With the increase in Ordinary Wage ceiling from September 2023, how should I compute the Additional Wage ceiling?
If your employee is earning monthly Ordinary Wages (OW) that are above $6,000, the estimated Additional Wage (AW) ceiling for the year 2023 should be $102,000 – ($6,000 x 8) – ($W x 4) where W is capped at the Ordinary Wage (OW) ceiling of $6,300 from September 2023.
For example, if your employee’s monthly OW is $7,000, the estimated AW ceiling for 2023 will be $28,800 instead of $30,000. You should pay CPF contributions on the AW up to $28,800.
If your employee is earning monthly OW that are $6,000 or below, the estimated AW ceiling will not be affected by the increase in OW ceiling.