Delay In CPF Restoration For Two Years More Savings In Special And Medisave Accounts Reductions In CPF Contribution Rate For Workers Aged 50-55 Lower CPF Salary Ceilings For Employer And Employee Contributions Contact us
CPF Changes And You
	As the economic climate continues to change, the road ahead is difficult and uncertain. For a nation that has always overcome adversity, we are not deterred. It is now vital that we focus on meeting the challenges with greater flexibility and competitiveness. While the Central Provident Fund has helped build our retirement nest eggs since 1955, we need to constantly adapt to better respond to keener competition and new challenges. In his Budget 2003 speech on 28 February 2003, Deputy Prime Minister and Finance Minister Lee Hsien Loong announced changes to the CPF that are in tune with the Economic Review Committee's recommendations to restructure Singapore's economy. These initiatives will keep the burden of CPF contributions as low as possible, while meeting your fundamental needs. With the restructuring, we are focusing on our core aims of providing basic financial security in retirement, housing and healthcare.
	Delay In CPF Restoration For Two Years
	The current CPF contribution rate of 36% stays for another two years. Later, the cuts will be restored progressively to the full 40%, although the pace and timing will depend on how the economy is faring.
	Why?   To save jobs. When companies are confident that their business costs are not rising, they are less likely to retrench workers or move out of Singapore.
	Singapore's economy has not yet fully recovered from the 2001 recession, while the current slowdown reflects a fundamentally changed business environment. To keep Singapore's competitiveness and to ensure our recovery is on track, the delay in restoring CPF cuts means that we do not increase the burden on employers before the economy has improved.
	More Savings In Special And Medisave Accounts
	From January 2004, all CPF members will gradually put in more in their Special and Medisave accounts. The increases will be introduced steadily over three years.
	Higher Contribution Rates to Special and Medisave Accounts CPF Rates Current From 1 Jan 2004 From 1 Jan 2005 From 1 Jan 2006 For workers aged 35 years and below       Special Account 4% 5% 5% 5% Medisave Account 6% 6% 7% 7% For workers aged above 35-45 years       Special Account 6% 7% 7% 7% Medisave Account 7% 7% 8% 8% For workers aged above 45-50 years       Special Account 6% 7% 8% 9% Medisave Account 8% 8% 8% 9% For workers aged above 50-55 years       Special Account 6% 7% 8% 9% Medisave Account 8% 8% 8% 9%
	Why?   The higher contributions to the Special and Medisave Accounts are necessary to ensure that Singaporeans have enough savings for old age and healthcare. They have a long-term impact on adequacy for these two objectives. Hence, it is important to make these adjustments early to help you build up your retirement and healthcare savings as soon as possible. The longer the delay, the more difficult it will be to build up these accounts to an adequate level.
	You need not worry that these changes will leave you with less savings in your CPF Ordinary Accounts to service your mortgage payments. If you buy your home before 1 January 2004, the Government will give you continued access to your Special Account to top up your CPF mortgage payments, to the extent that these payments are affected by the changes.
	Reductions In CPF Contribution Rate For Workers Aged 50-55
	From January next year, workers aged between 50 and 55 will gradually need to contribute less to CPF. Currently 20%, the CPF rate will be lowered to 18% on 1 January 2004, and then to 16% on 1 January 2005. Employers' CPF contributions for this group have also been capped at 16% to help this group stay employable.
	Lower CPF Contribution Rates for Workers Aged 50-55 CPF Rates Current From 1 Jan 2004 From 1 Jan 2005 Employer Contribution Rate 16% 16% 16% Employee Contribution Rate 20% 18% 16% Total CPF Contribution 36% 34% 32%
	Why?   To boost long-term employability. The cuts will enable older workers to take home more of their pay. The adjustment in the CPF component will also help older workers when their companies phase out seniority-based wage structures in favour of more flexible wage systems.
	Lower CPF Salary Ceilings For Employer And Employee Contributions
	CPF salary ceilings for contributions will be reduced in two phases.
	PRIVATE SECTOR Over the next two years, the top limit will drop from the current $6,000, to $5,500 on 1 January 2004, and $5,000 on 1 January 2005. This applies to both employer and employee contributions.
	PUBLIC SECTOR (NON-PENSIONABLE WORKERS) On 1 January 2004, the ceiling will be brought down from $7,000 to $6,000 for employer contributions, and from $6,000 to $5,500 for employee contributions. On 1 January 2005, the top amounts will be decreased further to be in line with the private sector's - $5,000 for both employer and employee contributions.
	PUBLIC SECTOR (PENSIONABLE WORKERS) On 1 January 2004, the ceiling will fall from $9,333 to $8,000 for employer contributions, and from $8,000 to $7,333 for employee contributions. On 1 January 2005, these will drop further to $6,667 for both employer and employee contributions.
	Lower CPF Salary Ceilings
	Existing 1 Jan 2004 1 Jan 2005 Employer Employee Employer Employee Employer Employee Private Sector 6,000 6,000 5,500 5,500 5,000 5,000 Public Sector (Pensionable) 7,000 6,000 6,000 5,500 5,000 5,000 Public Sector (Pensionable) 9,333 8,000 8,000 7,333 6,667 6,667
	Why?   To refocus the CPF Scheme on the basic needs of the bulk of the population, rather than the higher income earners who are better able to plan and provide for their future financial needs.
	Employers are urged to pass on part of their cost savings to deserving workers through the variable component of wages, such as bonuses or other variable payments.
	Contact Us
	CPF Contribution Rates 1800-226-3877 (Code 1) Employer@cpf.gov.sg Members' Accounts 1800-227-1188 (Code 1) Members-Accounts@cpf.gov.sg Medisave Scheme 1800-227-1188 (Code 6) Healthcare@cpf.gov.sg Public Housing Scheme 1800-225-8880 Public-Hsg@cpf.gov.sg Residential Properties Scheme 1800-225-8880 Private-Hsg@cpf.gov.sg