Budget 2025: CPF contribution rates for workers aged 55-65 to rise by 1.5 percentage points in 2026

SINGAPORE: In a move aimed at boosting the retirement savings of senior workers, Prime Minister Lawrence Wong announced on 18 February that the Central Provident Fund (CPF) contribution rates for workers aged above 55 to 65 will increase by 1.5 percentage points in 2026.

This adjustment will take effect on 1 January 2026, pushing the CPF contribution rate for workers aged 55 to 60 to 34 per cent.

The announcement, made during the Budget statement, marks a significant step in providing additional support to senior workers, allowing them to build more robust retirement savings as they continue to participate in the workforce.

This increase comes as part of ongoing efforts by the Singapore government to address the challenges faced by older workers and provide continued support for businesses.

Wong reassured employers that they will not need to apply for this CPF adjustment, as the increase will be applied automatically.

This streamlined approach aims to ensure that the initiative reaches its intended recipients without any bureaucratic delays.

“With this move, senior workers can build up their retirement savings, and businesses will get continued support from the government to cushion the impact on business costs,” said Wong in his Budget statement.

The policy change is expected to support businesses in managing the added financial pressure while also improving the financial security of older employees.

SEC extended till 2026, offering wage offsets for employers hiring workers aged 60 and above

In addition to the CPF contribution rate increase, the government will also extend the Senior Employment Credit (SEC) by one year, through to the end of 2026.

The SEC is designed to provide wage offsets to employers who hire Singaporean workers aged 60 and above, earning less than S$4,000 a month.

This extension reflects the government's ongoing commitment to encouraging employers to hire and retain older workers.

As part of the SEC enhancements, the highest tier of wage support eligibility will be adjusted to reflect the increase in the re-employment age. From 2026, employers who hire workers aged 69 and above will be reimbursed 7 per cent of the worker’s wages, up from the previous qualifying age of 68.

Additionally, companies will receive a 4 per cent reimbursement for workers aged 65 to 68 and 2 per cent for workers aged 60 to 64.

These updates aim to strengthen the financial resilience of both employers and employees, particularly senior workers, who may face challenges related to job opportunities and wages in the workforce.

The Singapore government is also actively reviewing policies to further improve the employability of older workers.

To this end, the Ministry of Manpower (MOM) will convene a Tripartite Workgroup on Senior Employment later this year.

The workgroup will examine the current landscape of senior employment, with a focus on developing strategies that better suit the needs of older workers and expand the types of jobs available to them.

Wong highlighted that the workgroup will play a key role in refining senior employment policies, ensuring that older Singaporeans can continue to contribute meaningfully to the economy while securing stable and appropriate job opportunities.