Calculating Normal CPF Contributions

CPF contributions must be paid for all employees other than foreign workers (and maybe a few odd exceptions, like employees working overseas or students). Contributions are made by employees and by employers. For reporting purposes, it is necessary to record the CPF paid on ordinary wages and additional wages separately. There are therefore four normal CPF deductions:

• CPF ORD EE — Employee Ordinary CPF.

• CPF ADD EE — Employee Additional CPF.

• CPF ORD ER — Employer Ordinary CPF.

• CPF ADD ER — Employer Additional CPF.

These CPF deductions apply to most of the workforce, so the deduction assignments are by eligibility group. A generation control CPF GC NORMAL which uses formula CPF FM NORMAL GC is attached to exclude foreign workers and to determine whether the payee is eligible for CPF contribution. (Only Singapore citizens and permanent resident are eligible). For the rare exceptions, you can override at the payee level.

Since the calculation of the four parts of the CPF contributions are related, a single pre-processing formula CPF FM CALCULATION, attached to all the CPF deductions, calculates the amounts. The formula is only required once, but is attached to all CPF deductions in case there are overrides.

CPF contributions must always be calculated and paid to the CPF Board monthly. To cater for pay frequencies other than monthly, the CPF calculation is calculated every period, based on month-to-date wages. CPF already calculated for previous periods in the month is then subtracted to give the current period contributions.

Working with The CPF FM CALCULATION Formula

The formula CPF FM CALCULATION calculates the normal CPF to be contributed by the employer as well as the employee (payee). The calculated amounts are stored in variables for use in the deduction amount fields.

The formula calculates the normal CPF using the following elements:

• The array CPF AR RATES retrieves the appropriate rates for the employee. The total wages are needed first to find the right wage bracket in the look-up. The following variables are returned:

  	Total CPF Calculation Variables		Payee CPF Calculation Variables
  A	Percentage of Ordinary Wages	I	Percentage of Ordinary Wages
  B	Percentage of NPVP & NPC	J	Percentage of NPVP & NPC
  C	Limit on Ordinary CPF	K	Limit on Ordinary CPF
  D	Wages Base Amount	L	Wages Base Amount
  E	Numerator	M	Numerator
  F	Denominator	N	Denominator
  G	Percentage of Additional Wages	O	Percentage of Additional Wages
  H	Wages Type	P

• The formula makes use of various other formulae and GP elements. The Variable CPF VR SECTOR stores the sector in which the employee works. All CPF deduction calculations are based on the sector of the employee.