4.21 Self-employed individuals do not pay full CPF, but they are required to contribute to Medisave at the same rates as other working individuals. The WIS scheme will extend to them. Self-employed persons will receive Workfare benefits that are two-thirds the amount for employees, provided they pay their Medisave. However, unlike employees, all of the Workfare for self-employed persons will be paid into their Medisave accounts.
4.22 Presently, one-third of self-employed persons are not paying Medisave, even though they are required to do so. To encourage more low-income self-employed persons to contribute to Medisave, we will reduce their contribution rate to one-third of the full Medisave rate. They will therefore pay no more than 3%, based on the new Medisave contribution rate of 6.5% to 8.5%.
4.23 For example, a self-employed person above 45 years earning an average of $1,000 a month would have had to contribute $80 a month to his Medisave. With the new scheme, he will only need to contribute $28 a month, whereupon the Government will top up his Medisave with a further $67 a month. In other words, the Government is topping up his income by about 7% a month.
4.24 The one-third Medisave contribution rate will apply to all self-employed persons2 with a net trade income of $12,000 or less a year; in other words, an average of $1,000 a month or less. The rate will increase gradually to the full Medisave rates at a net trade income of $18,000 a year, $1,500 a month or more.
2Those with a net trade income of below $6,000 are not currently required to contribute to Medisave. However they are encouraged to do so voluntarily.
|
