AW Ceiling Options - definition and how it works

There are 3 AW ceiling options in the system that you can choose from. Refer to the steps 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.png tab, look for the config_2.pngsub-tab.

Step 5: Scroll down and look for this section:

244.png

  • Use Year-To-Date total OW subject-to-CPF (cap at 6000 per month) or use previous year's total OW if available (System Default)

We recommend using this option if most of your Employees are getting below $6000 OW per month. This will compute the AW accordingly. Please note that if there’s a previous year’s total OW data, the system will base the computation on last year’s total OW. If there is any CPF over/underpayment, the system will re-compute and adjust the amount when the staff resigns within the year, or at the end of the year.

Example:

The employee started January 2018 – The computation for 2019 will be based on 2018’s total OW, while the 2019’s total OW will be for the year 2020.

  • Use max total OW projected for the year ($102000 - $72000 = $30000)

This option is recommended if most of your Employees are getting more than $6000 OW per month, as this will avoid the CPF over-contribution. If there is any CPF underpayment, the system will re-compute and adjust the amount when the staff resigns within the year, or at the end of the year.

The initial computation is based on the formula:

Maximum Wage subject to CPF - Total OW = AW Ceiling

$102000 - $72000 = $30000

AW ceiling in this case is 30k, given that the total OW(6000 * 12) is hit. However, if total OW has not reached 72k by the end of the year, the system will do a recalculation of the new AW ceiling on the December payrun. 

  • Average OW subject-to-CPF in the year * 12

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

 

*For more examples and further explanation on how these options work, you can check the link below:

https://www.cpf.gov.sg/Assets/employers/Documents/ExamplesonAdditionalWageCeilingComputation.pdf  

 

 

Was this article helpful?
0 out of 0 found this helpful