Debated in Parliament on 18 Aug 2015.
Mr Baey Yam Keng asked the Minister for Health (a) what is the current number and percentage of CPF members who have reached their MediSave contribution ceiling; and (b) whether the Ministry can allow CPF members, upon reaching their MediSave contribution ceilings, to keep the overflows to pay for medical expenses instead of channelling the overflows to their Special, Retirement or Ordinary Accounts.
The Parliamentary Secretary to the Minister for Health (Assoc Prof Dr Muhammad Faishal Ibrahim)(for the Minister for Health): Madam, the MediSave Contribution Ceiling (MCC) is the maximum amount that a Central Provident Fund (CPF) member can set aside in his MediSave account, currently set at $48,500. From 1 January 2016, MCC will be replaced by the Basic Healthcare Sum (BHS).
For the cohort who turned 55 in 2014, 21% of them had their MediSave Account (MA) balance at MCC. MediSave contributions above MCC will flow to a member's Special Account (SA) or Retirement Account (RA) to help improve his retirement adequacy. This will help to increase the monthly cash payouts from CPF LIFE, which can be used to supplement his MediSave monies for his healthcare needs if necessary. Members can also approach CPF Board to apply for reversal of MediSave overflows if they have exceptional circumstances and we will consider such applications on a case-by-case basis.
Madam, I would like to ask the Parliamentary Secretary if he could elaborate on how CPF LIFE contributes towards MediSave and how will members benefit from that. And whether the Ministry will consider allowing members to continue putting money into the MA beyond the new BHS and then also to allow greater flexibility for these excess savings to be used by members for their own needs or for their families' healthcare needs.
Madam, I thank the Member for the supplementary questions. Essentially, when a member receives the CPF LIFE amount, that additional money can be used for the healthcare needs as well. This is separate from the MediSave amount.
With regard to BHS, it has a longer run compared to what we have today, so it is a refinement of MCC. This is in view of the current process where people are working longer. As such, this will provide more adequacy for Singaporeans.
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The Member gave a suggestion relating to the issue of overflows. We have to take into account the retirement adequacy of Singaporeans, which is important. One thing we can assure is that, in exceptional cases, if there are Singaporeans who need help, as I had mentioned earlier about reversal of MediSave, we will consider that and we will do it on a case-by-case basis.
Madam, I have a resident who is 35 years old, self-employed and his MediSave has reached the ceiling. He is appealing to have an overflow of MediSave into his Ordinary Account (OA) so that he can use it to buy his first flat. However, the appeal has been turned down. I would like to urge the Parliamentary Secretary or the Ministry to consider, for those who have not bought any Housing and Development Board (HDB) flat, the overflow savings perhaps allow for them to be flowed into their OA, so that they can use it to buy the flat.
Madam, I thank the Member for the suggestion. As we move along our journey in developing Singapore, we always look at how we can refine the process and help each Singaporean to see how they can facilitate the process of buying a house and not forgetting to look at how retirement adequacy will be enhanced over the years. However, if Members have any residents who have issues that they strongly feel that we can help with and where we can make exceptional cases, I urge them to write to CPF Board or the Ministry concerned.
Minister Lim.
Thank you, Mdm Speaker. The question raised by the Member actually concerns the Ministry of Manpower (MOM), so I thought I should stand up to clarify our position. Any person who is working, basically, we want them to save for their medical, housing and retirement needs. In the case of the self-employed, right now, they are required to save for their medical. However, they do not save for their OA, they do not save for their retirement. Therefore, whenever there is any overflow, we channel that overflow to their SA, which would then be set aside for their retirement. In other words, for those who are self-employed, we feel that they are already not saving enough for their retirement and, therefore, if there is any overflow, SA should take precedence over OA. I hope that explains our position.
I agree with the Minister that saving for retirement is important but for this case, he has not even managed to buy a house. For those who have not managed to buy a house, perhaps let them buy a house first, rather than save for retirement.
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Mdm Speaker, if I were to follow the Member's logic, we should actually not require any working person to contribute to his SA until after he has finished his housing loan. Because, right now, for any working person, his CPF contribution goes into the three accounts: MA, SA and OA. So, since the Member said that housing should take precedence over retirement, then logically speaking, we should amend our law so that all working people should have their CPF contributions go into MA and OA only. Only after they have finished their housing loan, then they start to save for their SA. I do not think that is wise.
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