{"id":22964,"date":"2024-01-21T01:18:40","date_gmt":"2024-01-21T01:18:40","guid":{"rendered":"https:\/\/bestbrainz.com\/info\/?page_id=201"},"modified":"2024-01-21T01:18:40","modified_gmt":"2024-01-21T01:18:40","slug":"what-happens-if-i-never-pay-my-medisave","status":"publish","type":"page","link":"https:\/\/forms24.co.za\/data\/what-happens-if-i-never-pay-my-medisave\/","title":{"rendered":"What happens if I never pay my Medisave?"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Dodging your CPF contributions not only helps unscrupulous employers, it can end up costing you a fortune.<\/h2>\n\n\n<p class=\"wp-block-paragraph\">Some Singaporeans have found ways to avoid declaring their income, in order to avoid CPF contributions.&nbsp;Apart from being illegal (unless you\u2019re self-employed), refusing to be part of the CPF \u201csystem\u201d can cost you more money than you think.<\/p><div id=\"forms-3302774308\" class=\"forms-atf forms-entity-placement\" style=\"margin-top: 15px;margin-bottom: 20px;\"><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-9198760278752355\"\n     crossorigin=\"anonymous\"><\/script>\n<!-- Responsive ads atf -->\n<ins class=\"adsbygoogle\"\n     style=\"display:block\"\n     data-ad-client=\"ca-pub-9198760278752355\"\n     data-ad-slot=\"8381596201\"\n     data-ad-format=\"auto\"\n     data-full-width-responsive=\"true\"><\/ins>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><\/div>\n\n\n<p class=\"wp-block-paragraph\">Hiding your money from CPF can mean you\u2019re just cheating yourself; here\u2019s why.&nbsp;<\/p>\n\n\n<h3 class=\"wp-block-heading\"><strong>How do CPF Contributions Work?<\/strong><\/h3>\n\n\n<p class=\"wp-block-paragraph\">First, here\u2019s a primer on how the CPF contributions work.<\/p>\n\n\n<p class=\"wp-block-paragraph\">All employees earning more than S$500 in a month have to contribute 20 per cent of their monthly income to CPF. On top of that, their employer has to contribute an additional 17 per cent. So if you\u2019re an employee earning S$2,500 per month, you would have to contribute S$500 per month. In addition, your employer will have to put in an added S$425 per month.<\/p>\n\n\n<p class=\"wp-block-paragraph\">Self-employed people are a different matter. Under the Self-Employed Scheme, you are only required to contribute to Medisave (use this&nbsp;<a href=\"https:\/\/www.cpf.gov.sg\/eSvc\/Web\/Schemes\/SelfEmployedMedisaveContribution\/SelfEmployedMedisaveContributionLanding\">calculator<\/a>&nbsp;to find out how much). The amount is determined by a&nbsp;<a href=\"https:\/\/www.cpf.gov.sg\/Assets\/members\/Documents\/MARates2016.pdf\">combination of your age, and net earnings<\/a>. Any other contributions are voluntary.<\/p>\n\n\n<p class=\"wp-block-paragraph\">When you make CPF contributions, the money is allocated between your Ordinary Account (OA), Special Account (SA), and Medisave Account (MA).<\/p>\n\n\n<p class=\"wp-block-paragraph\">The base interest rates for your OA is 2.5%, and 4% for your SA and MA accounts. However, you will receive an additional 1% interest on the first S$60,000 across all 3 combined accounts.<\/p>\n\n\n<p class=\"wp-block-paragraph\">In other words:<\/p>\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>CPF Interest Rates for OA:<\/strong>First S$20,000 \u2013 3.5%Thereafter \u2013 2.5%<\/td><td><strong>CPF Interest Rates for SA and MA:<\/strong>First S$60,000 (across OA, SA and MA) \u2013 5%Thereafter \u2013 4%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n<p class=\"wp-block-paragraph\">(Btw the above illustrations applies only for those under 55 years old. But for the purposes of this article, let\u2019s not worry about that.)