What Are Ordinary Wages (OW)?
Ordinary Wages (OW) refer to the monthly wages earned by an employee for work performed within the same month. These are subject to CPF contributions and are capped based on the CPF Wage Ceiling.Examples of Ordinary Wages:
- Monthly basic salary
- Fixed allowances (e.g., transport, meal, or shift allowances)
- Overtime pay (if paid within the same month and within the OW ceiling)
CPF Contributions and Ordinary Wages (OW) Ceiling:
CPF contributions for OW are calculated based on the employee’s monthly salary. In the Singapore Budget 2023, the CPF Ordinary Wages Ceiling will increase in stages from $6,000 to $8,000 by 2026. Here is the timeline of the increases:|
CPF Monthly Salary Ceiling |
CPF Annual Salary Ceiling |
|
| Before 1st September 2023 |
S$6,000 |
S$102,000 |
|
From 1st September 2023 |
S$6,300 |
|
| From 1st January 2024 |
S$6,800 |
|
| From 1st January 2025 |
S$7,400 |
|
| From 1st January 2026 |
S$8,000 |
Source: Ministry of Finance
Overtime Pay Scenarios:
If an employee works overtime during this month and is paid by the 14th of the following month, it will be considered an Ordinary Wage (OW). Otherwise, it will be considered an Additional Wage (AW).| Overtime Period | Payable Date for Overtime Pay | Wage Classification | CPF Payable By |
|---|---|---|---|
| 1-30 June | 10 July | OW for June | 14 July |
| 1-30 June | 31 July | AW for July | 14 August |
What Are Additional Wages (AW)?
Additional Wages (AW) refer to payments made to employees that are not part of their fixed monthly salary. These payments are usually variable and may be given periodically rather than monthly.Examples of Additional Wages:
- Annual bonuses
- Commissions (if paid at irregular intervals)
- Incentive payments
- Leave encashment
- Retrenchment benefits
CPF Ceiling for Additional Wages (AW):
Example 1: Employee earns less than $6,000 of Ordinary Wage (OW)
Jessie is 42 years old and earns a $4,500 monthly salary. She will be receiving a total Additional Wage (AW) of $100,000 in 2025. As mentioned by the Minister of Finance, $102,000 is the total Ordinary Wages subjected to CPF for the year. Additional Wage (AW) Ceiling = $102,000 - (Monthly wage x 12) = $102,000 - ($4,500 x 12) = $48,000|
Month in Year 2025 |
OW paid ($) | OW subject to CPF ($) | CPF payable on OW (Employer) ($) | CPF payable on OW (Employee) ($) | AW paid ($) | AW subject to CPF ($) | CPF payable on AW (Employer) ($) |
CPF payable on AW (Employee) ($) |
| Jan | 4,500 | 4,500 | 765 | 900 | ||||
| Feb | 4,500 | 4,500 | 765 | 900 | ||||
| Mar | 4,500 | 4,500 | 765 | 900 | ||||
| Apr | 4,500 | 4,500 | 765 | 900 | ||||
| May | 4,500 | 4,500 | 765 | 900 | ||||
| Jun | 4,500 | 4,500 | 765 | 900 | 5,000 | 5,000 | 850 | 1,000 |
| Jul | 4,500 | 4,500 | 765 | 900 | 40,000 | 40,000 | 6,800 | 8,000 |
| Aug | 4,500 | 4,500 | 765 | 900 | ||||
| Sep | 4,500 | 4,500 | 765 | 900 | ||||
| Oct | 4,500 | 4,500 | 765 | 900 | ||||
| Nov | 4,500 | 4,500 | 765 | 900 | ||||
| Dec | 4,500 | 4,500 | 765 | 900 | 55,000 | 3,000 | 510 | 600 |
| Total | 54,000 | 54,000 | 9,180 | 10,800 | 100,000 | 48,000 | 8,160 | 9,600 |
Example 2: Employee earns more than $7,400 of Ordinary Wage (OW)
Nicholas is 45 years old and earns a $8,000 monthly salary. He will be receiving a total Additional Wage (AW) of $100,000 in 2025. As mentioned by the Minister of Finance, $102,000 is the total Ordinary Wages subjected to CPF for the year. Additional Wage (AW) Ceiling = $102,000 - (CPF Ceiling in 2025 x 12) = $102,000 - ($7,400 x 12) = $13,200| Months | Ordinary Wages (OW) | Additional Wages (AW) | Total CPF contributions payable ($) | ||||
| OW ($) | OW subject to CPF ($) | CPF payable on OW ($) | AW ($) | AW subject to CPF ($) | CPF payable on AW ($) | ||
| Jan | 8,000.00 | 6,000.00 | 2,220.00 | 0.00 | 0.00 | 0.00 | 2,220.00 |
| Feb | 8,000.00 | 6,000.00 | 2,220.00 | 0.00 | 0.00 | 0.00 | 2,220.00 |
| Mar | 8,000.00 | 6,000.00 | 2,220.00 | 10,000.00 | 10,000.00 | 3,700.00 | 5,920.00 |
| Apr | 8,000.00 | 6,000.00 | 2,220.00 | 0.00 | 0.00 | 0.00 | 2,220.00 |
| May | 8,000.00 | 6,000.00 | 2,220.00 | 0.00 | 0.00 | 0.00 | 2,220.00 |
| Jun | 8,000.00 | 6,000.00 | 2,220.00 | 30,000.00 | 18,800.00 | 6,956.00 | 9,176.00 |
| Jul | 8,000.00 | 6,000.00 | 2,220.00 | 0.00 | 0.00 | 0.00 | 2,220.00 |
| Aug | 8,000.00 | 6,000.00 | 2,220.00 | 0.00 | 0.00 | 0.00 | 2,220.00 |
| Sep | 8,000.00 | 6,300.00 | 2,331.00 | 0.00 | 0.00 | 0.00 | 2,331.00 |
| Oct | 8,000.00 | 6,300.00 | 2,331.00 | 0.00 | 0.00 | 0.00 | 2,331.00 |
| Nov | 8,000.00 | 6,300.00 | 2,331.00 | 0.00 | 0.00 | 0.00 | 2,331.00 |
| Dec | 8,000.00 | 6,300.00 | 2,331.00 | 60,000.00 | 0.00 | 0.00 | 2,331.00 |
| Total | 96,000.00 | 73,200.00 | 27,084.00 | 100,000.00 | 28,800.00 | 10,656.00 | 37,740.00 |
Payments Not Considered Wages (No CPF Contributions)
Some payments made to employees are not classified as wages and are therefore not subject to CPF contributions. Here are common examples:- Termination or Retrenchment Benefits: Compensation provided upon employment termination is not considered wages since it is not payment for services rendered.
- Expense Reimbursements: Payments made to employees for work-related expenses are not subject to CPF, provided they do not exceed the actual amount spent. Examples include:
- Entertainment expenses incurred while hosting clients on behalf of the company.
- Training and examination fees covered as part of an employee’s professional development.
- Meal expenses for employees working beyond regular hours.
- Benefits-in-Kind: Non-monetary perks such as company-provided housing, transport, or gifts are not considered wages.
- Flexible Benefits: Medical or dental expense reimbursements for employees and their dependents (spouse and child) are also exempt from CPF contributions.
