CPF Changes in SG Budget 2024

By Shawn Lee

If you’ve only got a minute:

• The CPF Enhanced Retirement Sum will be increased from 3 times the Basic Retirement Sum to 4 times, from 2025. This will allow CPF members to receive higher monthly payouts for life.
• CPF Special Account will be closed for those aged 55 and above. This is part of the CPF Board’s move to better align CPF interest rates to the nature of CPF savings in each CPF account.
• Contribution rates for employees aged 55 to 65 will be raised by 1.5 percentage points from 1 January 2025 to strengthen the retirement adequacy of senior workers.

Changes to the Central Provident Fund (CPF) aimed at strengthening retirement adequacy and providing better support for senior workers, were announced as part of Budget 2024.

Here are the highlights of the CPF changes.:

1. Increase in Enhanced Retirement Sum (ERS)

If you are 55 and above, you can choose to top up your Retirement Account (RA) up to the prevailing ERS.

From 2025, the ERS will rise from 3 times the Basic Retirement Sum (BRS), to 4 times. This means the ERS will be S$426,000 instead of S$319,500 in 2025. The Full Retirement Sum (FRS) will remain at 2 times the BRS. 

This will allow you to receive higher CPF payouts. A male CPF member on the CPF LIFE Standard Plan turning 55 in 2025 can receive monthly payouts of about S$3,300 from age 65, if he chooses to top up to the raised ERS, up from a monthly payout of about S$2,500.

2. Closure of CPF Special Account for aged 55 and above

Today, those aged 55 and above have a Special Account (SA) and a RA. From 2025, the SA will be closed for those aged 55 and above.

The SA savings will be transferred to the RA up to the Full Retirement Sum, where you will continue to earn the interest rate of at least 4%. The remaining SA savings will be transferred to the Ordinary Account (OA).

You can still voluntarily transfer your OA savings to the RA at any time, up to the revised ERS, to earn higher interest, and to receive higher retirement payouts. There is no action required to be taken for now.

3. Increase in CPF contribution rates for senior workers

To continue strengthening the retirement adequacy of senior workers, the employer and employee contribution rates for employees aged 55 to 65 will be raised by 0.5 percentage point and 1 percentage point respectively from 1 January 2025.

CPF contribution rates will be raised gradually over the next decade or so for Singaporean and Permanent Resident workers aged above 55 to 70. When the increases have been fully implemented, those aged above 55 to 60 will have the same CPF contribution rates as younger workers.

Current and Target CPF Contribution Rates by Age Band
Age Band	2016 -2021	Current (2024)	From 1 Jan 2025	By 2030
55 and below	37%	No change
Above 55 to 60	26%	31%	32.5% (+1.5%)	37%
Above 60 to 65	16.5%	22%	23.5% (+1.5%)	26%
Above 65 to 70	12.5%	16.5%	16.5%	16.5%
Above 70	12.5%	No change

4.Majulah Package

Details to the Majulah Package were unveiled as follows:

1. Earn and Save Bonus (ESB): This aims to help seniors earning up to S$6,000 per month accumulate more retirement savings. They will receive a yearly bonus of up to S$1,000 to their SA or RA (depending on age) for as long as they work, with more going to those who earn lower incomes. The first payment will be made in March 2025.

Note: Excludes seniors who own more than 1 property or live in a property with Annual Value of more than S$25,000

2. Retirement Savings Bonus (RSB): A one-time bonus of between S$1,000 and S$1,500 will be provided to seniors with retirement savings below the Basic Retirement Sum for 2023 of S$99,400. The bonus will be paid to their SA or RA (depending on age) in December 2024.

¹CPF Ordinary Account and Special Account balances for members below age 55, CPF Retirement Account and unsued CPF LIFE premium for members age 55 and above.
Note: Excludes seniors who own more than 1 property or live in a property with Annual Value of more than S$25,000

3. MediSave Bonus (MSB): All seniors will receive a one-time bonus of S$750 or S$1,500 in their MediSave Account. The bonus will be paid in December 2024.

5. MediSave Bonus for ages 21 to 50

To help all Singaporeans build up their medical savings in anticipation of rising healthcare costs, all adult Singaporeans from age 21 to 50 will receive a one-time MediSave Bonus of up to S$300. This bonus will be paid in December 2024.

6. Enhancements to Matched Retirement Savings Scheme (MRSS)

Launched in 2021, the MRSS helps senior Singapore Citizens (age 55-70) with lower retirement savings to save more for their retirement by matching cash top-ups made to their RA.

From 1 January 2025, MRSS will be extended to those above age 70 which will enable more Singaporeans to meet their retirement needs, with the help of their families, employers, and the community.

The annual matching cap will also be increased from S$600 to S$2,000 with a lifetime matching cap of S$20,000.

Do note that tax relief for cash top-ups that attract the MRSS matching grant will be removed as the matching grant is already a significant benefit extended by the Government. Givers can continue to receive up to S$16,000 in tax relief on cash top-ups that do not receive the matching grant.

7. Enhancements to Workfare Income Supplement Scheme (WIS)

From 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 covered, even as their wages grow.

Workfare payouts will also be raised. Lower-wage senior workers will qualify for a maximum annual payout of S$4,900, from S$4,200 currently.

8. Increase in income threshold of spouse/siblings for tax relief from cash top-ups

The income threshold to qualify for tax relief for cash top-ups made to CPF accounts of spouse/siblings will be increased from S$4,000 to S$8,000 in Year of Assessment 2025 for top-ups made from 1 January 2024.

9. Enhancements to Silver Support Scheme

The Silver Support Scheme provides quarterly cash payments to seniors aged 65 and above who had low incomes during their working years and now have less in retirement.

From 2025, these payments will be increased by 20% to strengthen support for eligible senior Singaporeans. The qualifying household monthly income per person threshold will also be raised from S$1,800 to S$2,300.

What CPF members can do

For most Singaporeans, our CPF savings form the foundation of our retirement plan. In the light of the latest CPF enhancements, review how you are optimising the various CPF schemes and leverage them to boost your retirement adequacy.

For those who are impacted by the closure of the SA, you may consider other suitable investment options to grow your CPF savings. Empowering yourself with financial knowledge will help you understand your risk profile and how to invest wisely.

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This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.