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Budget 2023: How CPF Changes Will Affect Employers

During the recent Budget 2023 announcement, Deputy Prime Minister and Minister for Finance Lawrence Wong announced some key CPF changes. 

They include a rise in CPF monthly salary ceiling for workers below 55 and  a rise in CPF contributions for senior workers aged 55 to 70. 

The Budget measures have been initiated to further support Singaporeans with housing, medical, and retirement needs. 

Increase in CPF Monthly Salary Ceiling for Employees Aged 55 and Below

The current CPF monthly salary ceiling, which determines the maximum CPF contributions for Ordinary Wages, is S$6,000. 

To keep up with increasing salaries, the monthly salary ceiling will be gradually raised to S$8,000 by 2026. This will occur in four stages to ensure that employers and employees have time to adapt to the changes. 

The current CPF annual salary ceiling is set at S$102,000 and will remain the same. Therefore, the CPF annual limit remains unchanged at $37,740. 

However, it will be evaluated regularly to ensure that it still covers approximately 80% of employees.

Refer to the infographic below for the stages of salary increase as well as a sample scenario.

CPF Increase for Senior Employees Aged >55 to 70

The CPF contribution rate for senior employees aged 55 to 70 is set to increase from 1st January 2024. 

The increase aims to encourage them to continue working and contributing to their CPF accounts as they approach retirement age. It also helps them build up their retirement savings and prepare for their golden years.

Refer to the infographic below for the increase in contribution for both employees and employers.

What Does This Mean for Employers?

The CPF contribution increase for both employees aged 55 and below as well as senior employees aged above 55 to 70 will result in higher business costs for employers.

However, companies can manage the increase by adopting effective strategies such as increasing productivity, optimising employee performance, and leveraging technology in their operations. 

Employers will also need to comply with the updated CPF contribution rates and communicate the changes to their employees.

How InCorp’s Payroll Team Can Help

Our dedicated payroll team can assist you in implementing the CPF changes and ensuring compliance with the updated CPF contribution rates. 

Here are some ways that we can help with the CPF changes:

  • Review and update employee information: We will review and update your employee information to ensure that the correct CPF contribution rates are applied. This includes updating the age of employees and their monthly salaries to determine the appropriate CPF contribution rates.
  • Update payroll systems: Our payroll system will be automatically updated to reflect the new CPF contribution rates and ensure that the payroll calculations are accurate.
  • Monitor compliance: We will monitor compliance with the updated CPF contribution rates to ensure that the correct contributions are made on behalf of employees. This includes monitoring the monthly salary ceiling and ensuring that the appropriate contribution rates are applied for employees who earn above the salary ceiling.

At InCorp, we ensure that you stay up-to-date with the latest regulatory changes and ensure a smooth transition with the implementation without affecting your daily business routines.

Budget 2023: How CPF Changes Will Affect Employers

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James Scaria

James Scaria


Human Resource Payroll - Outsourcing Services

Alton Neo

Alton Neo

Deputy CEO, Singapore

Director – Co-Head of Advisory and Outsourcing

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InCorp Content Team

InCorp's content team includes talented copywriters from our regional group and globally. We contribute informative, thought leadership, and market-trending articles to guide aspiring business entrepreneurs to a higher level across the Asia-Pacific region.

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