CPF Enhancements for 2025
Starting January 2025, several significant changes will be introduced to the CPF system to improve retirement planning and provide greater financial security for individuals. These updates are designed to empower CPF members by enhancing savings potential, increasing contribution ceilings, and offering more flexible retirement schemes. Whether you’re a senior worker, a mid-career professional, or planning for your future, these changes present opportunities to optimize your financial strategy and achieve long-term stability. Here’s a breakdown of the key enhancements
1) Increased CPF Contribution Rates for Senior Workers
Effective 1 January 2025, the CPF monthly salary ceiling will increase to $7,400, enabling higher CPF contributions. This increment supports better retirement savings and will further increase to $8,000 in 2026.
3) Closure of Special Account (SA) for Members Aged 55 and Above
The SA for members aged 55+ will be closed from the second half of January 2025. Key points include:
- SA savings will transfer to the Retirement Account (RA) up to the Full Retirement Sum (FRS) and earn long-term interest.
- Withdrawable amounts will move to the Ordinary Account (OA), accruing short-term interest.
- Existing CPFIS-SA investments remain unaffected. Notifications will be issued to members upon account closure, with transaction details accessible via CPF account histories.
4) Enhanced Retirement Sum (ERS) Increase
The ERS will increase to $426,000 from 1 January 2025, allowing members to receive higher CPF LIFE payouts. For example, a 55-year-old male topping up to this amount could receive $3,300 monthly payouts starting at age 65, compared to the current $2,500.
5) Enhanced Matched Retirement Savings Scheme (MRSS)
From 1 January 2025:
- Annual matching grant cap increases to $2,000.
- The age cap for MRSS eligibility is removed, broadening access to the scheme. Cash top-ups under MRSS will not qualify for tax relief, though up to $16,000 in tax relief remains available for non-MRSS top-ups. These changes provide greater opportunities to build retirement savings for eligible individuals.
