Baby Bonus, Baby Support Grant, and CDA: How Much will Parents Receive in 2021?
For many young couples in Singapore, starting a family can be a daunting prospect. Not only does it signal a change in life stage for the couple, it also brings emotional, physical and, of course, financial challenges.
For starters, prenatal expenses alone can range from $800 to $1,500 for a basic package. Delivery packages start at about $1,000 for normal delivery, and can easily exceed $10,000, depending on the choice of hospital and what medical procedures are required.
Once your baby is born, you can expect to spend about $15,000 in the first year alone. This includes everyday needs from formula milk and diapers, to big ticket items such as baby cots and strollers. If you and your spouse also choose to be a dual-income household, then there’s infant care programmes, nanny services and/or domestic helpers to consider.
As your child grows, other expenditures come into play, such as childcare and of course, education. And all this doesn’t even take into account potential paediatric medical bills or other rainy-day situations.
Thankfully, there are various government schemes available that can help to defray some costs such as the MediSave Maternity Package and the Baby Bonus Scheme, which comprises a Cash Gift and the Child Development Account. On top of that, to provide couples with greater assurance amidst the COVID-19 pandemic, children born between 1 October 2020 and 30 September 2022 can receive the new Baby Support Grant.
Here’s a breakdown of how much parents can receive from the Baby Bonus Scheme.
The Baby Bonus Scheme in 2021
The Baby Bonus is designed to support couples to have more children by reducing their financial load. It’s made up of two major components:
1. Cash Gift
The Baby Bonus Cash Gift is exactly that – money that you can use however you like, be it to pay for diapers or save up for the future.
For children born on or after 1 January 2015, you’ll receive a total of $8,000 each for the first and second child, and $10,000 each for the third and subsequent child. The Cash Gift is disbursed in five instalments over 18 months.
The following infographic shows the schedule of the Cash Gift's instalments:
2. Child Development Account (CDA)
The Child Development Account is a special savings account for children that you can use to pay for your child’s educational and healthcare expenses at selected institutions.
For children born on or after 24 March 2016, the CDA First Step grant of $3,000 kick starts the account. Then the government will match every dollar you deposit (up to specified contribution caps) in the account until your child is 12 years old.
The following infographic explains the CDA benefits in a nutshell:
3. Baby Support Grant (BSG)
Deciding when to start or expand a family has always been tricky. With a global pandemic and economic uncertainties in the mix, it’s easy to see why many couples might delay parenthood until there are fewer risks.
To help reassure couples to proceed with their family plans, the government announced a one-off Baby Support Grant (BSG) worth $3,000 for eligible parents of Singaporean children born from 1 October 2020 to 30 September 2022. You will receive it in your child’s CDA account from 1 April 2021 or within one month of enrolling into the Baby Bonus scheme, whichever comes later.
How much can parents expect to receive through the Baby Bonus Scheme and Baby Support Grant?
Depending on the birth order of your child, this is how much you can expect to receive the following amounts through the Baby Bonus Scheme and Baby Support Grant:
Total financial support for your 1st child: up to $17,000
For your firstborn, you can expect to receive as much as $17,000 per child if you are eligible for the Baby Support Grant.
Total financial support for your 2nd child: up to $20,000
For your second child, you can expect to receive as much as $20,000 per child with the new CDA dollar-for-dollar enhancement.
Total Baby Bonus payout for your 3rd and 4th child: up to $25,000
Raising multiple children doesn’t have to place a huge strain on your family’s finances. For your 3rd and 4th child, the government will provide up to $25,000 per child.
Total Baby Bonus payout for your 5th child onwards: up to $31,000
Large families may be rare in 2021, but families with 5 or more children receive support too. For your fifth child and any children thereafter, you can receive up to $31,000 per child.
Am I eligible for the Baby Bonus and Baby Support Grant?
There are only two eligibility requirements for the Baby Bonus Cash Gift:
The child must be a Singaporean Citizen
The parents must be lawfully married
This means that single parents cannot receive the cash gift. However, their children still get their CDA with the $3,000 First Step Grant and dollar-for-dollar matching.
Similarly, parents must also be lawfully married to be eligible for the Baby Support Grant.
How to apply for the Baby Bonus Scheme and receive Baby Support Grant
There’s no need to apply for the Baby Support Grant. Parents who qualify for the Baby Bonus Cash Gift automatically qualify for it if your child is born between 1 Oct 2020 and 30 Sep 2022.
