How Additional Wage (AW) Ceiling is calculated on payroll

• EAWC: Estimated Additional Wages Ceiling.
• Annual Ceiling: CPF's annual ceiling at 102,000.
• Cumulative OW: Cumulative Ordinary Wages earned year-to-date from all previously finalised pay runs with the CPF year.
• Fixed OW: Fixed Ordinary Wages within the current pay run. These are wages that are recurring and constant for an employee's record in pay runs throughout the year. They are generated when an admin:
  • Sets up an employee with their standard base salary rate in the "Pay Run Defaults" menu.
  • Sets up an employee with additional earnings in the "Pay Run Inclusions" menu.
  • Configures an employee's pay rates to include a pay category that is not the default salary rate for the pay run and has "pay this pay run" ticked.
• Variable OW: Variable Ordinary Wages within the current pay run. These are wages that fluctuate throughout the year. They are generated when an admin:
  • Manually adds pay categories within an employee's pay run (via Employee > Actions).
  • Imports timesheets for an employee.
  • Sets up an employee with work conditions and imports relevant ruleset payables into the pay run.
• No. of Monthly periods remaining in the year: The number of full fixed monthly periods remaining in the CPF year. For example, if the current pay run is for January, the remaining period is 11 months.

The opening balances will impact the Estimated Additional Wage Ceiling (AWC) using the following formula:

AWC = 102,000 - [Estimated OW from Opening balances] - [Cumulative OW from finalised pay runs] - (Fixed OW + Variable OW) - [Fixed OW X No. of Monthly periods remaining in the year]

Example 1

Here is an example calculation that uses the formula.

An admin saves these values within the Employee’s opening balances in 2025:

• $28,440 in Salary, which is tagged with the Ordinary wage CPF classification.
• The employee’s opening balance is set up with no. of months = 9.

Then, the admin creates an October 2025 pay run with a Salary of $2,500. Within the same pay run, there is also an overtime payment of ordinary wage CPF nature of $200.

Estimated Additional Wage Ceiling = 102,000 - 28,440 - (2,500+200) - (2,500*2) = 65,860

Example 2

Here is another calculation example, which depicts the averaging of the OW wages with ordinary wages exceeding the monthly ceiling.

An admin saves these values within the Employee’s opening balances in 2025:

• $90,000 in Salary, which is tagged with the Ordinary wage CPF classification.
• The employee’s opening balance is set up with no. of months = 9.
• Employee's basic salary is $10,000.
• The ordinary wage ceiling per month in 2025 is $7,400.

Then, the admin creates an October 2025 pay run with a Salary of $10,000. Within the same pay run, there is also an overtime payment of ordinary wage CPF nature of $200.

Estimated Additional Wage Ceiling = 102,000 - 66,000 - (7,400) - (7,400*2) = 13,200

$66,600 is calculated via averaging 90,000/9 = 10,000. However, there is a maximum of 7,400 for the OW ceiling per month in the year 2025. 

Hence, the platform will utilise 7,400*9 = 66,600 for predictive ordinary wages subjected to CPF from January to September 2025.

To review these calculations in the pay run, look for the '?' icon found beside the CPF value for the employee.

When you click this icon, a context panel will show up on the right side of the screen, displaying the details and values used for the calculation.

Click Calculation Method to see the full breakdown. 

The employer amount is rounded up to the nearest dollar ($), and the employee amount has the cents dropped.

If multiple pay runs are processed in the same month, the context panel shows the month-to-date CPF calculation. If the CPF limit was reached in the first pay run, the second pay run will show $0 CPF, with the context panel showing the calculation for that.

For cases when an employee is reassigned to a different employing entity in the same basis year, the estimated AW ceiling calculations will be calculated separately for each employing entity. Let's take this example:

• Employee was assigned to employing entity A from January to March 2025 (3 months).
• Then, the same employee was reassigned to employing entity B, starting April 2025.

When the April 2025 pay run is generated, the estimated AW ceiling will factor in the remaining months of the year (April - Dec, which is 9 months) in order to arrive at the new AW ceiling for this employee.

As for the AW CPF for Jan - Mar 2025, it is advised to manually recalculate this before the end of the year so as to arrive at the correct CPF cap for this basis year.

Transferring to another entity, then moving back to the original entity

Currently, our system's estimated Additional Wage (AW) ceiling does not fully support recalculation for employees who transfer between multiple entities within the same basis year. When an employee transfers back to their original entity within the year, the system may apply a higher estimated AW ceiling.

For example, consider an employee whose Ordinary Wage (OW) subject to CPF is consistently at $5,000 per month. This is an existing employee prior to the start of the CPF year.

• January: Works in Entity A, with an estimated AW ceiling of $42,000.
• February: Transfers to and works in Entity B, with an estimated AW ceiling of $47,000.
• March: Continues to work in Entity B, with the estimated AW ceiling remaining at $47,000.
• April: Transfers back to Entity A. In this scenario, the AW ceiling will be set at $57,000.

If your company frequently performs retransfers within the CPF year, it's advised to manually check and process any necessary CPF refunds to avoid over-contributions. Please submit a support ticket to express your interest in future enhancements to this feature.