The Additional Wage (AW) Ceiling sets the maximum amount of AW on which CPF contributions are payable per year. An employee's AW Ceiling is computed on a per employer per year basis. It is a CPF contribution cap on the employee's additional wages, such as bonuses, commissions etc.

The Ceiling applies to all Singapore Citizens and Singapore Permanent Residents (SPR).

----**Why do employers need to calculate AW Ceiling?**

This is to ensure that:

- CPF contributions are paid correctly to employees
- Avoid over-payment of CPF contributions
- Save the hassle of applying refund of excess contributions and to avoid situations where refunds cannot be made due to insufficient funds in their employees' CPF accounts.

----**How to calculate AW Ceiling?**

The AW Ceiling is computed using the following formula:

**$102,000* - Total Ordinary Wages (OW) subject to CPF for the year**

Step 1: At the start of the year, employers should first estimate the AW ceiling by using the current year’s estimated monthly OW.

Step 2: At the end of the year, upon an employee’s resignation or if there are changes in the employee’s salary, employers are to re-calculate the AW ceiling of the year based on the OW paid.

*For example, if your employee earns $8,000 a month, and earns an annual bonus of $20,000. Only the first $6,000 of his/her monthly income will be subject to CPF contributions. As for his/her annual bonus, the Additional Wage Ceiling is $102,000 – $6,000 x 12 = $30,000. This means that your employee's entire annual bonus is also subject to CPF contributions as it is below the CPF contribution cap.*

Do note that Official CPF calculator will give you a different amount because Additional Wage Ceiling Calculator is not real time and it doesn't project the OW ceiling for 12 months. In Talenox, we will calculate additional wage ceiling automatically in payroll.

For a more detailed understanding of different AW ceiling scenarios, head over to CPF website. 😎