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Oral Answer by Mr Lim Swee Say, Minister for Manpower, to Parliamentary Question on Medisave Contributions by Self-employed Persons

Employment practices
Notice Paper no. 198 of 2015 for the Sitting on or after 14 July 2015

Question no. 688 for Oral Answer

MP: Er Dr Lee Bee Wah

To ask the Minister for Manpower in order to help those self-employed who may not have sufficient savings in the CPF to buy a house (a) whether the Ministry can allow the CPF account holder, upon reaching his contribution ceiling for Medisave, to channel the excess contributions to his Ordinary Account instead of the Special or Retirement Account; and (b) if the CPF account holder can prove that he has substantial insurance policies to cover future medical expenses, whether he can be allowed to opt to only contribute to his Ordinary Account.

Answer
  1. Self-employed persons (or SEPs) are only required to contribute to their Medisave Account. Medisave Account contributions in excess of the prevailing Medisave Contribution Ceiling, or “MA overflows”, are automatically transferred to a CPF member’s Special Account if he is below 55 years old or Retirement Account if he is aged 55 and above. This is to help CPF members save more for their retirement needs as interest rates for the Special and Retirement Accounts are higher than the Ordinary Account, and members will enjoy better returns on these savings. 
  2. SEPs who wish to save more in the CPF for their housing and retirement needs can make voluntary contributions and enjoy tax relief on these contributions subject to limits.
  3. Er Dr Lee has also asked whether an SEP can opt to only contribute to his Ordinary Account, if he can prove that he has substantial insurance policies to cover future medical expenses. Medisave savings can be used to pay the hospitalization expenses and other healthcare expenses such as outpatient treatment for approved chronic diseases and recommended screening and vaccinations. Besides hospitalization expenses, Medisave savings can also be used to pay for the premiums of MediShield Life and ElderShield. MediShield Life will cover all Singaporeans and Permanent Residents for life. Unlike MediShield Life, coverage provided by other medical insurance policies may not be guaranteed for life. More importantly, his Medisave can also be used to pay for the medical expenses or MediShield Life premiums of his spouse, children, parents and grandparents. Hence, CPF members with comprehensive medical insurance policies are not exempted from contributing to their Medisave.