<\/p>\n\n\n<p class=\"wp-block-paragraph\">Your CPF monies are allocated among your accounts&nbsp;<a href=\"https:\/\/www.cpf.gov.sg\/Assets\/employers\/Documents\/Table%2011_Pte%20and%20Npen_CPF%20Allocation%20Rates%20Jan%202016.pdf\">based on your age<\/a>.<\/p>\n\n\n<p class=\"wp-block-paragraph\">It may seem better not to contribute, as you\u2019ll have more cash in your bank account every month. But in reality, hiding your money from CPF can mean you lose a small fortune.<\/p>\n\n\n<h3 class=\"wp-block-heading\"><strong>Hiding Your Income Could Mean Helping an Unethical Employer (to Rip You Off)<\/strong><\/h3>\n\n\n<p class=\"wp-block-paragraph\">Say someone wants to hire you, but they don\u2019t want to put you on their payroll. They strike up a \u201cspecial\u201d deal with you: they will pay you S$2,500 a month, without giving you an official employment contract.<\/p>\n\n\n<p class=\"wp-block-paragraph\">As the government doesn\u2019t know about the deal, you\u2019ll get to keep the whole S$2,500 \u2013 no need to pay S$500 per month&nbsp;into your CPF. But how much does this S$500 a month really cost you, by the end of the year?<\/p>\n\n\n<p class=\"wp-block-paragraph\">Remember that your employer is also not contributing the additional 17 per cent. This means you effectively lose S$425 a month. By the end of one working year,&nbsp;<em>refusing to contribute to CPF would already cost you a whopping S$5,100<\/em>.<\/p>\n\n\n<p class=\"wp-block-paragraph\">What\u2019s worse is that the loss compounds to truly eye-popping amounts, after the first 10 years of your working life.<\/p>\n\n\n<p class=\"wp-block-paragraph\">Assume that the added S$5,100 a year would otherwise go toward your CPF SA, which grows at a minimum of 4%&nbsp;per annum, and is meant for your retirement.<\/p>\n\n\n<p class=\"wp-block-paragraph\">Over the course of 10 years, S$5,100 compounded at 4% per annum would come to approximately S$62,787. That\u2019s a total accrued interest of almost S$11,790, which you\u2019ve&nbsp;<em>allowed&nbsp;<\/em>your shady employer to steal from you.<\/p>\n\n\n<p class=\"wp-block-paragraph\">Don\u2019t forget that, besides the loss of your CPF monies, being illegally employed means you have no proper contract. If your employer doesn\u2019t pay you on time \u2013 or flat out refuses to pay you \u2013 there\u2019s no way the Ministry of Manpower can protect you.<\/p>\n\n\n<p class=\"wp-block-paragraph\">And if you&nbsp;<em>are&nbsp;<\/em>caught making such an arrangement, you can expect a hefty fine, not least from the Inland Revenue Authority of Singapore (IRAS) for back taxes.<\/p>\n\n\n<h3 class=\"wp-block-heading\"><strong>If You\u2019re Self-employed, Think Twice About Dodging Your Medisave Contributions<\/strong><\/h3>\n\n\n<p class=\"wp-block-paragraph\">While self-employed people don\u2019t have to contribute to their CPF OA or SA, they must still contribute to their MA (see above). Now you may be tempted to under declare your income, or not declare it at all \u2013 especially if you\u2019re face&nbsp;irregular cash flows.<\/p>\n\n\n<p class=\"wp-block-paragraph\">But there are two things to bear mind. The first is that you\u2019re doing something illegal \u2013 expect big fines if the government ever finds out.<\/p>\n\n\n<p class=\"wp-block-paragraph\">The second is that your MA grows at a guaranteed 4%&nbsp;per annum \u2013 that\u2019s a deal that\u2019s hard to find among regular financial products (most endowment plans don\u2019t have guaranteed returns that come anywhere close).