How to Calculate the Additional Wage (AW) Ceiling for Current Employees

Modified on Fri, 22 Aug at 12:02 PM

The Additional Wage Ceiling is the maximum amount of Additional Wages (e.g., bonuses, commissions) that are subject to CPF contributions in a year. Follow the steps below to calculate it.

Step 1: Get the employee’s total Ordinary Wages (OW) for the year

Generate the year-to-date payroll report to view total OW.
OW for CPF is capped at $7,400 per month.

Example:

Payroll Month: Sept 2025
Monthly Salary: $8,500
Total OW = $7,400 × 12 = $88,800

Step 2: Work out the maximum AW allowed (AW Ceiling)

Formula: $102,000 – Total OW = AW Ceiling

Example:
$102,000 – $88,800 = $13,200

Step 3: Check how much AW has already been paid this year

Include bonuses, commissions, or other additional wages.

Example:

Bonus (Jan) = $1,500
Commissions (Mar & May) = $3,850
Total AW so far = $5,350

Step 4: Find the remaining AW Ceiling for the year

Formula: AW Ceiling – AW already paid = Balance AW Ceiling

Example:
$13,200 – $5,350 = $7,850

Step 5: Calculate CPF contributions

OW CPF = OW × CPF % (up to $7,400/month)
AW CPF = min(AW this month, Balance AW Ceiling) × CPF %

Example (Sept 2025, AW = $7,000):

OW CPF = $7,400 × 20% = $1,480
AW CPF = $7,000 × 20% = $1,400
Total Employee CPF = $2,880

Example 2: When AW exceeds the remaining ceiling

This example shows what happens when the Additional Wages (AW) for the month are higher than the remaining AW Ceiling. In such cases, only the balance up to the ceiling is used for CPF calculation.

Salary:

Jan–Apr = $5,200/month
May–Dec = $7,400/month

Payroll Month: Sept 2025

AW in Sept: $5,000

1. OW for the year = ($5,200 × 4) + ($7,400 × 8) = $80,000

2. AW Ceiling = $102,000 – $80,000 = $22,000

3. AW already paid this year = $18,432.13

4. Balance AW Ceiling = $22,000 – $18,432.13 = $3,567.97

5. Sept CPF:

OW CPF = $7,400 × 20% = $1,480
AW CPF = $3,567.97 × 20% = $713
Total CPF = $2,193

Since the Sept AW ($5,000) is higher than the remaining AW Ceiling, only $3,567.97 is counted for CPF contributions.

For resigned employees, refer to this guide: How to Calculate CPF for a Resigned Employee in Singapore