No plans to extend pilot Medisave contribution scheme to private sector for now: Josephine Teo

Manpower Minister Josephine Teo said self-employed people are part of the job fabric here.
Manpower Minister Josephine Teo said self-employed people are part of the job fabric here.PHOTO: ST FILE

SINGAPORE – From early 2020, freelancers working for the Government will have a portion of their fees automatically channelled towards their Medisave accounts, before they are paid the rest.

There are no plans to extend this Contribute As You Earn (CAYE) scheme to the private sector for now, Manpower Minister Josephine Teo said on Tuesday (Aug 20).

The pilot is aimed at helping self-employed workers save for their healthcare needs and manage their cashflow, she said at real estate agency PropNex’s annual convention.

Currently, they have to make compulsory Medisave contributions when they receive their tax bill, if their net trade income is more than $6,000.

Mrs Teo said the pilot will make it convenient for these workers, who will also not have to worry about bigger lump sums during periods when they cannot find work.

Putting money into a worker’s Medisave account as and when fees and commissions are paid also means he would accrue the 4 per cent interest earlier, she said.

Explaining the reason for the pilot, Mrs Teo said it is to ensure there are no glitches, that Medisave contributions are calculated correctly, and that it is useful.

“It’s not something that we will say you must use,” she said in a dialogue with PropNex chief executive Ismail Gafoor.


The CAYE scheme, first announced in March last year, is among various forms of government support for self-employed people.

Mr Ismail also asked whether self-employed people can be exempted from further CPF contributions if they have put the maximum allowed sums into their Medisave accounts for the year. Currently, excess funds are channelled to the other CPF accounts – Ordinary, Special or Retirement.

His question was met with applause from some 4,000 agents in attendance.

The Medisave contribution rate ranges from 4 per cent to 10.5 per cent, depending on the worker’s age and net trade income. Maximum limits range from $5,760 to $7,560 a year.

Currently, net trade income is the gross trade income minus all allowable business expenses, capital allowances and trade losses.

Mrs Teo replied that CPF not only helps with healthcare, it also ensures retirement adequacy and can be used to pay for housing.

Self-employed people also use their CPF for the same reasons, and their contributions should, by right, be similar to regular employees’, she said.

Salaried workers contribute 20 per cent of their salary to the CPF.

She added that while she would keep Mr Ismail’s request in mind, if she agreed to it, “regular employees will ask for the same, and then on the philosophy, (the CPF) becomes different already”.

Property agents said they welcome the CAYE, but felt contributions should be capped at the maximum sum for Medisave accounts.

Said Mr Roy Soegiarto, 48: “We’re self-employed people, so we’re obviously streetwise. There are things we are doing to ensure we are saving for our future.”