SINGAPORE - Budget 2015, delivered by Deputy Prime Minister Tharman Shanmugaratnam on Monday, features a multi-pronged approach to provide strong support for Singapore's middle class.
From raising the Central Provident Fund (CPF) salary ceiling to cutting the maid levy, many of the measures announced are aimed at helping middle-class families cope with the cost of living, further their careers and enhance their savings for retirement.
The key measures:
1. Enhanced savings for retirement
The Government will raise the CPF salary ceiling from the current $5,000 to $6,000 from next year and raise contribution rates for older workers.
Workers aged between 50 and 55 will see a 1 percentage point increase in both employer and employee contribution rates. Those between 55 and 60 will get a 1 percentage point raise in employer contribution rates.
Workers aged between 60 and 65 will get a 0.5 percentage point increase in their employer contribution rate.
The Government will also enhance CPF interest rates further in retirement to benefit those with lower balances.
The Government will give an additional 1 per cent interest on the first $30,000 in a member's CPF balances.
This will be given to all CPF members aged 55 and above, on top of the existing 1 per cent extra interest on the first $60,000 of balance, and means that they can earn up to 6 per cent interest in total.
"These are important enhancements. They will be on top of the changes recently proposed by the CPF Advisory Panel, aimed at providing more flexibility and certainty to CPF members, which the Government has accepted," Mr Tharman said.
2. Support for cost of living
The Government will halve the foreign domestic worker concessionary levy from $120 a month to $60 a month. It will also extend the concessionary levy to households with children aged below 16, up from below 12 today.
The annual savings from the reduced levy amount to $720 a year.
"These changes will provide greater support for middle-income families who are taking care of their children and elderly parents," Mr Tharman noted.
The reduction will take effect from May 1, and will benefit 144,500 households.
It will cost the Government about $125 million a year.
The Government will also provide Service & Conservancy Charges (S&CC) rebates.
One and two-room HDB households will receive a total of three months of rebates for this year, while three and four-room households will receive two months of rebates. This will cost the Government $80 million.
Furthermore, the Government will provide a Personal Income Tax Rebate of 50 per cent, with a cap of $1,000 so as to ensure that the benefits go mainly to the middle and upper-middle income groups. This will be for the Year of Assessment 2015 - that is, for income earned in 2014.
Some 1.5 million individuals will benefit from the tax rebate, which will cost the Government $717 million.
3. Supporting families with children
The Government will introduce a new Partner Operator (POP) scheme to complement the Anchor Operator (AOP) scheme. Child care operators on the scheme will have to commit to keeping fees affordable, developing their teachers and enhancing quality.
Parents will benefit from lower fees than these centres currently charge, and higher quality care.
For example, a household with median income whose child is enrolled in a centre with the median monthly fee of $900, currently pays $500 a month after receiving a subsidy of $400. If the centre comes onto the POP scheme, the household will pay around $100 less, and can look forward to quality improvements.
Currently, the AOP scheme accounts for one-third of the preschool sector, comprising both child care and kindergartens. Through a combination of the AOP and POP schemes, the Government aims for about half of pre-school children to benefit from enhanced government support for more affordable and quality pre-school by 2020.
This is estimated to cost $250 million over five years.
In addition, the Government will help families pay for pre-school fees through a top-up to the Child Development Accounts (CDAs) of every Singaporean child aged six and below this year.
Those currently without CDAs can open accounts and get the topup. The majority of children will receive $600.
The top-up will cost $126 million and benefit 230,000 children.
4. Supporting careers through new SkillsFuture scheme
The SkillsFuture scheme represents the Governments "next wave of investment in our people", Mr Tharman said.
"Through SkillsFuture, we will help Singaporeans learn at every age, and develop expertise and flair in every field. We will develop a whole array of learning options for individuals to choose as they shape their journey through life."
The Government will support this through higher subsidies and a range of awards and fellowships for those pursuing mastery in their fields.
SkillsFuture will start in schools, where students will be provided with professional education and career counselling to help them make informed choices. The Government will also support improvements to internships in Institutes of Higher Learing and give students more opportunities for international exposure.
The scheme has various components:
* SkillsFuture Credit: To help Singaporeans learn at every age, the Government is introducing a SkillFuture Credit. This is an initial credit of $500 to Singaporeans aged 25 and above, for use on work skills-related courses.
There will be top-ups at regular intervals with credits that Singaporeans can use to help pay for courses of their choice. The credits will not expire.
"There is no need for anyone to rush to use their credit. While some may use their initial $500 immediately for a short programme, others may want to accumulate credits to engage in more substantial training later in their career," Mr Tharman said.
The SkillsFuture Credit can be used for a broad range of courses supported by government agencies. These will include courses offered by local Institutes of Higher Learning and accredited education and training providers, as well as a range of courses that are funded by the Singapore Workforce Development Agency (WDA).
To complement this, every Singaporean will be given an online Individual Learning Portfolio - a one-stop education, training, and career guidance resource to help them plan their learning starting from their time in secondary school.
* SkillsFuture Earn and Learn Programme: This will match polytechnic and ITE graduates with employers. They will start working and undergo structured on-the-job training and mentorship while they study for an industry-recognised qualification.
Both trainees and employers who sign up for this programme will receive substantial support from the Government. This will be done in a phased way, eventually covering up to one in three polytechnic and ITE graduates.
* Subsidies: For Singaporeans aged 40 and above, the Government will increase the education and training subsidy to a minimum of 90 per cent for Ministry of Education and WDA courses. Currently the subsidies come in a range.
"This additional support from the Government recognises the opportunity costs that mid-career Singaporeans face when they go for education and training," Mr Tharman said.
The subsidies mean, for example, that for a part-time undergraduate course such as a Bachelor of Engineering, which is already subsidised, the total fees payable by a student will be reduced by 60 per cent, from about $17,000 to $6,800.
* Awards and Fellowships: To help Singaporeans develop skills and gain mastery in their chosen fields, a SkillsFuture Study Award will be introduced to develop specialist skills in future growth clusters.
Award recipients could include, for example, software developers, satellite engineers or master craftsmen. The awards can also support those who already have deep specialist skills and wish to develop other competencies such as business and cross-cultural skills.
The awards will be introduced in phases from this year to about 2,000 a year eventually.
Meanwhile, a SkillsFuture Fellowship will award about 100 fellowships a year, which can be used for a range of education and training options, in both craft-based and knowledge-based areas.
It will be funded from the SkillsFuture Jubilee Fund, which will be funded by voluntary contributions from employers, unions, the public and the Government.
The SkillsFuture Fellowships will be introduced from next year.
"The SkillsFuture Study Awards and Fellowships will be mainly used to develop deep skills and mastery in the growth clusters of the future. But we will be open to those who want to develop themselves in fields that they are really passionate about," Mr Tharman said.
The Government also aims to involve all stakeholders, such as training institutions, unions, trade associations and employers in this effort.
It will work with these stakeholders to jointly develop Sectoral Manpower Plans to map out skills needed for the future and boost the training capabilities of small- and medium-sized enterprises (SMEs) through a pool of SkillsFuture Mentors.