A lot of people have the misconception that the Central Provident Fund (CPF) takes away 20% of your salary every month.
While that is true, there is more to that than just what it seems like.
There are a few things you should know about this 20% “pay cut”.
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1) The amount that you give actually decreases as you age
At the start, your contribution rate is 20% of your monthly salary
As you grow older, the percentage of your salary CPF takes decreases.
Source: CPF Board
2) There is a cap to your salary contribution!
Yes, there is a limit to how much you can INVOLUNTARILY contribute to your CPF.
Currently, the limit is set at $6,000.
If you earn $6,000 or less, your contribution rate is 20%. Meaning you only contribute $1,200 to your CPF.
However, if you earn more …