- Singaporean families with young children are getting more support and financial benefits, as part of changes announced in Budget 2023.
- Key measures for parents include: a $3,000 increase in the Baby Bonus Cash Gift, more contributions to the Child Development Account (CDA), and four-week government-paid paternity leave.
- Lower- to middle-income working mothers will also benefit from the change in the Working Mother’s Child Relief to a fixed-dollar amount, from a percentage of earned income.
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Budget 2023 measures to help families and parents-to-be
Planning to start a family or have more kids? The Singapore government is offering more help to better support parents with the costs of raising their children.
There is already “a generous set of measures” such as the Baby Bonus Scheme, significant preschool and education subsidies, and tax benefits like the Parenthood Tax Rebate, Deputy Prime Minister (DPM) and Finance Minister Lawrence Wong, said in his Budget 2023 statement on 14 Feb.
But some of these schemes need to be adjusted, to ensure that parents who have greater needs can receive more support.
“To all young married couples: whether you already have a newborn, or you are expecting a baby, or plan to have a baby, we have something to help you in your parenthood journey,” DPM Wong said in his speech.
Here’s a look at the latest announcements — including cash gifts, tax relief, and parental leave — targeted at parents-to-be and families with kids in their early years.
Baby Bonus goes up by $3,000
All eligible Singaporean children born on or after 14 Feb 2023 will get $3,000 more in the Baby Bonus Cash Gift.
That means the first-born and second-born kids will receive $11,000, up from $8,000 currently. For the third child onwards, the cash gift is going up to $13,000, from $10,000.
From early 2024, the Baby Bonus money will also be paid out over a longer period of time, every six months, until the child turns six-and-a-half years old. This is so that parents can receive continuous support until their kid enters primary school.
Currently, it is disbursed in five instalments over the baby’s first 18 months, to help defray child-raising costs during infancy.
With the new disbursement schedule, parents will receive up to $9,000 in payouts in the first 18 months of the child’s life, as well as $400 every six months starting from when the child is two until they turn six-and-a-half years old.
Changes to the Baby Bonus Cash Gift
Current and new disbursement schedules and quantums of the Baby Bonus, for children born on or after 14 Feb 2023.
Child Development Account: $5,000 grant, higher co-matching cap
The Child Development Account (CDA) is a special savings account for Singaporean children. Parents can use this money to directly offset preschool and healthcare expenses. When a CDA is opened, the First Step Grant is automatically credited. For subsequent savings, the government does dollar-for-dollar co-matching when parents deposit money into the CDA, up to a cap.
The First Step Grant will be increased from $3,000 to $5,000, as DPM Wong announced in the Budget 2023 statement.
The government co-matching cap for the CDA will also be increased by $1,000 for the first and second children. That means the cap will be $4,000 for the first child (up from $3,000 currently), and $7,000 for the second child (up from $6,000 currently). The co-matching caps for subsequent kids remain unchanged — third and fourth children will continue to get up to $9,000 in matching funds from the government, and fifth and subsequent children can receive up to $15,000.
These changes, to the grant and the co-matching cap, will apply to kids born on or after 14 Feb 2023, and will be implemented from early 2024. Parents will be notified when they can make the additional deposits into their children’s CDA to enjoy the increased government co-matching.
More funds going into the Child Development Account
CDA changes for children born on or after 14 Feb 2023
Working Mother’s Child Relief: fixed amount
The Working Mother’s Child Relief (WMCR) is a tax benefit to encourage women to continue working after they are married and have given birth.
Currently, the tax relief is calculated as a percentage of the mother’s earned income. But this will be changed to a fixed-dollar amount — which essentially gives more government support to lower- and middle-income working mothers.
With this change, women will be claiming the same amount of tax relief in the same child order: $8,000 for her first child, $10,000 for her second child, and $12,000 for the third and subsequent child.
This will apply to working mothers with Singaporean children born or adopted from 1 Jan 2024. It will take effect from the Year of Assessment 2025 — that is, income earned in 2024.
Working Mother’s Child Relief amounts
An eligible working mother can receive these WMCR tax relief amounts depending on whether her Singaporean child was born or adopted before 1 Jan 2024, or from 1 Jan 2024.
Note that the total WMCR amount that a working mother can claim for all her children will remain capped at 100% of the mother’s earned income for the Year of Assessment.
Extended $3,000 Baby Support Grant
At the height of the Covid-19 pandemic, the Singapore government had provided a one-off Baby Support Grant (BSG) of $3,000. This was for children born from 1 Oct 2020 to 30 Sep 2022. The cash payout was meant to ease parents’ financial concerns about raising a child during the pandemic and to encourage couples to proceed with their parenthood plans.
The grant will be extended to also cover eligible babies born from 1 Oct 2022 to 13 Feb 2023. It will be disbursed from the second half of 2023.
More paternity leave and unpaid infant care leave
Parents of infants will get more leave provisions:
- Government-paid paternity leave: This will be doubled from two weeks to four weeks, for eligible working fathers of Singaporean children born on or after 1 Jan 2024.
- Unpaid infant care leave: This will be increased from six days per year to 12 days per year, for each parent during the child’s first two years. It will apply from 1 Jan 2024 onwards for working parents with Singaporean children under two years old.
The extra two weeks of paternity leave will initially be given on a voluntary basis. But it will be reviewed and eventually made mandatory.
Self-employed persons who have been in a particular business, trade, profession, or vocation for a continuous period of at least three months before their Singaporen child is born are also eligible.
“With the doubling of paternity leave, I hope the message is clear: we want paternal involvement to be the norm in our society, and we will stand behind all our fathers who want to play a bigger role in raising our children,” DPM Wong said.
Taken together, these changes will increase parental leave for a working couple from 22 weeks to up to 26 weeks in their child’s first year.
Mothers get more bandwidth to care for their finances
The slew of support measures for mothers can hopefully create more bandwidth for women to plan and take care of their own finances.
Data shows that across older age groups, women tend to have far lower Central Provident Fund (CPF) account balances than men. This is why there is room for women to consider investing their CPF Ordinary Account (OA) savings.
Our data shows that women generally invest less often compared with men, but also redeem less often. Women take a longer-term approach to investing and embrace a more holistic view when it comes to financial planning. They focus on goal-based investing rather than just short-term performance, especially when they need to plan for a longer life compared with men.
This explains why women are less focused on short-term trading and timing the market. It also means they want time to better understand the risk-reward trade-offs and how the investments relate to achieving their goals.
Endowus hopes to empower more women to take care of their own finances, in whichever life stage they may be at. To learn more, explore our curated section of investing articles dedicated to women. To get started with Endowus, click here.
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