Payroll processing for calculation of CPF can be automated to save time and reduce errors in salary computation

How A Payroll System Can Process Your CPF Calculation Without Errors

Do you feel very anxious every time you have to race against the monthly deadline for your workers’ salaries? Do you also feel the constant stress of the extra OT or transport allowance that adds extra workload to your payroll process? Do you know we cannot even leave CPF computation and crediting out of the equation?

A payroll system can help you automate the salary payment processes and cut down the cumbersome work without creating errors. This will help free up more time for your other HR or business activities so you can save time on payroll processing each month. Choosing the best payroll system for your company is critical to its success. Under the Employment Act, the Ministry of Manpower (MOM) in Singapore requires employers to provide itemised payslips to employees. These payslips also include CPF computation and crediting.

Processing payroll for calculating CPF can be organised well

What Is CPF

The CPF is the Central Provident Fund that was first set up by the British in Singapore in 1955. It is established to provide basic social security for retirement, buy a home or pay for medical bills when illness comes.

In force for more than 65 years, when Singapore became independent in 1965, the new Singapore local government continued the use of CPF for local Singapore workers. Over the years, the policy of CPF has changed. From time to time, CPF calculation can be a hassle for the HR staff processing it. In the early years of CPF, long before the computer was ever heard of, the payroll staff had to calculate the CPF manually and so, often, there were full of errors or even disputes. With modern technology, there is payroll automation nowadays done through the computer electronically. With this automation, CPF calculation has become more error-free.

Why CPF Calculation Is Important To Be Error Free

Under the CPF Act, it is essential to declare accurate CPF contribution for the employee. This is so as to determine any kickbacks being made which can be illegal. For example, if you declare $3,000 to MOM, but in actual fact, you are paying the employee only $1,500 gross pay, you can be in trouble.

Your employee’s wages are used to calculate CPF contributions. As a result, it is critical to provide accurate wage information to the CPF Board so that the correct amount of CPF contribution can be verified.

How To Declare CPF Accurately

Under the Singapore MOM law, there are 2 types of wages – Ordinary Wage (OW) and Additional Wage (AW).

OW is the fixed monthly payment type of wage. An employee’s standard fixed salary per month is classified as OW. This is definitely compulsory when it comes to computing the CPF contribution based on the OW.

The AW is the wage that is more variable. This includes the year-end bonus, annual wage supplement (AWS) and the sales commissions. If your employee is a sales staff who brings in sales and is obliged to earn commissions, then the CPF contribution must be additionally calculated based on this AW.

With our Jusixty payroll processing system, your CPF contributions can be computed more easily. There are fields in the system that can help you do just that.

Do you know how to compute and submit your employees’ CPF contributions more easily and yet accurately? Check out this article –

How Payroll Processing Automation System Can Help You Calculate CPF Efficiently

Calculating employee and employer CPF can be a very daunting task, especially for big corporations if the HR executive has to do the tedious calculation of the CPF contributions for every staff. Imagine if the HR executive processes this for more than 500 staff every month, how much time will be wasted? And cost that is wasted is also intangible one.

A payroll processing automation system that automates CPF payroll calculation will make the process much easier and faster. Furthermore, it can automate CPF calculation and release payslips with a few clicks.

The automated system enables the company to reduce or even eliminate the unnecessary time spent on miscalculation of CPF and human errors, resulting in no late payments to the workers.


Automating CPF calculation using a payroll processing system definitely comes in handy if you are managing many staff. The lack of manpower and the manual calculation methods coupled together leads to a wastage of valuable resources the company could have spent on. How about the variable components of the salary, such as year end bonus, or even sales commissions? During the end of year or mid year, where sales periods of business are expected, workers also deserve the hard work they put in additionally. So sales commissions do come into play and this could affect the CPF computation as well. With all these complicated factors in play, the more you need payroll automation to help you process the computation of CPF more efficiently