Singapore Budget 2016: Parents to get $3,000 in Child Development Account of babies born from March 24

Parents of babies born from March 24 onwards will get $3,000 upfront into their child's Child Development Account.
Parents of babies born from March 24 onwards will get $3,000 upfront into their child's Child Development Account.PHOTO: ST FILE

SINGAPORE - Parents of babies born from Thursday (March 24) onwards will get $3,000 upfront into their child's Child Development Account (CDA) under the new First Step Grant.

Envisioning a Singapore that is a "great place to raise a family", Finance Minister Heng Swee Keat kicked off the social portion of his Budget speech in Parliament on Thursday (March 24) by announcing measures about caring for the young.

They include:

-the Child Development Account (CDA) First Step Grant;

-new pilot initiative KidStart, for young children who need support;

-the Fresh Start Housing Scheme will provide a grant of up to $35,000 for families with young children in rental housing.

First, under the First Step Grant, parents of babies born from Thursday onwards will get $3,000 upfront into their child's CDA.

Under the Baby Bonus Scheme, the Government currently matches, up to a ceiling, parents' deposits into their children's CDA, a special savings account whose funds can be used at approved institutions to pay for childcare fees, medical expenses and more.

 

That ceiling is $6,000 for a first or second child, $12,000 for a third or fourth child and $18,000 for any subsequent children.

A one-off CDA top-up of either $300 or $600 was announced at last year's Budget for babies born between Jan 1, 2009, and Dec 31, 2015.

The First Step Grant will give $3,000 to eligible Singaporean children born from March 24, Mr Heng said, without parents having to contribute anything first.

"This will apply to eligible babies born from today," Mr Heng said to laughter from those in attendance. "I'm told that on average last year we have 93 babies born every day. So, congratulations to our 93 babies."

The amount will count towards the existing caps, meaning first-time parents who receive the grant and then save $3,000 to their child's CDA will hit the $6,000 co-savings ceiling.

They will then have $9,000 in their child's CDA, compared to $6,000 from an identical savings before the grant.


GRAPHIC: MSF

 

However, while children born from Thursday are eligible, the money will only be deposited from July 1, when necessary updates to systems are completed.

Parents of babies born between Thursday and June 30 should wait until July 1 before saving into the CDA.

Those who choose to save to the CDA before July 1 will not be eligible for the grant.

Mr Heng also announced that the Medisave withdrawal limit for pre-delivery medical expenses will be doubled from $450 to $900 with immediate effect.

Senior Minister of State Josephine Teo, who oversees population matters, will elaborate on other measures at the Committee of Supply debate, he added.

In a Facebook post, Minister for Social and Family Development Tan Chuan-Jin said that he will be at KK Women's and Children's Hospital on Friday (March 25) to share the announcement with new parents.

Ms Teo said in a Facebook post on Thursday evening that the First Step Grant will help an estimated 74 per cent of CDA holders maximise the government contribution caps, up from the current 60 per cent who do so.

About 5 per cent of CDA holders today do not save into the accounts at all, “perhaps because they are unable to do so”.

“The $3,000 grant will be particularly helpful for this group of parents and their children,” she added.

Also announced was a new pilot initiative to help parents who may need support in giving their children a good start in life.

KidStart, meant for kids up to six, will use government and community resources to help such children receive learning, developmental and health support.

Research shows that a child's early life experiences significantly influence their physical, cognitive and social development, Mr Heng said.

The programme will cost more than $20 million and benefit about 1,000 children - a cost of roughly $20,000 a child.

Finally, the Fresh Start Housing Scheme, first announced by Prime Minister Lee Hsien Loong at last year's National Day Rally, will help families with children living in rental housing. Some had previously bought a flat, but sold it and moved into public rental flats, making them not eligible for first-timer housing grants.

"For those who are determined to work hard to own a home again, we want to give them a fresh start," Mr Heng said.

To that end, the scheme will provide a grant of up to $35,000 for these families with young children to own a two-room flat with a shorter lease.

However, these families must demonstrate effort, he added. For example, they must stay employed and make sure their children attend school.