Lower-wage self-employed people must contribute to their MediSave account to qualify for government payouts to supplement their income.
Based on the latest data, nine in 10 of self-employed persons (SEPs) who earned an average monthly income of $2,000 and below fulfilled the requirement, among other criteria under the Workfare Income Supplement (WIS) Scheme, for the 2018 work year.
The scheme tops up the incomes of lower-wage workers - both employees and SEPs. Eligible SEPs get up to $2,667 in Workfare payouts a year.
All lower-wage employees and SEPs have to contribute to the Central Provident Fund (CPF) to benefit from Workfare, Senior Minister of State for Manpower Zaqy Mohamad told Parliament yesterday.
"This is because Workfare is a permanent scheme... This ensures that workers continue to take personal responsibility in saving for their longer-term retirement and healthcare needs, while receiving government support via Workfare," he said.
Mr Zaqy was replying to a question from Workers' Party MP Leon Perera (Aljunied GRC) about the number of SEPs who would have qualified for the WIS scheme were it not for their lack of MediSave contributions.
Mr Perera also asked whether the Government will consider providing concessions for SEPs to qualify for the scheme by having their MediSave requirement temporarily lowered in the light of the Covid-19 crisis, or having their MediSave contributions spaced out.
In his reply, Mr Zaqy noted that SEPs are required to contribute to their MediSave accounts only after declaring their incomes at the end of the work year. They also have up to two years to do so.
Complete data for the 2019 work year is not available as SEPs have until Dec 31 this year to make their MediSave contributions to receive Workfare, he said.
For the 2020 work year, there is a Dec 31, 2022 MediSave contribution deadline to get the payout, he added.
Within the two-year period, SEPs can choose to pay a lump sum or via monthly Giro instalments.
The CPF Board exercises flexibility to help SEPs who are facing financial difficulties, such as reducing monthly instalments by extending the Giro arrangement, or temporarily deferring monthly instalments, said Mr Zaqy.
"We also consider exceptional appeals on a case-by-case basis. Once the SEP makes the required MediSave contributions in full, they will receive their Workfare payout."
He added that SEPs who are facing significant income loss and require urgent financial aid may apply for the Ministry of Social and Family Development's Covid-19 Recovery Grant or Covid-19 Recovery Grant - Temporary.
Taxi and private-hire car drivers are also getting support from a Land Transport Authority Covid-19 driver relief fund.
In a clarification, Mr Perera asked whether case-by-case consideration will be given to allow SEPs with a shortfall in MediSave contributions to still receive Workfare payouts while they are on flexible instalment payment arrangements.
"Many SEPs at the lower end of the income scale have been very badly hit by Covid-19," he said. He cited a recent DBS Bank research report which found that workers making less than $3,000 a month had a median of about one month of emergency funds left last December.
Mr Zaqy said the MediSave quantum from most SEPs is far lower than what most employees contribute to their CPF accounts.
He added: "Most employees are paying about 20 per cent in CPF contributions while SEPs pay about 10.5 per cent on average, but even for lower-income workers, it goes even lower than that. So to some extent, it is already a low bar and we are giving a long two-year period to contribute to MediSave."
Correction note: This article has been edited for accuracy.
