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Definition
What are wages

Under the CPF Act, wages are defined as remuneration in money, including any bonus that is due or granted to a person in respect of his employment. 

Quick tip

Only payments that are considered wages should be included when declaring wage information and computing CPF contributions.

Payments to include as wages

Some examples of payments that are considered wages and should be included when declaring wage information.

Basic wage

Salary payable to an employee for work done.

Overtime pay

Payment to an employee for working beyond normal working hours.

Bonus

Payment such as performance bonus. 

Allowance

For example, meal allowance and transport allowance.

Commission

For example, sales commission.

Cash incentive

For example, productivity incentive.

Payments not to include as wages

Some payments made to employees that are not considered wages and should not be included in your wage declaration.

Termination benefit

Compensation that is not given for services or work done by the employee. For example, retrenchment benefit.

Reimbursement

Reimbursement incurred on behalf of the employer for official purposes. The reimbursement amount must not exceed the expenditure incurred. For example, purchase of office stationery.

Benefit in kind

Non-cash benefit or gift given to the employee. For example, a commemorative watch.

Need more examples?

View more examples of allowances and payments that attract CPF, as well as payments that are not considered wages.

See examples (PDF, 0.2MB)
Classification
Classifying wages as Ordinary Wages or Additional Wages

After determining that a payment is wages, classify it correctly as Ordinary Wages or Additional Wages. The wage type affects how CPF contributions are computed and how the wage information should be declared.

Total Wages (TW)

Total Wages is the sum of Ordinary Wages and Additional Wages. CPF contributions are computed on the Total Wages payable to an employee in a calendar month, subject to the applicable Ordinary and Additional Wage ceilings. 

Ordinary Wages (OW)
What are Ordinary Wages?

For wages to be classified as Ordinary Wages for the month, they must meet both of the following conditions:

  • They are given to an employee for their employment in that month, and
  • They are payable by the 14th of the following month.

For example, monthly salary.

Ordinary Wage ceiling

The Ordinary Wage (OW) ceiling sets the maximum amount of OW that attracts CPF contributions in a calendar month for all employees.

 

Information on past OW ceilings can be found in the CPF contribution rate tables.

View table
How the Ordinary Wage (OW) ceiling works

Example: If an employee's Ordinary Wages are $9,000 and the OW ceiling is $8,000, CPF contributions are computed on $8,000 of Ordinary Wages.

Additional Wages (AW)
What are Additional Wages?

Wages which are not classified as Ordinary Wages will be Additional Wages for the month.

 

For example, annual performance bonus.

Additional Wage ceiling

The Additional Wage (AW) ceiling sets the maximum amount of AW that attracts CPF contributions in a calendar year for all employees. It is applied on a per employee, per employer, per calendar year basis.

 

The AW ceiling is computed as follows:

$102,000 - Total Ordinary Wage subject to CPF for the year
How the Additional Wage ceiling works

Learn how the Additional Wage ceiling is computed and applied.

Learn more
Additional Wage ceiling calculator

This tool helps you compute the Additional Wage ceiling for your employees, in just minutes.

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FAQs
Common questions