How CPF allocation and contribution rates change as you grow older

Living in Singapore, many of you should be familiar with the CPF. While some may see it as a "forced savings" scheme, the CPF is a social security system that enables working Singapore Citizens and Permanent Residents (PRs) to set aside funds primarily for their retirement, as well as for their healthcare, homeownership, family protection, and asset enhancement.

The CPF is made up of three accounts:

1. Ordinary Account (OA): For housing, investment, insurance and education.
2. Special Account (SA): For retirement and investments.
3. MediSave Account (MA): For hospitalisation expenses and approved medical insurance

On your 55th birthday, a fourth account, the Retirement Account (RA), will be created for you. When this happens, your SA balance, followed by your OA will be transferred to your RA up to the Full Retirement Sum (FRS). 

Your SA will be closed, and any excesses of the FRS in your OA can be retained, withdrawn or invested. 

Defining your CPF contribution and allocation rates 

At first glance, the terms “contribution rate” and “allocation rate” may appear interchangeable. 

There is a difference. The CPF contribution rate references the percentage of your monthly salary that goes into your CPF accounts. 

The CPF allocation rate refers to the percentage of your monthly CPF contribution that is allocated to the three accounts: OA, MA, and SA or RA. 

How do CPF contribution and allocation rates change throughout your life?

As you grow older, your CPF contribution and allocation rates change to help you transition through life stages. Here’s an overview of how the numbers are adjusted:

For the contribution rate, 20% of your salary gets transferred to your CPF, with your employer contributing an additional 17% until you hit the age of 55. These percentages start to decline from that point onwards. 

Allocation rates are constantly shifting. As you get older, these percentages drop gradually for your OA and start to increase for your SA and MA, peaking at age 55.

35 years old and below: OA accumulation for your first home

For the first 10 to 15 years of your career, you will be contributing an equivalent of 37% of your wages (subject to a salary cap of S$6,000 – more on this below) to your CPF monthly. Both employers and employees have to make CPF contributions, with 20% coming from your monthly salary and 17% contributed by your employer.

At this stage of your life, the bulk of your CPF contributions are channelled into your OA. This is to help fund your current or future home, as you can use your OA balances to pay for the downpayment and monthly mortgage of your property.

When planning for your home purchase, you should not stretch your finances such that you have to use all of your OA contributions each month to afford your home. This is because, as depicted in the table above, your OA contributions start to drop from a peak of 23% of your salary after 35. This means as allocations shift from your OA towards your SA and MA, you may have to make up for shortfalls with cash payments.

Read more: A guide to your first BTO

Above 35 to 50: Gradual shift towards ageing needs

There is a gradual shift in your allocation rate, with less being funnelled into your OA, and more into your SA and MA. The reason for this is simple, while you may still have a home mortgage to pay off, you also need to start paying attention to your retirement and medical needs.

As the ~4% p.a. you earn on your SA and MA balances is higher than the 2.5% p.a. you get on your OA balances, you are better preparing for your retirement and safeguarding your medical needs. 

Read more: Latest CPF interest rates

Above 50 to 55: Preparing for the first CPF withdrawal

Once you are above 50, more of your CPF savings will be allocated towards your SA than your MA. These are critical years to accumulate retirement savings as your SA will be closed once you turn 55, and the new Retirement Account (RA) will be created. It is also the age when your RA savings will determine how much you can withdraw from your CPF.

In addition, ensuring that you are well-prepared for medical issues becomes increasingly important as you age. Hence, allocation towards your MA peaks at 10.5% from above age 50, and will remain so for the rest of your life.

Read more: How the SA closure impacts your retirement planning

Above 55 to 60: First decline in CPF contributions

As you turn 55 years old, your CPF contributions will see the first decline drop to 32.5%. Announced in Budget 2025 to strengthen the retirement adequacy for senior workers, the contribution rates will be set at 1.5 percentage points higher at 34% in 2026. Before turning 55, the contribution rate remained steady at 37% of your salary. This decline in contribution rate could free up more liquid cash for emergency needs. 

