Forum: Steps taken to help the self-employed with MediSave contributions

We refer to Mr Ortega Gerard James' letter, "MediSave contribution can financially burden self-employed people" (April 30).

Under the Central Provident Fund (CPF) system, both self-employed persons and employees are required to save part of their work income for their longer-term needs.

The treatment of self-employed persons' MediSave contributions is the same as employees' - once members have met the Basic Healthcare Sum, their contributions are channelled to their Special or Retirement Account, up to the Full Retirement Sum.

This prevents over-saving in the MediSave Account, and helps members set aside more savings for their retirement.

A contribution to CPF is not a tax payment as it goes into the self-employed person's own CPF account. Like other CPF members, self-employed persons enjoy attractive interest rates of up to 6 per cent on their MediSave, Special and Retirement Account balances and can use these monies in accordance with withdrawal guidelines.

Although most self-employed persons can meet their MediSave obligations, we recognise that self-employed persons' income streams can be unpredictable. Self-employed persons can sign up to make their annual MediSave contributions via monthly instalments through Giro, which will spread the required contributions into manageable sums over a longer period.

The Ministry of Manpower and the CPF Board are also piloting the Contribute-As-You-Earn scheme to help self-employed persons contribute to their MediSave as and when they earn their service fees.

Nonetheless, we understand this is a difficult period for many self-employed persons. For those who still face difficulties meeting their annual MediSave obligations, the CPF Board, which administers the Self-Employed Scheme, offers alternative arrangements to extend the Giro payment period beyond 12 months. This will further lower the monthly instalments.

Members who are facing significant income loss and who require urgent financial assistance can also apply for support through the Covid-19 Recovery Grant managed by the Ministry of Social and Family Development. We encourage them to visit their nearest Social Service Office if they need further help.

Fereen Liew (Dr)

Divisional Director

Income Security Policy Division

Ministry of Manpower

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