What happens if I never pay my Medisave?

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. Apart from being illegal (unless you’re self-employed), refusing to be part of the CPF “system” can cost you more money than you think.

Hiding your money from CPF can mean you’re just cheating yourself; here’s why. 

How do CPF Contributions Work?

First, here’s a primer on how the CPF contributions work.

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’re 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.

Self-employed people are a different matter. Under the Self-Employed Scheme, you are only required to contribute to Medisave (use this calculator to find out how much). The amount is determined by a combination of your age, and net earnings. Any other contributions are voluntary.

When you make CPF contributions, the money is allocated between your Ordinary Account (OA), Special Account (SA), and Medisave Account (MA).

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.

In other words:

CPF Interest Rates for OA:First S$20,000 – 3.5%Thereafter – 2.5%CPF Interest Rates for SA and MA:First S$60,000 (across OA, SA and MA) – 5%Thereafter – 4%

(Btw the above illustrations applies only for those under 55 years old. But for the purposes of this article, let’s not worry about that.)

Your CPF monies are allocated among your accounts based on your age.

It may seem better not to contribute, as you’ll have more cash in your bank account every month. But in reality, hiding your money from CPF can mean you lose a small fortune.

Hiding Your Income Could Mean Helping an Unethical Employer (to Rip You Off)

Say someone wants to hire you, but they don’t want to put you on their payroll. They strike up a “special” deal with you: they will pay you S$2,500 a month, without giving you an official employment contract.

As the government doesn’t know about the deal, you’ll get to keep the whole S$2,500 – no need to pay S$500 per month into your CPF. But how much does this S$500 a month really cost you, by the end of the year?

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, refusing to contribute to CPF would already cost you a whopping S$5,100.

What’s worse is that the loss compounds to truly eye-popping amounts, after the first 10 years of your working life.

Assume that the added S$5,100 a year would otherwise go toward your CPF SA, which grows at a minimum of 4% per annum, and is meant for your retirement.

Over the course of 10 years, S$5,100 compounded at 4% per annum would come to approximately S$62,787. That’s a total accrued interest of almost S$11,790, which you’ve allowed your shady employer to steal from you.

Don’t forget that, besides the loss of your CPF monies, being illegally employed means you have no proper contract. If your employer doesn’t pay you on time – or flat out refuses to pay you – there’s no way the Ministry of Manpower can protect you.

And if you are caught making such an arrangement, you can expect a hefty fine, not least from the Inland Revenue Authority of Singapore (IRAS) for back taxes.

If You’re Self-employed, Think Twice About Dodging Your Medisave Contributions

While self-employed people don’t 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 – especially if you’re face irregular cash flows.

But there are two things to bear mind. The first is that you’re doing something illegal – expect big fines if the government ever finds out.

The second is that your MA grows at a guaranteed 4% per annum – that’s a deal that’s hard to find among regular financial products (most endowment plans don’t have guaranteed returns that come anywhere close).

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 anyway, is it really worth lying to avoid MA contributions?

Don’t Shortchange Yourself Just to Dodge the CPF

Hopefully by now, you understand that it’s not worth losing so much money, just to gain access to an extra 20% of your income that you should be saving anyway.

If you feel tempted to play with fire and hide your income, remember the downside is probably bigger than the upside.

Need Information or Confused about Something ?

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Complete Guide to NSFAS Online Loan Application for South African Students (2025)

If you are a South African student looking to pursue higher education but are facing financial difficulties, the National Student Financial Aid Scheme (NSFAS) is one of the most accessible funding options available. NSFAS provides financial aid in the form of bursaries and loans to qualifying students at public universities and TVET colleges in South Africa.

This guide will walk you through everything you need to know about the NSFAS loan application process, from eligibility requirements to application steps and frequently asked questions.

📌 What is NSFAS?