Above 60 to 65: Significant drop in contributions and allocations to OA

From age 60, your CPF contributions significantly drop from 32.5% to 23.5%, and from 2026, the contribution rate will be increased by 1.5 percentage points at 25% as announced in Budget 2025. Similarly, allocation to your OA sees a large drop from 12% to 3.5%. Again, this is why it’s important to ensure you don’t overstretch your OA for your home downpayment and mortgage in your younger years.

At 65 years old, you can opt to start your CPF LIFE monthly payouts, which will be determined by how much your RA has.

Read more: How to receive monthly payouts with CPF LIFE

Above 65 years old

From above age 65, your CPF contributions drop from 25% to 16.5%, and this will decline again after you are above 70 years old. Allocation to your OA will decline to 1% and remain so. 

How much CPF monthly contributions do I have to make?

Now that we are clear on the percentages of our monthly salaries that go into our CPF accounts and how the CPF monthly salary ceiling impacts you, the amount of CPF contribution you have to make depends on the monthly salary ceiling, called the Total Wage (TW) ceiling, which is currently at S$102,000.

It comprises two components, the Ordinary Wage (OW) ceiling, and the Additional Wage (AW) ceiling. 

The OW most typically refers to your monthly salary. For example, you are 30 years old in 2025 and your monthly salary is S$8,000. Only the first S$7,400 will be subjected to CPF contributions, so 20% of S$7,400 will be made as an employee contribution to your CPF account and 17% as an employer contribution.

Revisions are made to the OW ceiling every year – here are the latest numbers:

On the other hand, AW refers to wages not classified as monthly salary, such as your annual performance bonus and incentive payments. These are also subjected to CPF contributions, and the ceiling for that is calculated as such:

S$102,000 - Total OW subject to CPF for the year‍

Taking the same example previously, the AW ceiling for a 30-year-old earning monthly salary of S$8,000 will be:
S$102,000 - (S$7,400 x 12) = S$6,000

Note that the total OW subject to CPF for the year in the calculation is S$7,400, not S$8,000 as the OW ceiling in 2025 is S$7,400. As for your AW, only S$6,000 of it will be subjected to CPF contributions from both yourself and your employer.

Why a higher CPF monthly salary ceiling could actually be good for you

The CPF monthly salary ceiling is designed to ensure that while higher earners contribute a fair share to their retirement savings, there is a limit to the mandatory contributions. This balance allows individuals to have enough disposable income for their immediate needs, while still preparing for the future.  

Incremental increases to the CPF monthly salary ceiling were announced in the Budget 2023 – some people lamented this move, but this is generally beneficial, especially in terms of retirement. Let’s look at how a higher monthly salary ceiling could actually impact you.

Adjustments to your cash flow: The higher CPF monthly salary ceiling could mean a lower monthly take-home pay, you may consider adjusting your finances and monthly budgeting for your cash to compensate for the higher CPF contributions.

Retirement adequacy: While the lower take-home pay may feel painful at first, raising the monthly ceiling wage will allow your retirement savings to grow quicker, ensuring a healthier sum of CPF monies ready for you to use as you reach retirement age. 

Risk-free interests on your OA savings: The extra CPF contributions could be seen as “forced saving”, especially useful if you have trouble staying disciplined with your savings. The risk-free 2.5% interest rate can grow substantially and be used for mortgage payments, property, protection schemes and education as you get closer to retirement.‍

OA investments: If you are seeking higher potential returns for your OA savings, these additional payments per month can also be put into investments under the CPF Investment Scheme (CPF-IS) for those with higher risk tolerance levels or looking to beat inflation over the long run.

Are you on track to your retirement goals?

After paying for your housing, insurance and medical needs, it’s important to have an adequate sum of money parked aside for your retirement. Some Singaporeans take for granted that their monthly CPF contributions will be enough to cover their retirement needs, but are taken off guard by the time they assess their CPF savings in their 50s or 60s.

Plan for your retirement as soon as you can. If you would like to explore growing your OA savings for retirement, learn more about CPF investing, and explore our Core Flagship CPF Portfolios.

Read more:

• 6 Things you can pay for with your CPF savings
• What you need to know before investing your CPF