Navigating the 2024 CPF Changes: What Every Singaporean Needs to Know

As we embark on a new year, it's essential to stay informed about the changes that may impact our personal financial landscape. One crucial cornerstone of our financial well-being is the Central Provident Fund (CPF).

The year 2024 brings some notable adjustments to CPF interest rates, salary ceiling and contribution rates. Understanding how they affect you depends on your current life stage.

Let's dive into the key changes and explore their implications.

Increase in Interest Rates.

In the first quarter of 2024, the interest rate for CPF Special, MediSave, and Retirement accounts are set to rise to 4.08% per annum. This welcome news means your savings will accumulate at a higher rate, marking the third increase since the 4% floor rate was established in 2008.

It's a reason to smile – no action is required; just watch your savings grow.

Raising the CPF Monthly Salary Ceiling.

From 1 January 2024, the CPF monthly salary has been raised from $6,300 to $6,800. If you earn at least $6,800 a monthly, you can expect a slight decrease in your take-home pay and an increase in your CPF contributions.

This salary ceiling refers to maximum portion of your monthly salary that is eligible for CPF contributions. Remember, you contribute 20% of your salary towards your CPF, while your employer contributes 17% (for Singaporeans aged 55 and below).

For example, if your salary is $8,000, your monthly take-home pay is expected to be reduced by $100. However, your CPF contributions will rise by $185.

Raising the CPF salary ceiling is one measure to ensure that the CPF system remains relevant in meeting our retirement needs. The Government has implemented a plan to gradually raise the ceiling to reach $8,000 by 2026, giving time for employers and employees to adjust.

Increase in CPF Contribution Rates for Ages 55 to 70

If you are a young senior and still working, you can expect to make more CPF contributions than before the change. Prior to 2022, when you turn 55, both employee and employer CPF contribution rates drop to 30% of total monthly salary.

Thankfully, the Government has accepted the recommendation to raise the contribution rates of working seniors aged above 55 to 70, to strengthen their retirement adequacy. The longer-term target is to reach the full increase by 2030.

Starting 1 January 2024, the third step-up has taken place, raising the CPF contribution rates for employees aged 55 to 70, as follows:

Reference: CPFB, FAQ What are the changes to the CPF contribution rates for senior workers that will take effect from 1 January 2024?, retrieved on 16 Jan 2024.

Increase in Basic Healthcare Sum (BHS)

Our MediSave account is our savings for healthcare needs. The Basic Healthcare Sum (BHS) is the estimated savings you need in your MediSave for basic subsidised healthcare needs in old age.

If you are below 65 this year, the prevailing BHS is $71,500 and this amount will be adjusted annually.

If you're turning 65 this year, the BHS for you becomes fixed at $71,500.

Subsequent contributions to your MediSave beyond the BHS limit of $71,500 will go into your Ordinary and Special Accounts.

Conclusion

Whether it's the rise in CPF interest rates, adjustments in the monthly salary ceiling, or changes in basic healthcare sums and CPF contribution rates, these changes contribute to strengthening our financial resilience in the long run, providing us with a more stable and secure retirement in the future.

If you are in your 50s and unsure of your retirement needs and adequacy, consider attending our “Retirement – Are You Financially Ready” workshop that is conducted by CCS as part of the National Silver Academy to promote successful ageing.

Click here to find out more: https://ccs.org.sg/nsa/

Credit Counselling Singapore

Published 16 January 2024