Medisave: Earn $500 more – rate increased 100%?


Is the Medisave contribution rate doubled when you earn $500 more?

I met an elderly self-employed person who complained that because he struggled to earn more in order to make ends meet from $12,000 to $18,000 a year – he was very unhappy that despite being a low-income person – his Medisave contribution rate doubled (increased by 100 per cent).

I was stumped by his remarks. So, I used the CPF Medisave contribution calculator to test what he said to try to figure out what is going on.

For age 50 and above – the self-employed Medisave contribution for $12,000 and $18,000 annual income is $630 (5.25 per cent) and $1,890 (10.5 per cent), respectively.

So, he was correct – the Medisave contribution rate increased gradually from 5.25 to 10.5 per cent, for annual income of $12,000 to $18,000.

From the perspective of this elderly low income self-employed person who was already earning very little – 21 per cent ($1,260) of the additional $6,000 (from $12,000 to $18,000) which he earned went to Medisave.


Leong Sze Hian

About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.