Helping Self-employed Persons to Buy Homes

The following question stood in the name of

Er Dr Lee Bee Wah – 23: 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.

Mr Yeo Guat Kwang (Ang Mo Kio): Question No 23.

Mr Lim Swee Say: Mdm Speaker, self-employed persons or SEPs in short, are only required to contribute to their Medisave Account. Medisave Account contributions in excess of the Medisave Contribution Ceiling 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.

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.

Er Dr Lee has also asked whether an SEP can opt to only contribute to the 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 hospitalisation expenses and other healthcare expenses, such as outpatient treatment for approved chronic diseases and recommended screening and vaccinations.

Besides hospitalisation 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.

3.00 pm

Mdm Speaker: Order. End of Question Time.

[ Pursuant to Standing Order No 22(3), Written Answers to Question Nos 24-26 and 28-30 on the Order Paper are reproduced in the Appendix. Question No 27 has been postponed to the next available sitting of Parliament .]