Photo of Josephine Teo from The New Paper

Second Minister for Manpower Josephine Teo had accepted her government’s committee, Tripartite Workgroup (TWG), recommendations to force self-employed to pay CPF and insurance as soon as they received payment for their work. Demanding CPF payments, the government committee reasoned that 86% of about 200,000 self-employed are unable to meet the CPF Minimum Sum (Basic Retirement Sum), as compared to only 42% of the regular workers. To enforce this, the TWG proposed a “pay-as-you-earned” system, where payments for work done will automatically have CPF deductions. The government said that this system is similar to Chile:

“This is based on a similar model to the South American country, Chile, where it is mandatory for freelancers to contribute to their pensions when they are paid for their services. Service buyers are also required to channel a portion of the service fees owed to freelancers into their pension accounts.”

The new law is estimated to see the government collect at least S$200 million in the unwithdrawable Medisave CPF each year.

In addition to CPF deductions, the TWG committee also recommended that self-employed be forced to pay insurance:

“Our tripartite partners are working with the insurance industry to create an insurance product that provides daily cash benefit for hospitalisation episodes exceeding one to three days, or prolonged medical leave exceeding seven to 14 days. We have considered whether such insurance should be made compulsory for all freelancers. We want the Government to encourage insurance take-up through licensing controls.”

Minister Josephine Teo said that she will put up the legislation in Parliament next month:

“I have accepted the recommendations, which will help shape the Government’s strategies to address concerns raised by self-employed individuals. I intend to provide a fuller response during the Committee of Supply parliamentary debates next month. This will include an outline of measures to implement the recommendations and the expected timelines.”