Retirement Guru: What happens to your CPF Contributions when you turn 55 ….

Launched in July 1955, the Central Provident Fund (CPF) is a compulsory savings and pension plan for working Singaporeans and permanent residents. It has become a hallmark of Singaporean life and all Singaporeans know that at age 55, a Retirement Account is created to provide for their retirement income. However, fewer are aware of the changes to CPF contribution rates and the allocation percentages among the Ordinary Account, the Special Account (which will be merged with the Retirement Account in January 2025), and the Medisave Account when one turns 55.

CPF Contribution Rates

CPF contributions are payable on Ordinary Wages to employees who are Singapore Citizens and Singapore Permanent Residents (SPRs) at the following current CPF contribution rates.

Impact on Take-Home Pay

At 55, your employee contribution rate drops from 20% to 16% resulting in an increase in your take-home pay. Assuming your salary is $5,000, your CPF contributions will go from $1,000 (20%) to $800 (16%) increasing your take-home pay by $200 per month.

Impact on Total CPF Contributions

At 55, your employer contribution will also decrease from 17% to 15%. For the same…