Deputy PM Wong highlights the importance of retirement planning

Singapore. According to Deputy Prime Minister and Finance Minister Lawrence Wong, the CPF Salary Ceiling should keep pace with inflation to ensure it doesn’t present more problems for the country’s citizens.

He responded to several questions during the Ask The Finance Minister programme on 17 February and assured people that he understood why the raised CPF salary ceiling concerns employers and employees.

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“But we also need to look at the long term. Retirement adequacy is a very important issue and if we don’t start building up for our retirement, we are storing up more problems for ourselves and for society,” he said.

“And really the CPF salary ceiling ought to be keeping pace with inflation. That’s the right way to think about this. It can’t be that we set the salary ceiling at S$6,000 and forever it doesn’t change,” he added.

As part of the Budget 2023, the CPF monthly salary will increase in stages until it reaches S$8,000 by 2026.

In September 2023, the ceiling will go up to S$6,300. Then, it will be S$6,800 by January 2024, S$7,400 by January 2025, and S$8,000 by January 2026.

According to Wong, the move was made to keep pace with the rising salaries. In turn, this is expected to help middle-income Singaporeans save more money for their retirement.

That said, the government said that now is not a good time to raise the ceiling. This is why it will be done in phases over a period of four years.

Currently, employees under 55 years old contribute 20% of their salary to their CPF. Meanwhile, employers contribute 17%.

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This change is also expected to increase the manpower expenses of businesses, according to associations.

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