Ultimate Guide to CPF in Singapore (2025): Contributions, Deductions, and Salary Caps Explained

CPF is at the heart of financial planning in Singapore, whether it’s for retirement, housing, or healthcare. But keeping up with policy updates, salary ceilings, and contribution rates can feel overwhelming.

By 2026, the CPF monthly salary ceiling will rise to $8,000, shifting how much you and your employer contribute. Retirement Sums continue to increase, MediSave limits are evolving, and CPF LIFE ensures that payouts last a lifetime. With so many moving parts, staying informed is more important than ever.

That’s where this guide comes in. Updated with the latest CPF policies for 2025, it breaks down everything you need to know about contributions, deductions, wage ceilings, and how CPF helps you secure your financial future. Whether you're planning your first home purchase, preparing for retirement, or maximizing CPF benefits, this guide is your go-to resource.

What is CPF and why it matters

The Central Provident Fund (CPF) is Singapore’s mandatory savings scheme designed to provide financial security for citizens and Permanent Residents (PRs). Established in 1955 as a retirement savings initiative, CPF has since evolved into a comprehensive financial system supporting retirement, healthcare, and housing. It serves as a cornerstone of Singapore’s financial framework, helping individuals achieve long-term financial stability.

CPF contributions are made by both employees and employers, with funds allocated across three key accounts:

• Ordinary Account (OA) – for housing, education, and investments
• Special Account (SA) – for retirement savings with higher interest rates
• MediSave Account (MA) – for healthcare expenses, including medical treatments and insurance premiums

At different life stages, CPF plays a pivotal role:

• Young adults can use their OA savings for education or home purchases.
• Working adults save for retirement while managing mortgage payments.
• Seniors benefit from CPF LIFE, an annuity scheme providing lifelong monthly payouts for financial stability.

CPF’s three core pillars—retirement, housing, and healthcare—ensure Singaporeans have the necessary financial support throughout life. CPF LIFE guarantees lifelong payouts in retirement, the OA facilitates homeownership, and MediSave provides a healthcare safety net, covering medical costs and insurance like MediShield Life.

How CPF contributions work

The Central Provident Fund (CPF) contributions in Singapore are structured to ensure financial security across three main accounts: the Ordinary Account (OA), Special Account (SA), and MediSave Account (MA). Here’s a breakdown of how it works:

CPF contribution rates from 1 Jan 2025 (monthly wages > $750)

Additional considerations

While the rates may seem straightforward, they vary further based on:

• Citizenship Status: Singapore Citizens and Permanent Residents (PRs) have different tiers for first-year, second-year, and third-year PR contributions.
• Total Wages: Contributions are calculated on total wages, including basic and additional wages.
• Self-Employed Professionals: Self-employed individuals are mandated to contribute to their MediSave Account if their net trade income exceeds $6,000 annually. The contribution rates vary based on age and income level. Voluntary contributions to CPF accounts, including MediSave, are eligible for tax relief, subject to prevailing caps.

For precise calculations, you can use the CPF Contribution Calculator.

What is the CPF wage ceiling? 

Every month, 20% of your salary is automatically contributed to your CPF account, while your employer tops up an additional 17%. However, these contributions are subject to the CPF wage ceiling, which caps the portion of your salary eligible for CPF contributions.

If your salary exceeds the CPF wage ceiling, the excess portion is not subject to CPF contributions from either you or your employer. This cap ensures that contributions remain sustainable while allowing higher earners to allocate excess income to other savings or investments.

In Singapore’s CPF system, wages are classified into Ordinary Wages (OW) and Additional Wages (AW), and each category has its own CPF contribution limit.

Ordinary Wage (OW) ceiling

Ordinary Wages (OW) refer to monthly wages that are earned in return for employment within a specific month and are payable by the 14th of the following month. This includes basic salary, overtime pay, and other regular allowances.

