CENTRAL PROVIDENT FUND CONTRIBUTIONS

Mr Thomas Thomas asked the Minister for Manpower (a) what proportion of the Singapore workforce make no or make irregular contributions to the Central Provident Fund; (b) whether this proportion is on the rise; and (c) what steps are being taken to ensure that these workers can still enjoy basic social security benefits provided by the Fund.

Dr Lee Boon Yang: Currently, about 1.22 million people in the Singapore workforce make regular contributions to the CPF. This is an increase of 16% compared to 1991. The proportion of the workforce that makes no or irregular contributions has remained stable over the last 10 years at about 17%. These could be self-employed persons.

Since July 1992, self-employed persons with a net trade income of more than $2,400 per year are required to contribute to the Medisave Account. They contribute between 6% and 8% of their yearly net trade income, depending on their age. Such contributions are granted tax relief. The number of self-employed persons who contribute to the Medisave accounts has increased by 24% from 126,000 in 1995 to 157,000 in June 2000.

To encourage self-employed persons to contribute beyond their Medisave Account, tax relief is also given for additional voluntary CPF contributions. Voluntary contributions by the self-employed have increased significantly by 35% from 58,000 in 1995 to 78,000 in June 2000.

The Inter-Ministerial Committee for the Ageing Population had suggested that the CPF system should be extended to provide coverage for as many Singaporeans as possible. One of the recommendations is to make contributions to the CPF Special Account compulsory for the self-employed. My Ministry is studying this recommendation and will consider ways to encourage and help the self-employed to further save for their retirement.