Having a baby in Singapore: Are baby grants sufficient?

Raising a child is not an easy feat – the financial commitment is very high especially in a city like Singapore.

We already know that Singapore is an ageing population. The proportion of residents aged 65 years and above has increased from 8.9% in 2010 to 13.1% in 2017, and this trend seems likely to continue as Singapore’s total fertility rate is at 1.2 (well below the 2.1 population replacement rate).

Raising a child is not an easy feat – the financial commitment is very high especially in a city like Singapore.

Read: Financial Must-Dos before your first baby

To encourage married couples to have more babies, the government has stepped in to provide a range of grants and benefits for new parents.

Grants available for Singaporeans

Baby Bonus Cash Gifts

The baby bonus scheme is specifically designed to help families cover the early costs of raising a child. It entitles new parents to a cash gift. For Singapore Citizen children born on or after 1 Jan 2015, the government will enhance the baby bonus cash gifts.

Children born on or after 1 Jan 2015:

Child Development Account    

A Child Development Account (CDA) is a special co-savings scheme for children. Parents with eligible children born on and from 24 March 2016 will receive the CDA First Step automatically after opening a CDA. This is an initial balance of $3,000 that is given by the government without parents having to save in the CDA first. Parents who continue to save beyond the initial balance will enjoy dollar-for-dollar matching by the government till the contribution caps. Parents can save till the end of the year that their child turns 12 years old.

Medisave Grant & Medishield Life

To support parents with their child’s healthcare needs, the Government is creating a Medisave account for each Singaporean new-born. All Singapore citizen babies born on and after 1 Jan 2015 will qualify for the enhanced Medisave grant of $4,000. This grant is meant to help parents defray the costs of their child’s healthcare expenses – such as the costs of recommended childhood vaccinations, hospitalisation and approved outpatient treatments.

Medishield Life is a mandatory basic health insurance that helps to pay for large hospital bills and selected outpatient treatments. All Singapore citizen babies are automatically covered by Medishield Life from birth. The premiums can be fully paid from Medisave, and parents will be able to tap on the Medisave grant for new-borns.

Tax relief & rebates

Parents are eligible to claim the Parenthood Tax Rebate (PTR) of $5,000 for their first child, $10,000 for the 2nd child and $20,000 for the 3rd and each subsequent child. Both the father and the mother may share the PTR to offset their taxable income. Any unutilised rebate can be used to offset the income tax payable in subsequent years until the rebate has been fully redeemed. There are other rebates as well such as Qualifying Child Relief, Handicapped Child Relief and Working Mother’s Child Relief.

In addition, if you’re a working mother whose parent, parent-in-law, grandparent or grandparent-in-law is looking after any of your Singapore Citizen children aged 12 years and below, you are eligible to claim the Grandparent Caregiver Relief of $3,000.

 

Good start bundle

In partnership with the Embracing PArenthood Movement, an initiative by the People’s Association (PA), NTUC and its social enterprises have put together the NTUC Good Start Bundle. These are essentials and perks that will benefit parents and their new-born babies.

The Singapore government realises that raising a child in Singapore is not cheap. Pregnancies and delivery bills can range from $4,500 to $15,000 and more. The bills do not end here – parents still need to fork out considerable amounts of money to raise their child in the first year itself. To aid new parents, the government has introduced the above grants and the baby bonus scheme in Singapore.

Finances aside, having children is still a lifelong commitment; one that needs proper planning to care, protect, nurture and raise them into good human beings. Though it may require you to plan your finances and perhaps, even to put your own needs aside, no price tag can be put on the joy of bringing a child into this world.

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