The Singapore Commentator

The Central Providend Fund (CPF) seems to have lost its patience in getting the self-employed to top up their Medisave accounts. On 10 September, it began issuing letters to the laggards, giving them seven days to top up their accounts. Those who fail to comply face fines of between $2,500 to $10,000.

Some of those issued with the warning letters have duly complied, but many others have not. One lawyer complained to The Straits Times:

I understand the government’s concern that the self-employed may spend all their money and then ask for help to pay medical bills. But then, they should target those who have no alternative health-care financing arrangements.

Another person wrote to The Straits Times to ask:

As a “Medisave laggard”, I seek to clarify one thing: Whose money is Medisave? Mine or the Government’s? I like to believe that the money is mine. But if so, then why should I face the prospect of being fined and otherwise penalised for failing to pay money which I “owe” to myself?

I think that is a good rhetorical point.

The reality in Singapore — as this incident makes clear — is that there are often legal constraints to what people can do, even with things that they own, even when it does not necessarily impact others negatively.

The government’s fear — as stated by the lawyer cited above — of people with underfunded Medisave accounts turning to the government for help is understandable. The question is whether there are better ways to encourage the self-employed to top up their Medisave accounts. After all, penalties are usually imposed for actual harm done, not for hypothetical fears.

Incidentally, the letter-writer goes on as follows:

For failed entrepreneurs like myself, other pressing needs include having to fend off creditors and having to pay off loans from family and friends, so that one does not have to feel uncomfortable in their presence. While the Government — and just about everybody else — talks about encouraging entrepreneurship and having people not be afraid of failure, the latest clampdown on people like me who owe money to Medisave has introduced a very major fear factor.

The government has asked entrepreneurs to risk their livelihoods to become entrepreneurs. This, however, apparently does not apply to their CPF money.

Some people have previously said that Singaporeans’ wish to maintain a fat CPF account discourages them from becoming entrepreneurs. Now it looks like the legal requirement for them to maintain their CPF accounts — in particular their Medisave portion — may discourage them from becoming entrepreneurs as well.