The National Student Financial Aid Scheme (NSFAS) is a government-funded financial aid scheme aimed at helping students from low- and middle-income households to access tertiary education without the burden of upfront fees.

NSFAS offers both bursaries and income-contingent loans:

  • Bursaries: For eligible students who meet academic and household income criteria (especially for TVET and university students).
  • Loans: For students who do not meet all bursary criteria or who are pursuing postgraduate qualifications not funded under bursary schemes.

✅ Who Qualifies for an NSFAS Loan?

To qualify for an NSFAS loan (especially for postgraduate students or programs not funded under the bursary system), you must:

  • Be a South African citizen.
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📚 Courses Funded by NSFAS

NSFAS primarily funds undergraduate qualifications, but certain postgraduate programs (e.g., PGCE, postgraduate diplomas in education, and professional courses like LLB) may be considered under the NSFAS loan scheme, not bursaries.

If you’re studying:

  • Undergraduate degree or diploma: You are likely eligible for a full NSFAS bursary.
  • Postgraduate study: You may qualify for a loan, depending on the course and funding availability.

📄 Required Documents for NSFAS Application

When applying, make sure you have the following documents scanned and ready:

  1. Certified copy of your South African ID or Smart Card.
  2. Parent(s) or guardian(s) ID documents.
  3. Proof of income (latest payslips, UIF, or affidavit if unemployed).
  4. Consent Form signed by your parent(s)/guardian(s) to allow NSFAS to verify income.
  5. Proof of registration or acceptance at a public institution.
  6. Academic transcripts (for continuing or postgraduate students).

🖥️ How to Apply for an NSFAS Loan Online

Step-by-Step NSFAS Online Application Process (2025)

  1. Visit the NSFAS Website

    Go to: https://www.nsfas.org.za

  2. Create an Account

    • Click on “MyNSFAS” and register your profile.
    • You’ll need a valid email address and South African cellphone number.
    • Choose a strong password and verify your account via email or SMS.

  3. Login and Start the Application

    • After registration, log in to your MyNSFAS account.
    • Click on “Apply” to begin a new application.

  4. Fill in Your Personal Details

    • Input your ID number, name, surname, and other details exactly as they appear on your ID.
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  5. Upload Required Documents

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  7. Track Your Application

    • Log in regularly to check your application status.
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🗓️ Important NSFAS Dates (2025)

  • Application Opening Date: September 1, 2025
  • Application Deadline: January 31, 2026
  • Appeals Period: February 2026 (if rejected)
  • Disbursement: After registration and approval

Note: Dates are subject to change; always confirm on the official NSFAS website.

💸 What Does the NSFAS Loan Cover?

NSFAS funding typically includes:

  • Tuition fees
  • Registration fees
  • Accommodation (if living away from home)
  • Meals and transport
  • Learning materials (e.g., textbooks)

For loans, repayment is only required once you start working and earn above a threshold (around R30,000 annually, but subject to change).

🔄 NSFAS Loan Repayment

Repayments are:

  • Income-contingent – you only repay when you can afford to.
  • Administered by DHET (Department of Higher Education and Training).
  • Interest-bearing, but interest rates are low and favorable.

You can also apply for a partial loan conversion to a bursary if you perform well academically.

🔁 How to Appeal a Rejected NSFAS Application

If your application is rejected, you may submit an appeal via your MyNSFAS portal:

  1. Log into your MyNSFAS account.
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  3. If rejected, click on “Submit Appeal”.
  4. Upload any missing or corrected documents.
  5. Provide a clear explanation or motivation.

📱 NSFAS Contact Information

📝 Final Tips Before Applying

  • Apply early to avoid system overload near the deadline.
  • Use your own email and cellphone number (do not use someone else’s).
  • Double-check that all your documents are certified and legible.
  • Keep a copy of your submission confirmation for reference.

By following this guide, you can confidently apply for NSFAS funding and move one step closer to achieving your academic and career dreams—without the burden of immediate financial pressure.

 

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