CPF Contribution Rates 2025–2026: The Complete Employer Guide

If you run a business in Singapore and employ staff, CPF contributions are one of the most important numbers you need to get right. Get them wrong and you are looking at penalties, late interest charges, and awkward conversations with your team.

This guide covers exactly what you need to know: the current contribution rates by age group, the changes that took effect in January 2026, how the updated Ordinary Wage ceiling affects your payroll calculations, and what to do if you have new permanent residents on the team.

What Is CPF and Why Does It Matter for Employers?

The Central Provident Fund (CPF) is Singapore's mandatory savings scheme, covering retirement, healthcare, and housing needs. As an employer, you are legally required to contribute a portion of your employees' wages into their CPF accounts every month, on top of deducting the employee's own share from their salary.

Both the employer contribution and the employee deduction are calculated as a percentage of the employee's Ordinary Wages (monthly salary) up to the Ordinary Wage (OW) ceiling, plus any Additional Wages (such as bonuses) up to the annual ceiling.

Getting CPF right is not optional. The CPF Board actively enforces compliance, and the penalties for late or incorrect contributions add up quickly.

CPF Contribution Rates by Age Group (From January 2025)

Contribution rates depend on the employee's age and their total monthly wages. The table below applies to Singapore Citizens and third-year-and-beyond Permanent Residents earning more than $750 per month.

These rates apply to the portion of wages up to the Ordinary Wage ceiling. For 2025, that ceiling is $7,400 per month.

Always verify the current rates at the CPF Board's employer obligations page, as rates for senior workers have been updated annually as part of a phased increase programme.

What Changed in January 2026: Senior Worker Rate Increases

From 1 January 2026, CPF contribution rates increased for employees aged 55 to 65. This is the final step in a multi-year roadmap to strengthen retirement savings for senior workers, announced as part of Singapore's broader efforts to support an ageing workforce.

Updated rates from January 2026

The additional contributions for employees in the 55 to 65 age group will be directed to their Retirement Account, up to the Full Retirement Sum (FRS). This means your senior employees build a stronger retirement cushion from the same payroll process.

If you are running payroll software like Xero, make sure your software is updated to reflect these new rates for employees who crossed into these age brackets on or after 1 January 2026.

The Ordinary Wage ceiling also increased

From 1 January 2026, the OW ceiling rose from $7,400 to $8,000 per month. This is the final step in the ceiling increase programme that began in September 2023. For employees earning above $8,000, CPF contributions are calculated on $8,000, not their full salary.

The annual salary ceiling remains at $102,000. This caps the total CPF-liable wages across both Ordinary and Additional Wages for the year.

How the Ordinary Wage Ceiling Works in Practice

The OW ceiling is the maximum monthly wage on which CPF contributions are calculated. Here is a quick example to make it concrete.

Say you have an employee aged 35 earning $10,000 per month in 2026:

1. Their CPF-liable wages are capped at $8,000 (the OW ceiling).
2. Employer contribution: $8,000 x 17% = $1,360
3. Employee deduction: $8,000 x 20% = $1,600
4. The remaining $2,000 of their salary is paid without CPF deductions.

If that same employee receives a year-end bonus, the Additional Wages (AW) ceiling applies. The AW ceiling for the year is $102,000 minus the total Ordinary Wages already subject to CPF in that year. This prevents high earners from inadvertently exceeding the annual cap.

For most small business owners, this calculation is handled automatically by your payroll software. But it is worth understanding the logic behind it, especially when hiring higher-salary staff or paying out bonuses.

CPF Rates for New Permanent Residents

Singapore Permanent Residents (SPRs) do not immediately contribute at full citizen rates. Instead, they follow a graduated contribution schedule during their first two years of PR status.

The graduated rates are lower for both employer and employee in year one and year two, then move to full citizen rates from the third year onwards. Both the employer and employee can jointly elect to apply full rates from the first year if they prefer.

Check the CPF Board's graduated contribution tables for the exact percentages by year and age group, as these also vary by employee age.

If you have staff transitioning from their second to third year of PR status mid-year, make sure your payroll is set up to switch rates at the right time. Missing this transition is one of the more common CPF errors we see.

Step-by-Step: How to Calculate CPF Contributions Correctly

1. Confirm your employee's citizenship status and age. Citizens and SPRs (third year onwards) use the full rate tables. First and second-year SPRs use the graduated tables.
2. Calculate the Ordinary Wages for the month. This is the regular monthly salary. Exclude reimbursements and one-off payments that are not wages.
3. Apply the OW ceiling. If their salary exceeds $8,000 (from January 2026), cap it at $8,000 for CPF purposes.
4. Apply the correct employer and employee rates from the table for their age group.
5. Calculate Additional Wages separately. If a bonus or other Additional Wage payment is being made, calculate the AW ceiling first ($102,000 minus cumulative OW already subject to CPF this year), then apply the relevant rates to the capped AW amount.
6. Submit and pay by the 14th of the following month. CPF contributions must be paid via CPF EZPay or your payroll software's CPF integration by the 14th. If the 14th falls on a weekend or public holiday, pay by the last working day before.
7. Retain payroll records for at least five years. IRAS and the CPF Board may request these during audits.