The Ordinary Wage Ceiling limits the amount of monthly wages subject to CPF contributions. If an employee’s OW exceeds this ceiling, CPF contributions will only be calculated up to the ceiling, and any excess amount will not attract CPF contributions.

• As of 1st Jan 2025, the OW ceiling is $7,400, and it will gradually increase to $8,000 by 2026.
• Example: If an employee earns $10,000 per month and the OW ceiling is $7,400, CPF contributions are only applied to $7,400, while the remaining $2,600 is exempt.

This cap ensures fairness in contributions and prevents overly high CPF contributions for top earners, which could distort the scheme's purpose.

While higher earners may accumulate less in CPF accounts due to the ceiling, they are encouraged to invest or save the excess income independently.

Additional Wage (AW) ceiling

Additional Wages (AW) are irregular or non-monthly payments made to employees, such as bonuses, commissions, and incentives. Since these wages are not paid on a monthly basis, CPF applies a separate contribution cap.

The Additional Wage Ceiling ensures CPF contributions on AW do not exceed a defined threshold. This ceiling is calculated annually using the formula:

AW Ceiling = $102,000 - Total Ordinary Wages (OW) for the Year

• $102,000 is equivalent to 17 months x $6,000, a historical reference point for CPF contribution caps.
• Example: If an employee earns $7,000 per month in Ordinary Wages, their total OW for the year is $84,000. This means their AW ceiling for the year would be $18,000 ($102,000 - $84,000).

Employees with lower monthly wages have a higher AW ceiling, allowing more contributions from bonuses or commissions.

The AW ceiling complements the OW ceiling by capping total contributions for both regular and irregular income. This ensures that total CPF contributions remain within a sustainable range.

Total Contribution Limits and Their Effects on Savings

Combining OW and AW contributions, the total CPF contributions are capped at $102,000 annually. This ensures the system remains equitable and prevents overfunding of CPF accounts for high-income earners.

Contributions are distributed across the Ordinary Account (OA), Special Account (SA), and Medisave Account (MA) based on age. For younger workers, a larger proportion goes to the OA, while older workers see more allocation to SA and MA for retirement and healthcare needs.

The CPF contribution limits restrict CPF savings for high-income earners beyond the wage ceilings. As a result, individuals earning above these thresholds often turn to alternative savings or investments for their excess income.

For average-income earners, the ceilings are less likely to impact contributions, allowing steady growth in CPF savings.

What CPF accounts do you have?

Before you turn 55 years old, your CPF is divided into three accounts, each serving a specific purpose: the Ordinary Account (OA), Special Account (SA), and MediSave Account (MA). Once members turn 55 and their SA is closed, the contributions that would typically go into the SA will instead be fully allocated to the Retirement Account (RA), up to the Full Retirement Sum (FRS). For those who have already met the FRS in their RA, the excess contributions will be redirected to their OA, ensuring continued growth for their financial future.

What are the CPF allocation rates for these accounts?

The contribution percentages to these accounts vary based on the contributor's age (2025 allocation):

Starting from 1 January 2025, CPF contribution rates for employees aged 55 to 65 will be increased to enhance their retirement savings.

What are the CPF interest rates in 2025?

CPF savings earn government-guaranteed interest rates, which vary by account type. These rates ensure CPF members can grow their savings for retirement, healthcare, and housing.

How are CPF interest rates determined?

CPF interest rates are reviewed quarterly and pegged to market benchmarks, ensuring CPF savings grow steadily while being protected by guaranteed floor rates. The interest earned differs across accounts based on their purpose and risk profile.

Ordinary Account (OA) interest rate

The OA interest rate is determined by the 3-month average of major local banks’ interest rates. However, this rate has remained low, with the most recent calculation for Aug – Oct 2024 averaging 0.45%.

To safeguard CPF savings, the Government guarantees a minimum OA interest rate of 2.5% per annum, ensuring CPF members continue to receive stable returns even when market rates are low.

