AW Ceiling Options - How it Works

There are 3 AW Ceiling computation options that you can choose from depending on how you need the system to calculate it for you. Refer to the definitions and learn more of the details below.

Step 1: Log in to the account.

Step 2: Click on PAYROLL.png .

Step 3: Go to configuration.png .

Step 4: In the 'General' tab, click the 'Configuration' sub-tab.

Step 5: Scroll down to the section - AW Ceiling Computation Options.

1. Use Year-To-Date total OW subject-to-CPF (cap at $6,800/month starting January 2024) or use previous year's total OW if available (System Default)

We recommend using this option if the majority of your employees are getting below $6,800 OW per month and the approximate AW for the whole year won't go over $20,400. Kindly note that if there is a previous year’s total OW data, the system will base the AW ceiling computation from last year’s total OW. If there is any CPF over/underpayment, the system will recompute and adjust the amount when the staff resigns within the year, or in December. Otherwise, no AW ceiling will apply, therefore the AW CPF will be computed accordingly. 

e.g. Employee started January 2023. The AW computation for 2024 will be based on 2023’s total OW, while the 2024’s total OW will be for the year 2025.

2. Use max total OW projected for the year ($102,000 – ($6,800x12) = $20,400)

This option is recommended if most of your employees are getting more than $6,800 OW per month as this will avoid the CPF over-contribution. If there is any CPF underpayment, the system will recompute and adjust the amount when the staff resigns within the year, or in December. 

The initial computation is based on the formula:

Maximum Wage subject to CPF - Total OW = AW Ceiling

$102,000 - $81,200 = $20,400

AW ceiling in this case is $20,400, assuming that the total OW($81,600) is hit. However, if total OW will not reach $81,600 by the end of the year, the system will do a recalculation of the new AW ceiling on the December payrun. The same process goes when employee resigns within the current year.

3. Average OW subject-to-CPF in the year * 12

The system will help you compute the AW ceiling more approximately. The computation will use the Year-to-date Total Average OW subject to CPF.


*For more information on the CPF Contribution Changes, you can refer to the link below:

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