Updated OW/AW – SG 2023 Budget Changes

There have been some recent updates in the Ordinary Wage (OW) cap and Additional Wage (AW) ceiling based on the SG 2023 Budget Changes. Starting 1 September 1, 2023, the OW cap (maximum OW subject to CPF) will increase to $6,300 from $6,000, which also means that the AW Ceiling will change as well.

Previous years’ AW Ceiling year-end calculation:

$102,000 - ($6,000 * 12 months) = $30,000

Updated year-end AW Ceiling calculation:

$102,000 - ($6,000 * 8 months) - ($6,300 * 4 months) = $28,800

  •  8 months - January to August 2023
  •  4 months – September to December 2023

CPF will apply to all relevant pay elements subject to CPF. While the OW cap is computed on a monthly basis, the AW ceiling on the other hand, is very dependent on the whole year’s total OW.

Here is an example of a payrun carried out in 2023:

This employee is a Citizen, 45 years old.

Because the employee's age falls between 55 and under, the wage contribution rate is 20%.


We shall use the New Year's end ceiling of $28,800.

January 2023 Payrun

In this January Payrun, the Basic Pay and Bonus are both calculated at 20% each.


From January through August, the OW cap will remain at $6,000; therefore, the calculation is $6,000 * 20% = $1,200.

The Bonus is regarded as Additional Wage and has a $28,000 annual cap. All of the $20,000 will be subject to CPF. Calculation: $20,000 * 20% = $4,000

Let's assume the employee received a further $20,000 bonus for the month of May. Here is the computation.

May 2023 Payrun


From January through August, the OW Cap will remain at $6,000; therefore, the calculation is $6,000 * 20% = $1,200.

Bonus is considered as Additional wage, and the AW has a $28,000 annual ceiling. However, since we previously determined the first $20,000 in January, we will only utilize $8,800 to reach the $28,800 yearly cap for May 2023. Therefore, the computation is $8,800 * 20% = $1,760.

By September, the OW cap will be $6,300 per month. So if a payrun is processed for September, the OW computation will be different.

September 2023 Payrun


The calculation for the Employee CPF - Ordinary will be the capped at of $6,300 * 20% = $1,260.

No Additional Wage is calculated for the Bonus because the employee has already met the $28,800 annual cap.

By looking at the Yearly Report data for 2023, you will see that the CPF - Ordinary from January to August is $1,200. Due to the increase in the OW monthly cap, the CPF - Ordinary would rise to $1,260 from September to December.


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