<\/p>\n\n\n<p class=\"wp-block-paragraph\">Your MA is also used to pay for insurance, such as Medishield, or Integrated Shield Plans. As health insurance is something you need to buy&nbsp;<em>anyway<\/em>, is it really worth lying to avoid MA contributions?<\/p>\n\n\n<h3 class=\"wp-block-heading\"><strong>Don\u2019t Shortchange Yourself Just to Dodge the CPF<\/strong><\/h3>\n\n\n<p class=\"wp-block-paragraph\">Hopefully by now, you understand that it\u2019s not worth losing so much money, just to gain access to an extra 20% of your income that you&nbsp;<em>should be saving&nbsp;<\/em>anyway.<\/p>\n\n\n<p class=\"wp-block-paragraph\">If you feel tempted to play with fire and hide your income, remember the downside is probably bigger than the upside.<\/p><div id=\"forms-1466676\" class=\"forms-content forms-entity-placement\"><div style=\"width: 300px; padding: 20px; margin: 0 auto; border: 1px solid #ddd; border-radius: 8px; background-color: #f9f9f9; text-align: center; font-family: Arial, sans-serif;\">\r\n    <p style=\"font-size: 16px; margin: 0 0 10px;\">Need Information or Confused about Something ? <\/p>\r\n    <a href=\"https:\/\/onlineapplications.co.za\/ask\/\" style=\"display: inline-block; padding: 10px 20px; background-color: #007BFF; color: #fff; text-decoration: none; border-radius: 4px; transition: background-color 0.3s;\">Ask a Question<\/a>\r\n<\/div>\r\n<\/div><div id=\"forms-820027729\" class=\"forms-btf forms-entity-placement\" style=\"margin-top: 15px;margin-bottom: 20px;\"><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-9198760278752355\"\n     crossorigin=\"anonymous\"><\/script>\n<!-- Responsive ads btf -->\n<ins class=\"adsbygoogle\"\n     style=\"display:block\"\n     data-ad-client=\"ca-pub-9198760278752355\"\n     data-ad-slot=\"5513273173\"\n     data-ad-format=\"auto\"\n     data-full-width-responsive=\"true\"><\/ins>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><\/div>\n<div id=\"forms-212801989\" class=\"forms-cpc forms-entity-placement\"><hr>\n<h1>Did You Know : Top 15 Free Online Learning Platforms<\/h1>\n\n<ol>\n  <li>\n    <strong>Free Online Education Degrees : Coursera:<\/strong>\n    <p>Coursera partners with universities and organizations worldwide to offer a wide range of courses. 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It offers a free trial period.<\/p>\n  <\/li>\n<\/ol><\/div>","protected":false},"excerpt":{"rendered":"<p>Dodging your CPF contributions not only helps unscrupulous employers, it can end up costing you a fortune. Some Singaporeans have found ways to avoid declaring their income, in order to avoid CPF contributions.&nbsp;Apart from being illegal (unless you\u2019re self-employed), refusing to be part of the CPF \u201csystem\u201d can cost you more money than you think. &#8230; <a title=\"What happens if I never pay my Medisave?\" class=\"read-more\" href=\"https:\/\/forms24.co.za\/data\/what-happens-if-i-never-pay-my-medisave\/\" aria-label=\"Read more about What happens if I never pay my Medisave?\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-22964","page","type-page","status-publish"],"_links":{"self":[{"href":"https:\/\/forms24.co.za\/data\/wp-json\/wp\/v2\/pages\/22964","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forms24.co.za\/data\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/forms24.co.za\/data\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/forms24.co.za\/data\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forms24.co.za\/data\/wp-json\/wp\/v2\/comments?post=22964"}],"version-history":[{"count":0,"href":"https:\/\/forms24.co.za\/data\/wp-json\/wp\/v2\/pages\/22964\/revisions"}],"wp:attachment":[{"href":"https:\/\/forms24.co.za\/data\/wp-json\/wp\/v2\/media?parent=22964"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}