The total monthly salary of a person is the aggregate of OW (ordinary wage) and AW (additional wage). The maximum cap for OW is different from AW.
CPF contribution ceiling for OW is capped at $6000 per month. You or your employer cannot make any contributions to your CPF account for the OW that goes beyond $6000. For example :
If Steve is earning an OW of $7000, neither he nor his employer can make any contribution to CPF from the $1000 above the $6000.
AW is the bonuses and incentives like leave pay, annual bonus, transport allowance, commissions, or performance bonus that one does not receive every month. The maximum amount of AW than can contribute to CPF can be calculated using a simple formula.
$102,000 – total ordinary wage that is subjected to CPF
In Steve’s case, his total OW subjected to CPF would be - $6,000*12 = $72,000. In that case, Steve’s total AW that would attract CPF contributions would be:
$102,000 - $72,000 = $30,000
There is also a maximum Annual Limit of $37,740 for mandatory and voluntary contributions to an employee’s CPF account. If an employee has not hit the cap after making all the mandatory contributions, he can make voluntary contributions to the CPF account up to the limit of $37,400.
