Helping Self-Employed Persons

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.

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 rates. They will therefore pay no more than 3%, based on the new Medisave contribution rate of 6.5% to 8.5%.

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.

The one-third Medisave contribution rate will apply to all self-employed persons* with a net trade income of $12,000 or less a year. The rate will gradually increase to the full Medisave rates at a net trade income of $18,000 a year.

Helping Informal Workers

There is another group whom we want to encourage to join the CPF system and to benefit from the WIS. These are the informal workers who do odd jobs on an ad-hoc basis. Their employers do not pay their CPF, either because they cannot afford to do so, or because the workers prefer to take their entire wages in cash.

For purposes of the WIS scheme, we will treat informal workers just like the self-employed. Informal workers will receive WIS benefits if they work and contribute to their Medisave. They must pay Medisave at the same rate as the self-employed, and they will receive the same Workfare benefits as the self-employed, i.e. two-thirds of what employees receive, but all paid into their Medisave accounts.

We want, however, to caution employers who avoid paying CPF for their workers. Under the CPF Act, so long as a worker works regularly for any employer, that employer is liable to pay their CPF. As we institutionalise Workfare, MOM and CPFB will step up enforcement to ensure that payment for CPF is complied with.

WIS Scheme Rewards Work

The WIS scheme is expected to benefit 438,000 Singaporeans**, and cost about $400 million a year over time. The numbers are likely to go up as more individuals are incentivised to join the workforce and contribute to CPF. While Workfare is a long-term government programme, the specific scheme that we have worked out is new and will need to be tested out. We will review this scheme after three years and adjust it to better achieve our aims.

The Workfare Income Supplement scheme is a major policy change. For the first time, the state will be supplementing the market wages that low-wage workers receive. But we have decided to make this change so as to help low-wage workers and encourage them to stay employed. This will strengthen social inclusion in Singapore.

Preparing for Future Healthcare Needs

Through Workfare and the various CPF changes that I have just mentioned, the CPF balances of all Singaporeans will rise to help them meet their long-term expenses, including their medical needs. However, many Singaporeans are understandably concerned about whether they will be able to afford their healthcare bills as they grow older.

Healthcare costs for the individual are rising because we are now living longer and becoming more prone to age-related diseases like stroke, diabetes and hypertension which are typically chronic and require long-term care. The elderly use more healthcare services and incur higher costs per episode of care. For example, hip fractures because of osteoporosis are common among the elderly and hip replacement surgeries are usually required to ease their condition.

The incidence of heart disease and cancer among Singaporeans is also growing, leading to very costly hospitalisation and treatment cycles. And the expectations of Singaporeans are rising; they are demanding more medical services, better medical technologies and more effective drugs.

To cater to these healthcare needs, the Government will be ramping up our healthcare expenditure over the next five to 15 years. Over the next five years alone, we expect to increase our spending to reach about $3 billion a year in 2012, compared to $2 billion today. Part of this will go towards growing the number of doctors, nurses and allied health professionals in our public hospitals. In particular, we aim to bring 4,500 more nurses into the public sector over the next five years, as they play an increasingly important role in supporting the elderly. We will also increase the number of acute hospital beds and improve clinical services.

We will create academic medical centres in our NUH and SGH campuses, which will allow us to better marry the strengths of academic and clinical practice. Both centres will have a stronger clinical research component, with funding focused on the major diseases afflicting Singaporeans. In addition, step-down care now provided by charities will be better integrated with hospital care. We also want to better integrate patient care between GPs and specialists so that GPs can play a larger role in looking after Singaporeans’ health.

Singaporeans will still have to foot their share of their medical bills, either in Medisave, insurance or cash. Some people, especially the elderly and low-income, have difficulty setting aside enough in their Medisave for their healthcare needs. They need our help. I will top up the Medifund by $200 million to $1.4 billion.

Mr Speaker Sir, I have outlined some of the major programmes that the Government will have to embark on over the next five years and beyond, to build our capabilities for the future and to strengthen our social security system.

*Those 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.

**Estimated numbers by imposing the housing AV criterion.