CPF 2023 Updates: Monthly Salary Contribution to Increase in September
In line with the Government’s Budget 2023 announcement in February, the CPF monthly salary ceiling will be gradually increased.
The first increase will happen on 1 September 2023, with the ceiling raised from $6,000 to $6,300. The Government plans to raise the ceiling gradually to $8,000 by 2026.
This is to help Singaporeans save more for retirement as well as to keep up with rising salaries. The change will also affect both employers and employees, as employers will also have to factor in the higher CPF contributions in their labour costs.
CPF Contribution Increase Update: 1 September 2023
Starting 1 September 2023, the CPF Ordinary Wage monthly salary ceiling will be raised by $300 to $6,300, then to $6,800 from 1st January 2024, $7,400 from 1st January 2025 and $8,000 from 1st January 2026.
The CPF annual salary ceiling of $102,000 remains unchanged. This means that all salaries received in a year, including Additional Wages (allowances, bonuses etc) will not attract additional contributions.
Detailed contribution tables can be found here.
How the CPF Update Will Impact Employees
If an employee earns less than $6,000 per month, there will be no change to their take-home pay.
Those earning between more than $6,000 will see their CPF contribution increase slightly. For example:
- Current situation: An employee earning $6,500 per month will contribute $1,200, based on a 20% contribution on the $6,000 ceiling.
- After 1 September 2023: Their contribution will increase by $60 to $1,260, based on a 20% contribution on the $6,300 ceiling.
The decrease in take-home pay is offset by the gain in CPF savings. With Singaporeans expected to retire later and live longer, this change is helpful for future retirement planning.
Ensure Accurate Payroll and CPF Deductions with BrioHR
Calculating CPF and other statutory deductions can become complicated, especially when multiple employees in multiple pay brackets are involved.
With BrioHR’s IRAS-compliant payroll module, you can ensure that all matters related to pay are handled accurately by the software system. Plus, any updates to payroll such as the CPF contribution limit will be automatically updated by the system, ensuring that your organization too complies with all payroll regulations.
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This enables business owners and HR teams to truly focus on what matters most – people.
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