How do I calculate CPF contributions on Additional Wages (AW) paid before the end of the year/last month of employment?
To determine the CPF contributions on Additional Wage (AW) payable, the AW ceiling has to be first calculated. The AW ceiling sets the maximum amount of AW on which CPF contributions are payable per year.
You can use the current year's Ordinary Wages (OW) to estimate the AW ceiling whenever AW are payable. Alternatively, you can also estimate the AW ceiling using previous year’s OW.
Once the employee’s total OW for the year are known, usually at the end of the year or in the last month of employment, you should re-calculate the AW ceiling based on the total OW subject to CPF contributions. You can refer to these examples and the AW ceiling calculator on the computation of the AW ceiling.
After re-computing the AW contributions:
- Any shortfall in the CPF contributions after the re-computation should be paid together with December's contributions or contributions for your employee's last month of employment, whichever is applicable.
- If you have overpaid the CPF contributions, you can apply for a refund.
