Central Provident Fund (CPF)

The Central Provident Fund (CPF) is Singapore's mandatory social security savings scheme that requires all working Singapore citizens and permanent residents to contribute a portion of their wages into individual accounts used for retirement, healthcare, and housing. The scheme was established on July 1, 1955, under British colonial rule, originally as a voluntary program that became compulsory in 1957. Both employees and employers contribute; as of 2025, employees aged 55 and under earning more than $750 per month contribute 20% of wages while employers contribute 17%. The 2025 Mercer CFA Institute Global Pension Index ranked Singapore fifth worldwide for pension system quality, and Singapore received an "A" grade for the first time.

Think of the CPF like a mandatory personal savings account with three separate envelopes labeled retirement, healthcare, and housing: every paycheck automatically fills all three envelopes in proportions set by the government.

CPF Contributions Are Allocated Across Four Accounts

Your CPF contributions go into different accounts based on your age and the purpose of each account. The Ordinary Account holds funds usable for housing purchases, insurance, education expenses, and CPF-approved investments. The Special Account is reserved for retirement savings and retirement-related financial products. It earns a higher interest rate than the Ordinary Account to incentivize preservation until retirement. The MediSave Account covers healthcare expenses including hospitalization, outpatient treatments, and insurance premiums for MediShield Life. At age 55, a Retirement Account is created by combining funds from the Special Account and a portion of the Ordinary Account to provide a stream of monthly income in retirement.

CPF LIFE Converts Savings into Lifelong Income

CPF LIFE (Lifelong Income For the Elderly) is Singapore's national annuity program that automatically enrolls CPF members who turn 55 from 2013 onward and have sufficient retirement savings. It converts your Retirement Account balance into a guaranteed monthly payment for as long as you live. The monthly payout depends on the balance in the Retirement Account at the point of activation, which is typically at age 65. CPF LIFE addressed a key limitation of the earlier Minimum Sum Scheme, under which payouts could be exhausted within about 20 years, leaving retirees without income in extreme old age.

Foreign Workers Are Not Covered by CPF

CPF contributions apply only to employees on a contract of service who are Singapore citizens or permanent residents. Foreign employees on work passes are exempt from CPF. As an alternative, foreign workers who want to save for retirement in Singapore may use the Supplementary Retirement Scheme (SRS), a voluntary scheme that offers tax relief on contributions. The annual SRS contribution limit for foreigners is $35,700, compared to $15,300 for citizens and permanent residents, because foreigners do not receive CPF contributions from employers.

Sources:
https://www.cpf.gov.sg/member/cpf-overview
https://www.workday.com/en-sg/topics/hr/what-is-cpf-contribution.html
https://www.deel.com/glossary/central-provident-fund-cpf-contributions/
https://topsourceworldwide.com/glossary/central-provident-fund/