With greater job uncertainty, how can freelancers plan for retirement?

SINGAPORE: When 27-year-old Gabriel Yip started working as a freelance camera assistant a year ago, he was able to earn two to three times his previous full-time salary in a few months.

He makes a point of putting some money aside for savings and retirement each month, but as a freelancer it has become more difficult to commit to a constant amount.

“My income has become more irregular. If I earn more this month, I will put in a little more. If I earn less, I will use less,” said Yip.

In addition to the uncertainty, appearances dried up when the COVID-19 pandemic hit.

“Many of my colleagues and I have resorted to the delivery of groceries, packages or odd jobs (during the breaker phase),” he said.

“I only focused on the first day. Retirement had to take a back seat for a while because I had to make sure I had enough money to even pay my bills. ”

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Mr. Yip’s experience is not uncommon among full-time freelancers and self-employed people. They make up a growing part of the workforce.

Last year, Singapore had an estimated 190,900 such “primary in-house employees” – a 9 percent increase from 174,800 in 2019, according to the Department of Labor’s Labor Force Survey.

“Retirement planning in a world where you’ve got lifelong employment, employers have done you really well, and retirement plans that cover the rest of your life … that’s clearly gone,” said Christopher Gee, senior research fellow at the Institute of Policy Studies (IPS).

“Worse still, when the flow of payments is not regular, you get ad hoc payments, lump sums … all of this volatility in revenue puts gig workers under a great obligation to be disciplined enough and have the will to set them aside to put this certain amount, “he added.


With job insecurity growing in this group, there are a few steps that workers can take to ensure that retirement savings are not neglected.

First, the self-employed should aim to set up an emergency fund that can cover their living expenses for at least six months, said Raymond Ng, vice president of the Association of Financial Advisors (Singapore).

The next step is to get insurance to protect one from short-term financial difficulties that can affect long-term financial goals, he said.

This is vital for freelancers as they miss out on employee benefits like health insurance and CPF contributions.

“Let’s say for a delivery driver: If he gets into an accident, maybe a week or two without being able to work, it will affect his income. He also bears the medical costs, ”said Ng.

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He added that if an employee is financially tight, the insurance plan doesn’t have to be “very comprehensive”, but health insurance is key. If possible, freelancers can also consider income replacement or disability insurance.

“With all of this you can start setting goals for a retirement plan. You have to have certain parameters, ”said Ng.

This includes whether they want to retire in whole or in part, what their core costs would be, and what type of lifestyle they want to lead after retirement.

He also advised self-employed people to contribute to their own CPF accounts. An alternative would be to look at what private insurers can offer, he said.

Ultimately, Mr. Ng emphasized that the key principle of retirement planning is to start early.

“The compound effect is very important … start late and you may have trouble creating the same fund (that you would have if you started earlier).”


Ms. Azurah Jan Che Onn Azahar, a 29-year-old freelance audio content creator, agreed that it is important to start early. For this reason, she would like to have a more formal training in retirement provision as a freelancer.

Ms. Azurah, who is also a music educator, said she was taught the business aspect of the music industry in school, but she had to learn how to manage finances herself.

“It was pure due diligence, research and questions because that’s new to me. And I’m sure other freelancers (can) relate to it because we’re not being taught, “she said.

One of their projects, The Freelancers Academy, now aims to provide information to other freelancers in the industry. This includes, for example, the content of how freelancers should protect themselves from loss of income.

“When you’re young, freelance work is a joy … but if you don’t know how to save, where to put your money, it will bite you later in life.

“I’ve met freelancers who are looking into this right now. So when you’re in the industry, you learn from other people’s mistakes,” she said.

READ: Comment: The late payment curse that plagues freelancers

Mr. Yip agrees that more could be done to formalize such training on financial planning as a freelancer.

“Most of us, especially my age, already know the importance of savings …But I think (it’s about educating us about it) how we can do that. “

In particular, Mr. Yip said greater efforts could be made to teach this segment of the workforce to invest as “freelance life is very fragile” and this could help provide them with some protection.

Ultimately, successful retirement planning boils down to self-discipline, Ms. Azurah said, adding that there is a responsibility to follow the freelance path.

Mr Gee from IPS also said that while financial planning is an easy concept to talk about, it is difficult to respond to.

“The reality is that many workers will have difficulty doing this themselves. The ideal is that we adapt our current institutions to this group of workers, ”he said.

“Whatever platform they use to find work … like Grab, Gojek,You need to be able to link CPF accounts to this platform and accept constant instruction, ”Gee added.

He also suggested making the systems more flexible so that an amount of money cannot be passed on to CPF until an earnings threshold is reached, for example reassuring workers that they will have enough to cover their living costs first.


In response to CNA’s questions about how policy can accommodate this group of workers, the CPF board of directors said the self-employed (SEP) percentage of the Singapore workforce had “remained stable” between 8 and 10 percent over the past decade .

SEPs currently have to deposit part of their income into their MediSave account every year in order to save for their health needs.

To further facilitate contributions for this group, the government began piloting the CAYE (Contribute-as-you-Earn) program early last year. Under this system, government agencies that pay SEPs deposit a portion of the payment into the person’s MediSave account.

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“This simplifies the process for SEPs as MediSave contributions are made on their behalf as soon as they earn and the time lag between earning and contributing is minimized,” the report said.

The government provided dollar-for-dollar reconciliation for contributions under the program last year. By the end of March, 2,253 SEPs had made MediSave contributions of around S $ 0.6 million as part of the CAYE pilot project.

“In addition to saving for their health needs, SEPs, like other workers, also need to save for their retirement. We hope that you can make a conscious effort to contribute regularly to your CPF. “

An easy way to do this is to sign up for GIRO plans to make regular contributions to their special or retirement account, said the CPF board of directors.

It added that SEPs under the age of 55 can receive “attractive rates of up to 5 percent” while SEPs aged 55 and over can receive interest rates of up to 6 percent.

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“If they do this early and regularly, their CPF savings can grow significantly over time to help boost their retirement savings. You could also get tax savings by topping up, ”said the CPF board of directors.

In addition, eligible SEPs aged 55 to 70 can benefit from the new Matched Retirement Savings Scheme (MRSS) launched last month.

With this system, the government will provide dollar-for-dollar reconciliation for the topping up of cash into retirement accounts, capped at S $ 600 per year for the next five years.

March 31, 2021