Our payroll guide for Singapore small business owners goes deeper into the full payroll process, including IR8A filings and leave calculations.

Common CPF Mistakes Employers Make

Using the wrong age group. CPF rates change on the first day of the month in which an employee's birthday falls. If your system uses the employee's age at the start of the year, it will eventually use the wrong rate. Always confirm that rate changes are triggered by the employee's actual birthday month.

Forgetting to update rates each January. Senior worker rates have increased annually since 2022. If your payroll system is not automatically updated, or if you are running manual payroll, you could be underpaying from the first pay cycle of the new year.

Including non-wage payments in the CPF base. Reimbursements, expense claims, and certain allowances are not classified as wages under the CPF Act and should not be included in the CPF calculation. Incorrectly including them means you are overpaying and your employees may also have excess contributions in their accounts.

Missing the PR graduation date. As noted above, SPRs move to full rates from their third year of PR status. The exact date is tied to the date of their PR approval, not the calendar year. Payroll software needs to be set up correctly to handle this.

Late payment. The CPF Board charges interest at 1.5% per month (equivalent to 18% per annum) on any late contributions, from the date they were due. On top of that, the Board may impose a composition fine of up to $1,000 per offence, or pursue prosecution for wilful non-payment.

CPF Penalties: What to Do if You Have Underpaid

If you discover that CPF contributions have been underpaid, act quickly. The CPF Board has a self-rectification process, and early disclosure typically results in more favourable treatment than being flagged during an audit.

Steps to rectify underpayment:

1. Calculate the shortfall for each affected employee and period.
2. Submit the corrected contributions through CPF EZPay, along with the late interest.
3. Update your payroll system to prevent the same error recurring.
4. Keep documentation of the correction in case it is queried later.

If the underpayment is material or has been going on for several years, it is worth speaking to an accounting firm before you approach the CPF Board. We can help you quantify the liability, prepare the supporting documentation, and navigate the process with minimal disruption.

How the 2026 OW Ceiling Increase Affects Your Payroll Costs

For employees earning between $7,400 and $8,000 per month, the OW ceiling increase means a higher CPF contribution from both employer and employee than in 2025.

Take an employee earning $7,800/month (aged 35):

• 2025: CPF calculated on $7,400. Employer pays $7,400 x 17% = $1,258. Employee contributes $7,400 x 20% = $1,480.
• 2026: CPF calculated on $7,800. Employer pays $7,800 x 17% = $1,326. Employee contributes $7,800 x 20% = $1,560.

That is an extra $68 per month in employer costs for this one employee. If you have several staff in this salary band, it is worth updating your headcount cost models for 2026. Our team can help if you need to review your payroll budgets as part of your broader financial planning.

Frequently Asked Questions

What happens if my employee's salary is below $750 per month? Employees earning $50–$500 per month are not required to contribute CPF (though the employer still must). Employees earning $500–$750 per month have no employee contribution, but the employer must contribute a reduced rate. Employees earning less than $50 have no CPF obligations at all. See the CPF Board's wage guidelines for the exact reduced-rate tables.

Do I need to pay CPF for foreign employees on an Employment Pass or S Pass? No. CPF contributions only apply to Singapore Citizens and Permanent Residents. Foreign pass holders are not covered under the CPF scheme.

When exactly do the new rates for 2026 apply? The 1 January 2026 rates apply to wages paid for work done on or after 1 January 2026. If you paid January wages in late December 2025, check with the CPF Board or your accountant on how the transition date applies to your payroll cycle.

What is the difference between Ordinary Wages and Additional Wages? Ordinary Wages are regular monthly salary. Additional Wages include bonuses, commissions, and other payments not tied to the monthly pay cycle. Both are subject to CPF, but they have separate ceilings and are calculated independently.

Can I deduct both my employer and employee CPF contributions from the employee's salary? No. The employer contribution is a cost borne by the business, not the employee. Only the employee's share can be deducted from their salary. Deducting the employer's share from the employee is not permitted under the Employment Act.

Ready to take CPF compliance off your plate?

Managing CPF calculations correctly, especially as rates change year on year, takes time and attention. Mistakes are costly. We handle payroll for small businesses across Singapore, making sure your CPF submissions are accurate, on time, and correctly reflected in your accounts.

Book a free consultation and Harvest handles the rest.