Our unique Singapore Baby Bonus Scheme

Someone asked me about Baby Bonus recently and I went to find out how much I will be getting from the Government. Think this is one benefit of having children in Singapore.

Let me write briefly on what this baby bonus is about and how I am planning to use it...

The Baby Bonus Scheme is designed to help families defray the costs of raising a child. It comprises a cash gift and a Child Development Account (CDA), a special co-savings scheme for children.

Enhanced Baby Bonus Cash Gift

For Singapore Citizen children born on or after 26 Aug 2012, the Baby Bonus cash gift has been enhanced as follows:

Enhanced Baby Bonus Cash Gift

Child Order	Born between 17 Aug 2008 and 25 Aug 2012 (for each child)	Born on or after 26 Aug 2012 (for each child)
1st & 2nd Child	$4,000	$6,000
3rd & 4th Child	$6,000	$8,000

Additionally, the cash gift is now disbursed more quickly. It is given out in 3 instalments over 12 months following the child’s birth (instead of 4 instalments over 18 months previously):
* 50% at birth;
* 25% when the child is 6 months old; and
* 25% when the child is 12 months old.

Baby Bonus CDA

The Baby Bonus Child Development Account (CDA) is a co-savings scheme for children, where savings deposited by parents into a special savings account called the CDA are matched dollar-for-dollar by the Government, up to a specified ceiling, as indicated below:

 

CDA Government Co-Savings Caps

Child Order	From 17 Aug 2008 onwards (for each child)
1st & 2nd Child	$6,000
3rd & 4th Child	$12,000
5th Child & beyond	$18,000

CDA savings funds can be used for child development needs at Approved Institutions registered with the Ministry of Social and Family Development (MSF). Approved uses of CDA funds include the following:

• Fees for child care centres, kindergartens, special education schools and early intervention programmes
• Medical expenses at healthcare institutions such as hospitals and GP clinics
• Premiums for MediShield or Medisave-approved private integrated plans
• Assistive devices
• Eye-related products and services at optical shops
• Approved healthcare items at pharmacies

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At this moment, for each of my kid, I am still thinking of putting in a seed fund of $19,000 together with the Cash gift of $6,000 that I'll be receiving to construct an investment portfolio meant for their future tertiary education. It means a total of $25,000 for each of my babies. In total, I must fork out $38,000 for both of them. Hopefully, I can achieve 4.5%p.a yield and by 20 years, this fund can grow to $60,000.

As for the CDA Co-Savings, I will definitely put in $6,000 for each of them in order to receive the full $6,000 from government. I will use this $12,000 for their future childcare expenses.

This means I will likely be putting aside $50,000 in total for the babies. Hopefully this year's budget report, government will give more money to have babies. Put in $50,000, broke already...