Forum: MediSave contribution can financially burden self-employed people

Under the Central Provident Fund's Self-Employed Scheme, gig economy workers like me must make at least yearly MediSave contributions based on net trade income and age.

However, the contribution amount appears to be calculated without considering whether a person's MediSave account ceiling (in the form of the Basic Healthcare Sum) has already been reached.

Thus, a gig worker can be asked to make a contribution of a substantial amount to his MediSave account, with the excess spilling over into the Special Account.

My own experience this year bears this out.

The amount I was required to contribute was about three times my income tax for the same year.

I dutifully deposited the amount into my MediSave account, and half of this was instantly channelled into my Special Account because I had reached the account ceiling.

While this scheme is meant to provide for medical exigencies and even retirement, it adds unnecessary financial burden on gig workers, as our income streams are unpredictable.

Moreover, if one's MediSave account (or even Special Account) is not deficient, the forced contribution feels unjustified and more like a tax.

On that point, given that this scheme is concerned with CPF savings, it is counter-intuitive that the Inland Revenue Authority of Singapore (Iras) administers this scheme, especially since it sends out notifications of the MediSave top-up amounts during the tax season.

This leads me to wonder if Iras has an overview of a self-employed person's MediSave account or if it mainly proceeds to assign the quantum according to the net trade income details on file.

Regardless, since the Self-Employed Scheme falls under the CPF, it would be more conceptually streamlined for the CPF Board to manage this - lest the mandatory MediSave contributions get negatively associated with tax payments instead of compulsory savings related to CPF deductions.

Ortega Gerard James

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