Special, MediSave, and Retirement Account (SMRA) interest rates

SMRA interest rates are pegged to the 12-month average yield of 10-year Singapore Government Securities (10YSGS) + 1%. From Nov 2023 – Oct 2024, the calculated rate was 3.99%, which falls below the 4% floor rate.

To help CPF members grow their long-term savings, the Government has extended the 4% floor rate for SMRA accounts until 31 Dec 2025. This ensures that CPF members receive a minimum return of 4% per annum, even if the pegged rate is lower.

Why does CPF have a floor interest rate?

CPF interest rates are designed to balance market-driven returns with financial security. The minimum guaranteed rates ensure CPF savings continue to grow steadily, even when market conditions fluctuate.

These floor rates protect CPF members from earning lower returns during periods of declining interest rates, reinforcing CPF’s role in retirement, healthcare, and housing security.

Extra interest on CPF balances

To help boost retirement savings, the Government provides extra interest on CPF balances.

The extra interest earned on OA savings will be credited to the Special Account (SA) or Retirement Account (RA) to enhance retirement savings. For CPF members under CPF LIFE, extra interest continues to be earned on all CPF balances, including savings used for CPF LIFE.

Planning retirement with CPF

The CPF system is a cornerstone of Singapore’s retirement planning, ensuring lifelong financial security through structured savings and payout schemes. Here’s an overview of the CPF Retirement Sum tiers, CPF LIFE, and how they differ from the Retirement Sum Scheme.

What is the CPF Retirement Sums?

The CPF Retirement Sum (RS) is a savings benchmark that determines how much you need in your Retirement Account (RA) at age 55 to ensure adequate payouts from age 65 onwards. Previously known as the Minimum Sum, it was renamed the Retirement Sum in 2016.

There are three tiers of retirement sums, each providing different payout levels:

The BRS and FRS increase annually to account for inflation, rising living standards, and life expectancy. The ERS is now set at 4x the BRS starting from 2025, allowing CPF members to top up more for higher payouts. Below is the RS from 2024-2027:

What happens to your CPF at 55?

At age 55, savings from your Special Account (SA) and Ordinary Account (OA) are transferred into a newly created Retirement Account (RA), up to the Full Retirement Sum (FRS).

If you were born in 1958 or later and have at least $60,000 in your RA at payout start age, you’ll be automatically enrolled in CPF LIFE—Singapore’s national annuity scheme.

CPF LIFE: Lifelong payouts

CPF LIFE (Lifelong Income for the Elderly) is a national annuity scheme that provides lifelong monthly payouts, ensuring you never run out of retirement income.

How CPF LIFE works

At age 55, CPF savings from the Ordinary Account (OA) and Special Account (SA) are transferred to the Retirement Account (RA). This transfer establishes the foundation for the Retirement Sum tier—Basic, Full, or Enhanced—based on the amount saved in the RA. These savings are used to pay the CPF LIFE premium, which funds the annuity, ensuring lifelong monthly payouts.

Monthly payouts from CPF LIFE commence at the payout eligibility age, currently set at 65. The scheme guarantees lifelong payouts, even if the member’s RA balance is eventually exhausted. This provides retirees with a steady income stream throughout their lives, offering financial stability and peace of mind in retirement.

CPF LIFE offers three payout plans, depending on your preference for fixed or increasing payouts:

Regardless of the plan you choose, CPF LIFE ensures you receive payouts for life. Upon passing, any remaining CPF LIFE premiums, along with CPF savings, will be returned to your beneficiaries.

How to grow your CPF savings for retirement

Retirement Sum Scheme vs. CPF LIFE

Both CPF LIFE (Lifelong Income for the Elderly) and the Retirement Sum Scheme (RSS) provide retirement payouts, but they differ in terms of payout duration, eligibility, and financial security. 

Which one is right for you?

✔ CPF LIFE is ideal if you want guaranteed income for life and peace of mind knowing you won’t run out of money.

