Proposal for MediSave Contribution Requirements to be Lowered Temporarily to Allow Self-employed Persons to Qualify for Workfare Income Supplement

7 Mr Leon Perera asked the Minister for Manpower (a) to date, what is the number of self-employed persons (SEPs) who could have qualified for Workfare Income Supplement (WIS) but are unable to do so because of their lack of MediSave contributions; and (b) whether the Government will consider providing concessions for SEPs to qualify for WIS by having their MediSave eligibility temporarily lowered in light of the COVID-19 crisis or having their MediSave contributions spaced out.

The Senior Minister of State for Manpower (Mr Zaqy Mohamad) (for the Minister for Manpower): Mdm Deputy Speaker, the Workfare Income Supplement Scheme tops up the incomes of our lower-wage workers, both employees and self-employed persons (SEPs). Eligible SEPs receive up to $2,667 in Workfare payouts a year.

All lower-wage employees and SEPs are required to contribute to the Central Provident Fund (CPF) to benefit from Workfare. This is because Workfare is a permanent scheme. The need to meet CPF obligations is part of Workfare's eligibility criteria and is consistently applied to both employees and SEPs. This ensures that workers continue to take personal responsibility in saving for their long-term retirement and healthcare needs, while receiving Government support via Workfare.

SEPs are only required to contribute to their MediSave accounts after declaring their incomes at the end of the Work Year. They have up to two years to do so. Based on latest available data, among SEPs who met all other Workfare criteria for Work Year 2018, nine in 10 fulfilled the required MediSave contributions and received their Workfare payouts. Complete data on WIS SEP recipients for Work Year 2019 and 2020 are not available, as SEPs have up till 31 December 2021 and 31 December 2022, respectively to make their required MediSave contributions to receive Workfare.

Within the two-year period, SEPs can also choose the mode of payment that best suits their circumstances. SEPs can either pay as a lump-sum or via monthly GIRO instalments. CPF Board also 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. 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.

We recognise that this is a difficult period. SEPs who are facing significant income loss and require urgent financial assistance may apply for MSF's COVID-19 Recovery Grant (CRG) or COVID-19 Recovery Grant – Temporary . Taxi and private hire car drivers are also receiving additional financial support from the Land Transport Authority's COVID-19 Driver Relief Fund.

Mdm Deputy Speaker: Mr Leon Perera.

Mr Leon Perera (Aljunied): I thank the Senior Minister of State for his reply. Just one clarification about what he said. I just wanted to understand if, in fact, SEPs who are unable to make the MediSave shortfall, whether there will be consideration given on a case-by-case basis to defer the time at which they can pay the MediSave or start an instalment plan, but they may still be able to get the Workfare payment before that happens. I believe the Senior Minister of State did refer to that, but I just wanted to clarify.

The reason I ask this is because I think many SEPs are at the lower end of the income scale and very badly hit by COVID-19. A report by DBS Bank, from December last year, said that those of their customers who are earning less than $3,000 a month, had about one-month of emergency funds left. This was in December last year, the height of the COVID-19 pandemic. Just wondering what is the extent of flexibility the Government will show to SEPs in that position?

Mr Zaqy Mohamad: I thank the Member for his question. In fact, these are valid concerns, given the current conditions. As I shared in the Ministry of Manpower, we are quite flexible because the SEP has two years to make MediSave contributions and within that, we can provide monthly instalments, or in some cases, as we mentioned, we will put temporary deferment if required.

The difference between the Workfare and CRG, or some of the other assistance schemes, is that, this is more an income top-up supplement as opposed to direct financial assistance that one might get out of SSO or CRG. So, these are slightly different schemes, and therefore, the focus is slightly different too.

For most SEPs, the MediSave contribution is far lower than that of normal employees. For example, most employees are paying about 20% CPF contributions, while the SEPs' payable is 10.5% on average. For lower-income workers, I think it goes even lower than that. To some extent, it is already a low bar and we are giving a long two-year period for SEPs to contribute to MediSave. I think that is generally quite reasonable and certainly, we can give flexibility, where required.