When an employee resigns, CPF contributions are recalculated slightly differently. This is because the Additional Wage (AW) ceiling depends on the number of months the employee actually worked in the year.
 

If the AW ceiling increases due to fewer months of service, earlier CPF contributions may fall short. The system will automatically detect these shortfalls and include them in the final (resignation) payroll.

Below is an example to explain how it works.

Step 1: Count the months of service

Include all months from January to the resignation month.

• Example: Employee resigns in July 2025 → worked 7 months (Jan–Jul).

Step 2: Confirm salary, age group and CPF rates

• Ordinary Wage (OW): $10,000/month
• Date of Birth: 21 Jan 1969 → 56 years old in 2025
• CPF rates (Age 55–60): Employee 17%, Employer 15.5% (Total 32.5%)
• Note: OW for CPF is capped at $7,400/month.

Step 3: Recalculate the AW Ceiling

Formula: 102,000 − (7,400 × months worked)

• Full year (12 months): 102,000 − (7,400 × 12) = 13,200

• Resignation in July (7 months): 102,000 − (7,400 × 7) = 50,200

Since the employee worked fewer months, the AW ceiling is higher. This is what creates CPF shortfalls for earlier months.

Step 4: Recheck CPF month by month

For each month (Jan–Jul):

1. Calculate CPF on OW (capped at $7,400).
2. Calculate CPF on AW (capped by the remaining AW ceiling).
3. Compare with CPF originally paid.

4. Any difference = shortfall.

Example CPF Table (Jan–Jul 2025)

Based on $10,000 OW/month and actual AW values.