✔ RSS may work for those with additional income sources (e.g., investments, rental income) and who prefer more control over their CPF savings.

If you qualify for CPF LIFE but still prefer RSS, you may be able to opt out if you have alternative annuities or pension plans that provide equal or higher payouts.

When can you use your CPF funds?

CPF savings serve multiple purposes, including retirement income, homeownership, healthcare, and investments. Understanding when and how you can use your CPF ensures that you make the most of your savings throughout different life stages.

1. Monthly payouts in retirement

At age 65, you can start receiving monthly payouts from your Retirement Account (RA) through either CPF LIFE or the Retirement Sum Scheme (RSS).

You can withdraw the remaining balances in your Ordinary Account (OA) and Special Account (SA) or keep them in CPF to continue earning interest. If you want higher payouts, you can top up your RA to the Enhanced Retirement Sum (ERS).

Payouts may be adjusted over time to account for interest rate changes and life expectancy.

2. Using CPF for healthcare needs

Your MediSave Account (MA) helps you pay for medical expenses for yourself and your dependents.

Your Basic Healthcare Sum (BHS) sets the maximum amount you can hold in your MA. Once you reach your BHS limit, excess MediSave savings will be transferred to your other CPF accounts.

3. Using CPF to buy a home

Your Ordinary Account (OA) savings can be used to finance home purchases under CPF housing schemes.

When selling your property, the CPF savings used for the purchase, including accrued interest, must be refunded to your CPF account to restore your retirement savings.

If you own a property with a lease lasting until at least age 95, you can withdraw more of your RA savings while meeting the Full Retirement Sum (FRS) through a mix of property and cash.

4. Protecting your family with CPF insurance

CPF offers insurance schemes to protect you and your loved ones financially.

5. Growing your CPF savings through investments

If you have excess CPF savings, you can invest them to potentially earn higher returns under the CPF Investment Scheme (CPFIS).

Approved investments include unit trusts, ETFs, government bonds, shares, gold, fixed deposits, and insurance products.

6. Withdrawing CPF from age 55 onwards

At age 55, your Retirement Account (RA) is created, and you may be eligible to withdraw part of your CPF savings.

You can make multiple withdrawals anytime instead of taking out everything at once.

Making CPF nominations: What happens to your CPF after death

A CPF nomination ensures that your CPF savings are distributed according to your wishes when you pass away. Without a nomination, your savings will be handled by the Public Trustee’s Office, following intestacy laws or a Muslim Inheritance Certificate, which may not align with your preferences.

Why make a CPF nomination?

👉 Making a CPF nomination ensures that your CPF savings go directly to the people you care about, without delays or additional costs.

When should you make or review a CPF nomination?

You can make a CPF nomination as early as age 16, once you start working and accumulating CPF savings. However, it’s equally important to review your nomination regularly, especially after significant life events:

✔ Marriage – Automatically revokes your existing nomination, requiring a new one.

✔ Childbirth – Ensure your child is included as a beneficiary.

✔ Divorce – Your nomination remains unchanged; review if necessary.

✔ Death of a Nominee – Update your nomination to reflect new beneficiaries.

💡 Quick Tip: Make it a yearly habit to review your CPF nomination at the start of each year!

What your CPF nomination covers (and what it doesn’t)

🔹 CPF savings are NOT part of your estate and cannot be included in a will. This protects your savings from creditors and ensures they go directly to your nominees.

How CPF nominations work

1. Make a Nomination: Specify who receives your CPF savings and how much each nominee gets.
2. CPF Board Contacts Your Nominees: Upon your passing, CPF Board will notify your nominees and facilitate the payout process.
3. Payouts in Cash: CPF savings are paid out in cash to your nominees.

🔹 Without a nomination, CPF savings are transferred to the Public Trustee’s Office, which will distribute them according to intestacy laws. This process can take several months.