Applying for the Baby Bonus Scheme is a straightforward process. Here’s how to do it:
Step 1: Prepare the necessary documents
You will be asked to upload some documents when you enrol in the scheme. Make sure your paperwork is ready:
A valid marriage certificate
Bank Account Holder’s account details for the cash gift
Personal particulars of the Bank Account Holder and CDA Trustee, if they are not the child’s parent
Your child’s birth certificate (only if married overseas)
Step 2: Enrol in the Baby Bonus Scheme
You can start enrolling for the Baby Bonus Scheme as early as 8 weeks before your due date. The enrolment form can be accomplished online.
Step 3: Register your baby’s birth
Once your baby’s birth is registered, a CDA account will be automatically opened within 3-5 working days.
If your child’s certified Estimated Date of Delivery (EDD) was 1 October 2020 but was born earlier than this, you can still receive the Baby Support Grant. Simply email a scanned copy of your child’s doctor-certified EDD to firstname.lastname@example.org for their consideration. The document should contain:
The Estimated Date of Delivery
The Mother’s Name and IC number
Name of clinic
It’s that simple! Once the application is complete, you can expect to receive the first instalment of the Baby Bonus Cash Gift within 7 to 10 working days after your child’s birth. The Baby Support Grant will be deposited from 1 April 2021 or within 1 month of your enrolment into the Baby Bonus Scheme, whichever comes later.
Your child’s CDA will also be automatically opened within 3 to 5 working days at your bank of choice, with the CDA First Step grant deposited within the subsequent 2 weeks.
If you need help, you can call the Baby Bonus hotline at 1800-253-7707, visit www.babybonus.msf.gov.sg, or approach the Baby Bonus One-Stop Centres at your hospital’s birth registration counter.
Putting CDA funds to good use
Now that you know how much your child will be getting, the natural questions that follow are: what exactly can we use the CDA funds for and how can we best utilise it? Some of the answers might surprise you! Do note that CDA funds can only be used at Baby Bonus-approved institutions.
Childcare and Preschool Education
While Government subsidies are available to offset preschool fees, it is still worthwhile for parents to top up their CDA and use it to pay for the out-of-pocket fees after subsidies. After all, you’d technically only be paying half the fees since the government matches your CDA contributions dollar-for-dollar.
This extends to early intervention programmes and special education schools. You can also tap on CDA funds to purchase assistive technology devices that your child might need. These include items ranging from hearing aids to mobility aids such as crutches and wheelchairs.
One of the best ways to utilise the CDA is to purchase a MediSave-approved plan for your child. Getting full coverage at an early age means they will continue to be covered against any future conditions that may develop. Most parents use their child’s MediSave to pay for the premiums, but did you know that while funds in the CDA only earn up to 2 per cent per annum, your child’s MediSave account accrues an interest of 4%? In other words, you should save their MediSave funds and tap on their CDA instead!
Remember to check with your insurer before making your application, as not all plans can be paid for using your child’s CDA.
Did you know your child’s hospital and outpatient expenses can also be paid using their CDA? Of course, if you have already purchased health insurance that covers hospitalisation, you won’t have to worry too much. Still, every child catches the occasional flu bug or two, and even the healthiest child needs their vaccinations. Again, why not use CDA instead of MediSave to pay for these?
Other Healthcare-related Purchases
Perhaps the least expected way of using CDA funds is to purchase everyday items such as health supplements and spectacles! Be sure to find out which pharmacies and optical shops make the list of approved institutions first.
The above tips should help you maximise the funds in your child’s CDA. But don’t worry, even if you don’t use up all the funds, they won’t go to waste.
Funds not used by the end of the year that your child turns 12 years old will be transferred to your child’s Post-Secondary Education Account (PSEA), subject to a cap.
Parents who have not saved up to the CDA Government co-matching cap can continue to contribute to the PSEA and receive the Government’s matching grant until the cap is reached, or when the child turns 18 years old, whichever is earlier. Eventually, any funds that remain in the PSEA at the middle of the year that your child turns 31 years old, will get transferred to their CPF Ordinary Account. You can also opt to transfer the balance to the child’s sibling’s existing PSEA.
If you're a mum- or dad-to-be, learn more about how to reconfigure your finances to suit your growing family today.
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income insurance advisor.
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