As the clock ticks toward midnight on 31st December, many of us will be raising a glass to toast the new year. But before you dive into the celebrations, here’s some tough love: are your retirement plans ready to withstand the changes coming in 2025?
For most working Singaporeans, the CPF is a cornerstone of our retirement plans. Yet, with the changes introduced in Budget 2024 set to take effect on 1 January 2025, your carefully laid plans might need some tweaks for you to stay on track.
Here are 4 significant CPF changes in 2025 that could disrupt your retirement plans—unless you act now.
1. Closure of Special Account (SA) for those aged 55 and Above
In the second half of January 2025, the CPF Special Account (SA) of those aged 55 and above will be closed.
If you’re in this age group, savings in your SA will be transferred to your Retirement Account (RA), up to the Full Retirement Sum (FRS). The remainder will be transferred to your Ordinary Account (OA). Existing investments in your SA will not be force sold, you can keep them. Upon maturation or sales, the funds will be transferred to your RA or OA, depending on whether you have hit your FRS.
If you’re under 55, you’ll need to decide if it still makes sense for you to top up your SA for the 4% interest. Those who are younger may still see the SA as an easy way to grow your money at a higher rate while those who are closer to 55 may want to find alternative investment options that could offer higher yields.
While it’s not news, this also means that the well-loved SA Shielding strategy will no longer be feasible for those who have been waiting to unlock it.
Fret not, we shared some alternatives you can start exploring to ensure that you will still be able to hit your retirement goals.
2. Increase of Enhanced Retirement Sum (ERS)
The ERS is the maximum amount that those aged 55 and above can top up in their Retirement Accounts. From 2025, the ERS will be raised to 4x of the Basic Retirement Sum (BRS) to $426,000.
Topping up to the raised ERS allows for higher CPF LIFE payouts from age 65 onwards. That said, maximising CPF LIFE payouts comes with its set of considerations depending on your financial situation. Louis shared some food for thought on the CPF LIFE returns previously.
You can estimate your monthly payout based on your contributions using this calculator from CPF. Additionally, you can check your maximum top up amount by logging into your CPF account. To further assist with your planning, explore the Retirement Payout Planner to kickstart your retirement journey.
3. Increase in CPF Monthly Salary Ceiling
On 1 Jan 2025, the CPF monthly salary ceiling will be raised to $7,400 (from $6,800 in 2024). Wages above the ceiling are exempted from CPF contributions. This increase is part of the plan to increase the CPF Ordinary Wage ceiling to $8,000 by 2026
If you’re in the group who had hit the previous ceiling, you could enjoy more monthly contributions into your CPF in the coming year.
That said, the CPF annual salary ceiling of $102,000 and CPF Annual Limit of $37,740 will remain unchanged.
4. Enhanced Matched Retirement Savings Scheme (MRSS)
While this may not affect your retirement plan directly, if you’ve been contributing to your parents’ CPF to take advantage of the dollar-to-dollar MRSS grant, you should take note of these changes in 2025!
On 1 Jan 2025, the cap for the MRSS will be increased to $2000 per year (from $600/year). This will now be available to all aged 55 and above (instead of only those between 55 to 70 previously).
Here’s a quick summary of the changes, taken from CPF:
| Enhancements | Current | From 1 January 2025 |
| Increase in matching grant cap | $600 per year | $2,000 per year, with a $20,000 cap over an eligible member’s lifetime |
| Removal of age cap | Age 55 to 70 | Age 55 and above |
Do keep in mind that the MRSS is catered for seniors with lower retirement savings, hence it is only available to those with less than $102,900 in the RA. Here’s the eligibility criteria:
| Age | Age 55 and above (From 1 Jan 2025) |
| Retirement Account (RA) Savings | Less than $102,900 (as of 2024) |
| Average Monthly Income | Not more than $4,000 |
| Annual Value of Residence | Not more than $21,000 |
| Property Ownership | Own not more than one property |
In 2025, the changes to the CPF are not limited to the four mentioned above. You can read the full list of changes in CPF’s website here.
For some of our readers, I think the following may also be worth noting:
i. Increase in CPF contribution rates for Senior Workers
From 1 Jan 2025, CPF contribution rates for those between 56 to 65 will be raised by 1.5% which includes:
- 1% from employee’s share
- 0.5% for employer’s share
Here’s the updated CPF contribution rates for senior workers as of 1 Jan 2025:
| Age (Years) | 2024 | CPF Contribution Rates from 1 Jan 2025 | ||
| Total (% of wage) |
Total (% of wage) |
By employer (% of wage) |
By employee (% of wage) |
|
| 55 and below | 37 | 37 | 17 | 20 |
| Above 55 to 60 | 31 | 32.5(+1.5) | 15.5(+0.5) | 17(+1) |
| Above 60 to 65 | 22 | 23.5(+1.5) | 12(+0.5) | 11.5(+1) |
| Above 65 to 70 | 16.5 | 16.5 | 9 | 7.5 |
| Above 70 | 12.5 | 12.5 | 7.5 | 5 |
If you’re in the age group between 56 – 65, you would enjoy more CPF contributions in the new year. 🥳
ii. CPF contributions for Platform Workers
If you’re a hustler and have been earning some spare cash as a grab driver or delivery crew on weekends, this could affect you!
From 1 Jan 2025, CPF contributions will be deducted from your payout as and when they are earned.
This means that while your overall earnings will increase, if you’re doing Grab for extra cashflow, your immediate cash income could be lower than expected as part of it would be diverted into your CPF.
For those born after 1 Jan 1995, you will not need to take any further action, your CPF contributions will be deducted and submitted by the platform operators.
Folks born before 1 Jan 1995 will need to decide if you wish to opt in for the increased CPF contributions;
- Those who opt in will contribute at the same rate as those born after 1 Jan 1995 and may be eligible for the Platform Workers CPF Transition Support (PCTS).
- Those who do not opt in will only contribute to their MediSave Account (MA), these contributions will also be deducted from your earnings and submitted to CPF every month.
Full time platform workers may need to tweak their work hours if cashflow is a major concern. You can refer to this article to learn more about how your CPF contribution will be determined.
Will these 2025 CPF changes affect your retirement plans?
2025 will bring changes to the CPF that could impact your financial plans for retirement. On the whole, the changes should benefit you. However, the onus is on us to update our plans to ensure that we remain on track for a comfortable retirement.
Dr Wealth has a wealth of articles written to help you optimise your CPF, you can find them here. Or, you can reach out to Louis here if you’re looking for personalised financial tips.