3 CPF limits that every Singaporean needs to know

07 Sep 2016 

Not to fret if you've just started your first job a few months ago and are still coming to terms with how much of your salary goes towards your CPF. Even if you've been working for a few years, there might still be some things you might not have known about CPF! For instance, are you aware that there are limits to the amount of CPF you can receive and contribute in a year?


Let's use the example of Praveen to explain the 3 CPF limits that every Singaporean needs to know:

3 CPF limits that every Singaporean needs to know.png 

 1.    Ordinary Wage Ceiling

The Ordinary Wage (OW) Ceiling limits the amount of OW that attracts CPF contributions and is capped at $6,000 currently.


In this instance, if Praveen draws an OW of $6,500, the $500 above the OW Ceiling of $6,000 would not attract any CPF contributions from either his employer or himself.


2.    Additional Wage Ceiling

The Additional Wage (AW) Ceiling is the maximum amount of AW that attracts CPF for the year, and can be computed using the following equation:


$102,000 - Total OW subject to CPF for the year


In Praveen's case, his AW can be calculated as such:

$102,000 – ($6,000 x 12 months) = $30,000


As illustrated above, Praveen's AW Ceiling can be calculated as $30,000. If he were to receive a year-end bonus of $40,000, the $10,000 above his AW Ceiling would not attract any CPF contributions.


Here are some examples of what is considered as an AW:


  • Bonuses
  • Cash incentives
  • Transport and meal allowances
  • Commissions


It is also important to note that the AW Ceiling is computed on a per employer basis per year basis. To compute this amount for yourself and view some examples of computation, you may refer to our Additional Wage Ceiling Calculator.


3.    CPF Annual Limit 

The CPF Annual Limit is the maximum amount of mandatory and voluntary contributions that can be credited to an individual's account in a year. This includes contributions from both the employer and employee, and is capped at $37,740 currently.


The maximum amount of VC that can be made for the calendar year is as follows:



Maximum amount of VC = $37,740 – MC



Given that Praveen is below 55 years old, he would have accumulated $26,640 in his CPF within a year based on his monthly wage of $6,500.


Total CPF Contribution in a year = 37% x $6,000 x 12 months = $26,640


This will mean that he can only contribute a maximum of $37,740 - $26,640 = $11,100 this year.


To fully benefit from the high interest rates in your CPF, you can consider doing the sums yourself and making a voluntary contribution to the CPF Annual Limit!

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