The Central Provident Fund (CPF) is a vital part of Singapore’s retirement, healthcare, and housing savings system. While the standard CPF contribution rates apply to most employees, older workers and low-wage employees benefit from reduced CPF rates to ensure employment opportunities remain strong while still building savings for the future.
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📌 1. Why Reduced CPF Rates Exist
Reduced CPF rates for older employees are designed to encourage companies to hire and retain mature workers, while also supporting their continued participation in the workforce. Similarly, for low-wage employees, lower CPF contributions help maintain a healthy balance between take-home pay and long-term savings.
📅 2. CPF Contribution Rates for Older Workers (as of 2025)
CPF rates are tiered based on age, with younger employees contributing at the full rate and older employees contributing at reduced rates. This ensures that both employer and employee contributions remain manageable.
| Age Group | Employer Rate (%) | Employee Rate (%) | Total CPF Rate (%) |
|---|---|---|---|
| 55 & below | 17 | 20 | 37 |
| Above 55 – 60 | 14 | 14 | 28 |
| Above 60 – 65 | 10 | 8.5 | 18.5 |
| Above 65 – 70 | 8 | 6 | 14 |
| Above 70 | 7.5 | 5 | 12.5 |
💼 3. CPF for Low-Wage Employees – The Workfare Income Supplement (WIS)
Low-wage employees benefit from the Workfare Income Supplement (WIS) scheme, which provides additional CPF contributions and cash payouts funded by the government. This ensures that even with reduced CPF rates, their long-term savings are boosted.
- Applies to Singapore citizens aged 30 and above earning up to S$2,500 per month.
- CPF contributions under WIS are deposited into the employee’s CPF accounts, enhancing retirement, housing, and healthcare savings.
- Cash payouts help supplement immediate living expenses.
⚖️ 4. Balancing Take-Home Pay and Savings
Reduced CPF rates mean that older and low-wage employees retain more cash in hand, which can be critical for their daily living expenses. However, the trade-off is slower accumulation of CPF savings, making voluntary top-ups a recommended strategy for those who can afford it.
📍 5. Employer Considerations
- Hiring older workers becomes more cost-effective due to lower CPF contribution obligations.
- Payroll systems must be updated to automatically apply the correct CPF rates based on the employee’s age.
- Employers should educate staff about how CPF rates impact their long-term savings.
📊 6. Example Calculation
Let’s take an example of an employee aged 62 earning S$4,000 per month in 2025:
- Employer CPF: 10% of S$4,000 = S$400
- Employee CPF: 8.5% of S$4,000 = S$340
- Total CPF Contribution: S$740
✅ Final Takeaway
The reduced CPF rates for older workers and low-wage employees are a thoughtful balance between maintaining employability, ensuring adequate retirement savings, and preserving take-home pay. Employees should plan ahead to supplement their CPF where possible, while employers should leverage these rates to build a diverse and inclusive workforce.
