 26% (+9.5%)
- 65 to 70 years – 16.5% (+4.0%)
- ≥ 70 years old – 12.5% (no change)
For more details on when these changes are expected, do view the table below carefully.
The upcoming change to look out for will be implemented as soon as 1 Jan 2021, for 55 to 60-year-old workers, to expect a raise in 1.5%-2% for CPF contributions, borne by both employees and employers.
Retirement age raised to 65 by 2030
As for the retirement and re-employment ages, there will be some changes as well.
From the current retirement age of 62, it will be raised to 63 by 1 Jul 2022. Subsequently, the retirement age will hit 65 by 2030.
For the re-employment age, this figure currently stands at 67. By 1 Jul 2022, it will be raised to 68, and eventually hit 70 by 2030.
Where will CPF contributions go?
The increased CPF contributions will be “fully allocated” to a member’s Special Account (SA) which has “higher interest rates” than the Ordinary Account. For the full details on the increased interest to be enjoyed, do read more at this link.
Additionally, the government does not expect a rise in CPF contributions to impact the “employability” of older workers.
Channel NewsAsia reports that the last CPF contribution adjustment was done in 2016, for workers aged 50 to 55 to a similar percentage of 37%.
We’d love to know what you think of the new CPF & retirement age changes in the comments below.
Featured image adapted from CPF Board via The Online Citizen.
