How is CPF calculated in a Pay Run?

1. Log into your Payroll Platform.
2. Select Payrun Settings.
3. Scroll down to Pay Categories.
4. When you configure a pay category you can select the following CPF classifications:

• Ordinary Wage - includes wages due or granted wholly and exclusively in respect of an employee's employment in that month or wages payable before the due date for payment of CPF contributions for that month e.g. monthly salary
• Additional Wage - includes wages which are not granted wholly and exclusively for the month or wages made at intervals of more than a month e.g. a quarterly bonus
• Exclude from CPF - income flagged exempt from CPF will not be included in any CPF calculations

The CPF classification field determines whether the income is included against the ordinary or additional wage limit for CPF. If you have any questions in relation to whether earnings should be classified as ordinary or additional, the Central Provident Fund Board website provides information on this.

The system default pay categories have had the CPF classification configured, however these can be modified if required.

There are a few employee settings which will impact whether CPF is calculated within a pay run. Here is how to start and what needs to be set:

1. Log into your Payroll Platform.
2. Select Employee list.
3. Select the relevant employee from the list
4. In the Employee file, scroll down the left-hand menu to Statutory Details.

Legal status

Located on the Statutory details page, the legal status setting is used to determine eligibility for CPF payments. The options are:

• Citizen
• Permanent Resident
  • If the permanent resident option is selected an additional 2 fields will be available:

    • Date obtained residency: This is used to determine applicable CPF rates. Reduced rates apply by default during first 2 years of obtaining residency.

      Helpful Hint

      On the first month when an employee's date obtained residency falls mid month in a pay run, the system will pro-rate the employee's monthly salary and apply CPF (OW) on earnings that fall on or after the date obtained residency.
      The same rules apply for overtime entries. Any overtime entries made before the date obtained residency will be exempt from CPF and those made on or after the date will be subject to CPF.
      All the other earnings added in pay run (AW earnings for example) will be included in the amount that is subject to CPF.

      To learn more, please refer to this article: Understanding CPF for Singapore Permanent Resident (SPR).

    • CPF contribution rates: Select which CPF rates will apply during the first 2 years of residency. If no selection is made, the graduated (reduced) employer and employee rates will apply.
      
       

Employee group

The employee group setting is used to determine which CPF rates apply within the calculation. The different settings are:

• Private sector.
• Non-Pensionable government.

• Pensionable government: Pensionable employees have a different CPF rate to non-pensionable and private-sector employees. Pensionable employees also have a higher Ordinary Wage cap (cut off) being $8,000 per month instead of $6800 for other employees.

CPF exempt

CPF will not be applicable if the CPF exempt option has been selected. This setting is located on the Pay run defaults page: 

 

An employee can have CPF adjustments configured within Pay run inclusions.

The following type of adjustments are available:

• Voluntary Employer CPF
• Voluntary Employer MediSave

1. Log into your Payroll Platform.
2. Select Employee list.
3. Select the relevant employee from the list
4. In the Employee file, scroll down the left-hand menu to Pay Run Inclusions.
5. Scroll to CPF Adjustments and click Add.
6. You will be asked to enter:

• Contribution Type.
• Amount (per pay run) $.
• Notes.
• When should this pay run inclusion start?
• When should this pay run inclusion expire?

7. Apply settings and click Save.

CPF is calculated at the time the pay run is created, using the month-to-date earnings (up to the pay period end date): 

1. If there are multiple pay runs with a pay period end date falling in the same month, and the first pay run created has a later pay period end date, the month-to-date calculation will not consider the previous pay run as it only checks up until the pay period end date.
2. Additionally, where there are multiple pay runs and changes are made to a previous pay run, all pay runs for the month will need to be refreshed to make sure the CPF calculations are correct.
3. Recalculate employees by going into the (unfinalised) pay run and clicking on their name > actions > recalculate, or recreate the pay run.
4. You will not be able to unlock a pay run (to set the status as unfinalised) if you have already downloaded the CPF lodgement file.

Adjust Mandatory Employee and Employer CPF Contributions

Within the payroll platform, there is a feature allowing adjustment of mandatory employee and employer CPF contributions. These adjustments do not affect the default platform's automated calculations for ordinary and additional wages subject to CPF. Should you decide to override these automated calculations, it will not affect the CPF calculation engine, specifically concerning the estimated CPF Additional Wages (AW) ceiling for CPF additional wages throughout the CPF year.

You can access this adjustment feature by following these steps:

1. Click the Pay Runs menu.

2. Click the unfinalised pay run you need.

   Important

   The pay run has to be unfinalised for you to be able to make CPF adjustments.

3. Click the employee who needs CPF adjustments.
4. Click the Actions button.
5. Click Adjust CPF.
   
6. Click the CPF Adjustments field, and choose:
   • Manadatory Employee CPF.
   • Mandatory Employer CPF.
7. Enter Notes.
8. Enter the amount.
9. Click the Save button.
   

For cases where an employee is reassigned to a different employing entity in the same Basis Year, the CPF calculations will be treated separately per employing entity. To learn more, please refer to this article: How is Additional Wage (AW) Ceiling calculated?

Below are a few sample scenarios of different employee configurations and the impact the settings have on their CPF calculations:

Citizen who works in the private sector

This employee will have CPF applied at the private sector rate which follows the full CPF rate.

Tax resident who belongs to the pensionable employee group

This employee won’t have CPF applied as they are a tax resident, although they can have voluntary CPF and MediSave contributions included in the pay run

Permanent Resident who belongs to the non-pensionable employee group

This employee will have non-pensionable CPF rates applied for a resident within their 2nd year of residency applied as the date obtained residency was within the last 2 years

Permanent Resident who belongs to the pensionable employee group

This employee will have pensionable CPF rates applied at the full rate when the Date Obtained Approval is within pay run.

Citizen who works in the private sector and is CPF exempt

In this case, it doesn't matter what settings are on their Statutory details page, the employee won’t have CPF applied as the CPF exempt option is selected.

Foreign employee who belongs to the pensionable employee group

Employee won’t have CPF applied as the employee is a foreigner, although they can have voluntary CPF and MediSave contributions included in the pay run.

The CPFB website has CPF calculators available, please refer to the below links to access these:

• CPF Contribution Calculator (for Singapore Citizens / 3^rd year and onwards Singapore Permanent Residents)
• CPF Contribution Calculator (for 1^st and 2^nd year Singapore Permanent Residents)
• CPF Additional Wage Ceiling Calculator (for Singapore Citizens/3rd year and onwards Singapore Permanent Residents)

If there has been an error in the CPF payments, an adjustment or refund may need to be requested. This is managed by the CPFB directly and more information can be obtained in the Adjustment and Refund of CPF Contributions section within the Employer Guide in the CPF site.