With the rise of the gig economic system in Singapore, the Authorities has introduced final 12 months throughout Parliament a brand new “contribute-as-you-earn” (CAYE) mannequin to assist them with their healthcare and retirement wants.
Below this mannequin, freelancers and self-employed individuals (SEPs) could make small and common MediSave contributions, as an alternative of paying larger lump sums on the finish of the 12 months.
That is much like how employers pay a contribution to their employees’ Central Provident Fund (CPF) accounts alongside their salaries each month, defined Manpower Minister Josephine Teo.
Whereas CPF deductions now stand at 20 per cent, the MediSave contributions for every transaction remains to be undecided.
The Authorities remains to be engaged on this, together with different implementation points, as it really works towards to pilot the scheme by 2020.
Minister Teo stated that this pilot can be rolled out to freelancers employed by the Authorities, and has no plans as of but to increase it to the non-public sector.
CAYE Would Be Useful For These In Personal Sector Too
With CAYE, the service purchaser (on this case, the Authorities) hiring the freelancer has to make a contribution to the particular person’s MediSave account as and when they’re paid for his or her work.
It provides comfort and the self-employed individuals don’t have to fret about having to contribute larger lump sums throughout ‘dry seasons’.
Additionally they begin getting the four per cent MediSave account curiosity earlier.
– Josephine Teo, Minister of Manpower
Actual property brokers for one, face difficulties in paying the obligatory yearly contributions into their Medisave accounts.
Contributions are based mostly on the earlier 12 months’s revenue, they usually have raked in decrease earnings this 12 months as a result of weakening economic system.
Furthermore, freelance employees normally don’t have any medical advantages and the lack of revenue might be an added burden.
Minister Teo has famous these issues however pressured that paying MediSave contributions is an “obligation” for a self-employed particular person.
If we open this scheme to the non-public sector and also you consider this scheme to be useful to you, then earlier than the fee is paid out to the agent, on the backend you possibly can calculate what the MediSave contribution ought to be… and that goes into the (MediSave).
Doing such calculations will be troublesome nonetheless. If CAYE opens as much as the non-public sector, they not have to consistently calculate and fear about their MediSave contributions.
Nonetheless, it will also be troublesome for many who are simply making an attempt to make ends meet but nonetheless must put aside cash for MediSave.
Featured Picture Credit score: Bloomberg