Singapore is entering a new phase in its retirement landscape with a series of pivotal reforms taking effect in 2025, aimed at bolstering financial security and flexibility for its ageing population. These changes, spearheaded by the government and supported by major institutions such as the National Trades Union Congress (NTUC), involve adjustments to retirement and re-employment ages, the Central Provident Fund (CPF) system, and initiatives to boost older workers’ savings.
Raising Retirement and Re-employment Ages
In a decisive move to extend working longevity, Singapore is raising both the retirement and re-employment ages. The national retirement age will rise to 64, while the re-employment age will increase to 69. These changes are part of the government’s broader plan to incrementally lift the retirement age to 65 and the re-employment age to 70 by 2030.
However, some institutions are moving ahead of schedule. From 1 January 2025, NTUC will raise the retirement and re-employment ages for its employees to 64 and 69 respectively, marking a 1.5-year lead over the national timeline. The Public Service Division will follow closely, implementing these new age thresholds from 1 July 2025—a full year in advance of the nationwide mandate.
These measures are designed to encourage older workers to remain economically active while providing employers with a longer horizon to engage experienced staff.
Key CPF Changes: Boosting Retirement Income
One of the most significant components of the 2025 reforms lies in the CPF system—Singapore’s compulsory savings scheme that underpins retirement funding for most citizens.
1. Enhanced Retirement Sum (ERS)
From 1 January 2025, the Enhanced Retirement Sum (ERS) will increase to S$426,000. This allows CPF members who can afford to top up their savings to receive monthly payouts of up to S$3,300 for life under the CPF LIFE annuity scheme.
2. Special Account (SA) Closure
Another structural shift involves the closure of the Special Account (SA) for CPF members aged 55 and above, beginning from the second half of January 2025. Existing SA balances will be automatically transferred to the member’s Retirement Account (RA), streamlining savings to focus on retirement needs.
3. Higher CPF Contribution Rates for Older Workers
To further strengthen retirement savings, CPF contribution rates for employees aged above 55 to 65 will rise by 1.5% starting 1 January 2025. This increase is split between employers (0.5%) and employees (1%).
This adjustment is part of a gradual enhancement plan for older workers first announced in Budget 2020, aimed at maintaining parity with younger cohorts over time.
4. Increase in CPF Monthly Salary Ceiling
High-income earners will also benefit as the CPF monthly salary ceiling rises to S$7,400 (from S$6,800 previously) beginning 1 January 2025. This allows for higher mandatory contributions, which can significantly grow retirement savings over time.
5. Expansion of the Matched Retirement Savings Scheme (MRSS)
In 2025, the MRSS will be expanded to include seniors aged above 70, who were previously excluded. The annual government matching cap will increase from S$600 to S$2,000, with a lifetime cap of S$20,000. This enhanced support will help lower- and middle-income seniors build up their CPF balances more quickly.
A Future-Proofed Retirement System
These sweeping updates reflect Singapore’s long-term strategy to ensure the sustainability and adequacy of retirement incomes in light of rising life expectancy. The reforms also underscore the government’s emphasis on active ageing, encouraging seniors to stay in the workforce longer while simultaneously supporting voluntary top-ups and flexible payout options.
Critics have raised questions about whether these changes go far enough for lower-income seniors who may still struggle to meet even the Basic Retirement Sum. However, the expansion of targeted schemes like MRSS and higher employer contributions offer a more inclusive safety net than before.
Moreover, the early adoption of these changes by major employers like NTUC and the Public Service sends a strong signal of readiness and support for older workers—both from an employment and retirement adequacy standpoint.
What Workers Should Do Now
Workers approaching retirement are advised to:
- Review CPF balances and explore top-up options.
- Check eligibility for MRSS and other support schemes.
- Stay informed about how CPF changes affect withdrawal, interest, and monthly payouts.
Conclusion
With the 2025 retirement overhaul, Singapore is laying crucial groundwork for a more resilient and inclusive retirement ecosystem. While the reforms demand adjustments from employers, employees, and policymakers alike, they reflect a proactive stance in addressing demographic shifts and evolving economic realities.