We thank Mr Chan Swee Wing for his letter (Why make self-employed top up shortfall CPF Board is creating?, Nov 11).

The Basic Healthcare Sum (BHS) is an estimate of the savings that Singaporeans will need for their basic subsidised healthcare expenses in old age, including large inpatient bills, selected outpatient treatments, long-term care and MediShield Life premiums.

The BHS is a cap on the Medisave Account, and not a minimum amount members need to have.

To ensure that it is relevant for every cohort that turns 65, the BHS is adjusted annually to keep pace with growth in Medisave use by the elderly, rising healthcare costs and expansions in Medisave uses.

These adjustments affect only Central Provident Fund (CPF) members below the age of 65. Once members reach 65, their BHS will be fixed for the rest of their lives.

The same CPF rules apply to both salaried employees and self-employed persons (SEPs).

One, CPF members do not have to top up their Medisave Account to the BHS.

Two, CPF members continue to make CPF contributions even if they have met their applicable BHS.

Amounts above the BHS are transferred to the member's CPF Special Account (SA) or Retirement Account (RA), which have interest rates equal to or higher than that of the Medisave account.

The BHS cap and transfer arrangement are designed to avoid over-savings in Medisave and to supplement the member's retirement savings, which can be withdrawn per the usual CPF withdrawal rules.

This helps SEPs who do not receive regular CPF contributions from employers to save for their retirement needs.

For members who have met the Full Retirement Sum in their SA or RA, the savings in excess of the BHS will be transferred to the Ordinary Account (OA).

Savings in the OA can be used for other purposes such as housing repayment.

Sim Feng Ji

Divisional Director

Income Security Policy

Ministry of Manpower

Cham Dao Song

Director, Finance Policy

Ministry of Health