The Central Provident Fund (CPF) contribution adjustments taking effect on 1 January 2026 introduce changes to both the wage ceiling and the contribution rates for senior workers. Employers should assess the financial and administrative impact early, as these updates will directly affect payroll costs, manpower budgeting and HRIS configurations.
Adjustment to CPF Ordinary Wage (OW) Ceiling
From 1 Jan 2026, the monthly OW ceiling will increase from S$7,400 to S$8,000.
Implication:
A larger portion of monthly wages becomes CPF-liable.
Employers with mid- to higher-income earners will see a corresponding increase in employer CPF contributions.
No change to the annual CPF salary ceiling (S$102,000), meaning the combined OW + AW cap remains unchanged.
Increased CPF Contribution Rates for Senior Workers
Higher contribution rates will apply to employees aged 55 to 65, for wages above S$750/month:
Age 55–60
Total contribution rate: 32.5% → 34%
Employer: 15.5% → 16%
Employee: 17% → 18%
Age 60–65
Total contribution rate: 23.5% → 25%
Employer: 12% → 12.5%
Employee: 11.5% → 12.5%
Allocation:
The incremental contribution will be directed fully to the Retirement Account (RA), up to the Full Retirement Sum. Excess, where applicable, will flow into the Ordinary Account.
Impact Assessment for Employers
Payroll Cost Increase
Employers should recalibrate manpower costs, particularly where:
The workforce has a significant proportion of employees aged 55–65.
Employees earn between S$7,400 and S$8,000, or exceed the current OW ceiling.
Annual budgeting cycles begin before 2026, requiring accurate cost forecasting.
HR & Payroll System Updates
System changes will be required to reflect:
New CPF wage ceiling (S$8,000).
Updated age-indexed contribution rates.
Adjustments to payroll formulas, caps, and validation rules.
Review of Additional Wage (AW) capping logic in HRIS.
Cash Flow & Accrual Adjustments
Finance teams should:
Update monthly accrual models to incorporate higher CPF expenses.
Re-evaluate manpower budgets and salary bands for 2026.
Ensure accurate forecasting for year-end provisions tied to CPF liabilities.
Transitional and Compliance Considerations
Employers should ensure payroll teams are fully briefed before the first 2026 pay cycle.
Review and update HR policies, employment contracts (where contribution details are referenced), and staff communication templates.
Companies planning workforce restructuring or remuneration reviews should factor in higher CPF cost impact for senior workers.
Recommended Employer Actions
✔ Incorporate new CPF rates into FY2026 budget and manpower plans
✔ Update payroll and HR management systems
✔ Conduct staff cost impact analysis for employees aged 55–65
✔ Communicate upcoming changes to affected employees
✔ Review salary structures and hiring plans in light of increased statutory costs