Singapore has spent the last few years steadily lifting the wages of lower-income workers through the Progressive Wage Model and the Local Qualifying Salary. To help employers absorb the cost of those increases, the Government runs the Progressive Wage Credit Scheme (PWCS), a transitional co-funding scheme that pays employers a share of the wage rises they give to eligible lower-wage staff.
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For 2026 the scheme is more generous than many employers realise, following an enhancement in Budget 2026. This guide explains how the PWCS works, the co-funding rates and wage ceiling for 2026, who qualifies, and what you need to do to receive the payout, which, importantly, is almost nothing.
What Is the Progressive Wage Credit Scheme?
The PWCS was introduced at Budget 2022 to defray the cost to employers of raising the wages of lower-wage workers as the Progressive Wage Model expanded across sectors. Rather than a one-off subsidy, it co-funds sustained wage increases over seven qualifying years, from 2022 to 2028, encouraging employers to keep wages up rather than reverse them once support tapers.
Crucially, the PWCS is administered by IRAS and requires no application. Payouts are computed automatically from the CPF contribution data employers already submit, and disbursed by the first quarter of the following year. That makes timely and accurate CPF contributions the single most important thing an employer must get right to benefit.
2026 Co-Funding Rates and Wage Ceiling
The Government has repeatedly enhanced the co-funding rates. At Budget 2025 the 2025 rate was raised from 30% to 40%, and at Budget 2026 the 2026 co-funding was lifted from 20% to 30%. Budget 2026 also set the rates for the scheme’s last two years: 30% in 2027 and 20% in 2028. From 2025 a single tier applies, with a gross monthly wage ceiling of S$3,000 for co-funding.
| Qualifying Year | Government Co-Funding | Gross Wage Ceiling |
|---|---|---|
| 2022 | 75% (first tier); 45% (second tier) | S$2,500 (first tier); above S$2,500 to S$3,000 (second tier) |
| 2023 | 75% (first tier); 45% (second tier) | S$2,500 (first tier); above S$2,500 to S$3,000 (second tier) |
| 2024 | 50% (first tier); 30% (second tier) | S$2,500 (first tier); above S$2,500 to S$3,000 (second tier) |
| 2025 | 40% | S$3,000 |
| 2026 | 30% (enhanced at Budget 2026) | S$3,000 |
| 2027 | 30% | S$3,000 |
| 2028 | 20% | S$3,000 |
Payouts for qualifying year 2026 are scheduled for the first quarter of 2027, and the final payout, for 2028, by the first quarter of 2029. Each year’s co-funding covers both the increase given in that year and the sustained portion of the previous year’s increase, rewarding employers who hold the line on pay. Because 2028 is the last year, increases given in 2028 are co-funded for one year only.
Who and What Qualifies?
Eligible employees
The scheme targets lower-wage Singapore Citizen and Permanent Resident employees whose gross monthly wage before the increase is within the wage ceiling, and whose average monthly wage after the increase is no more than S$4,000. The employee must have been on your payroll, with CPF contributions, for at least three calendar months in the qualifying year (not necessarily consecutive) and must have received CPF contributions from a single employer for at least three calendar months in the preceding year. Wages paid to business owners, meaning sole proprietors, partners and shareholder-directors, do not qualify.
Qualifying wage increase
For qualifying years 2022 to 2026, the gross monthly wage increase must be at least S$100 to attract co-funding, up to the wage ceiling. The scheme co-funds both the increase given in the qualifying year and the sustained portion of the previous year’s increase. For qualifying years 2027 and 2028 the minimum increase rises to S$200, although increases below S$200 that qualified in 2026 and are sustained in 2027 will continue to be co-funded in 2027.
Because the calculation runs off CPF data, the wages must be paid and the CPF contributed on time. Late or missed contributions can reduce or delay the payout.
How the PWCS Fits with Other Support
The PWCS sits alongside a suite of employer support measures. It complements the Progressive Wage Model and Local Qualifying Salary requirements it was designed to cushion, and works in parallel with schemes such as the SkillsFuture Enterprise Credit for training and transformation. Employers should also keep the Skills Development Levy and their broader CPF obligations in view when budgeting payroll for the year.
Unlike most grants, there is no stacking approval to manage: the PWCS runs automatically and does not require you to forgo other support. The practical planning question is simply whether a wage increase you are considering will fall within the ceiling and minimum-increase rules, so you can factor the co-funding into your cost.
What Employers Should Do
Because payouts are automatic, the employer’s job is mainly hygiene: pay eligible staff correctly, make CPF contributions accurately and on time, and keep payroll records that reconcile to CPF submissions. When the payout notification arrives from IRAS, check it against your own records so you can query any discrepancy promptly. Employers should also review whether planned pay rises for 2027 meet the new S$200 minimum and fall within the co-funded band; a small adjustment can materially change how much support you receive. IRAS is also refreshing its grant digital services from end-December 2026, and from 2 November 2026 Corppass administrators should assign the new SCHEMES & GRANTS authorisations to staff who handle these payouts.
Conclusion
The Progressive Wage Credit Scheme remains one of the most employer-friendly forms of Government support in Singapore for 2026: generous co-funding, a raised wage ceiling and no application to file. The catch is that it rewards good payroll discipline: get CPF right, and the co-funding follows automatically. With co-funding held at 30% for 2027 before tapering to 20% in 2028, the final year of the scheme, now is the time to plan pay rises that make the most of it.
Full scheme details are published by IRAS, and the broader lower-wage worker framework is explained by the Ministry of Manpower.
Information checked against official sources on 6 November 2026.
The Editorial Team, Raffles Corporate Services
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