This article was originally written on 27 Aug 2015 but has been updated to include additional 1 week paternity leave that was announced by Parliament yesterday.
Baby bonus is an incentive introduced by the Singapore government to encourage parents to have more children. Currently, the total fertility (TFR) rate per female in 2014 was just 1.25 when the desired ratio is 2.1.
The baby bonus is not automatic and requires parents to take some action to enjoy it. The Baby Bonus scheme was first introduced in April 2001 and has gone through various enhancements.
This article summarise all the baby bonus schemes and as well as all the incentives which encourage Singaporean couples to have more children. It also list down what young parents must do in order not to miss out these baby bonus incentives.
Cash Gifts Baby Bonus
For children born on or after 26 August 2012, there is a cash gift of $6,000 for 1st and and 2nd child. There is a $8,000 for 3rd and 4th child.
For children born on or after 1 January 2015, there is the cash gift is $8,000 for 1st child. For 2nd child it is $10,000. From 3rd child and subsequent children (i.e. unlimited), the cash gift is $10,000 for each child.
Since this baby bonus is in the form of cash, you can do anything you like with this baby bonus cash incentive!
How to join receive the baby bonus cash gift: Login using your SingPass and fill up the online form HERE.
$1 for $1 co-matching saving scheme (CDA)
Another baby bonus is the CDA account which took effect from 1 August 2001. CDA stands for Child Development Account. This is a saving account managed by various banks. Currently banks authorise to open CDA account are DBS Bank, OCBC and UOB.
To obtain your baby bonus through the CDA account, you will need to contribute cash into this account.
|Order of child||Your contribution $||Government’s contribution (maximum) $|
|5th and above||18,000||18,000|
The CDA account can be used for child care, kindergartens, medical and payment of private integrated shield plans (IPs). As for IPs, most if not all of the insurers no longer accept payment of the IPs due to poor take-up rate.
How to open a CDA account? You will need to login to: HERE, select “Services Login” with SingPass and click “Opening of CDA”.
It is important to note that the CDA account is a trust account –meaning monies in the CDA is NOT the property of the parents. In fact, the monies in the account belong to the child. Read: What will happen to the Child Development Account (CDA) when parent die?
Medisave Grant is a form of “baby bonus” in the sense Medisave monies are given to your children.
Children born between 26 August 2012 and before 1 January 2015 qualify for $3000 in Medisave Grant.
For children born on and after 1 January 2015, the Medisave Grant is $4000.
The Medisave Grant is deposited into the child’s CPF Medisave account and can be used for medical and payment of Medishield and as well as Private Integrated Shield Plans.
How to receive the Medisave Grant: No action required as the grant is given automatically. Parents will receive a letter from CPF within 2 months.
How to use child’s Medisave to pay insurance: Consult your financial adviser on the procedure.
Maternity leave (or cash equivalent for self-employed)
Working mothers enjoy 16 weeks of maternity leave.
The ability to enjoy 16 weeks of maternity leave is not exactly a baby bonus but the government does pay for some or all of the cost of maternity leave. For the first two confinements, the government pays for the 8 weeks of the confinement. For third and subsequent confinements, the government pays the entire 16 weeks.
Note that “working mothers” also include self-employed individuals if they incurred loss of income during the maternity leave period. I believe many tuition teachers and insurance agents are not aware that they can be compensated by the government in this way.
How to enjoy the maternity leave: You need to apply through your employer.
For self-employed, you can claim your maternity leave capped at $10,000 per 4 weeks and is calculated based on your Notice of Assessment from the IRAS. The claim website is HERE.
Paternity Leave (or cash equivalent for self-employed)
Working fathers enjoy 1 week of government-paid paternity leave. It is mandatory for employers to provide this leave.
With effect from 1 January 2015, employers can voluntary grant an additional 1 week paternity leave. This is also fully paid by the government. However, with effect from 1 January 2017, employers are legally required to provide this additional 1 week paternity leave.
Again, it is not exactly a baby bonus since there is no cash receive but the government does pay to the employer for the paternity leave.
Paternity leave is also applicable for self-employed individuals if they incurred loss of income during the paternity leave period. So for self-employed individuals, they do get cash and that is really a baby bonus!
How to apply paternity leave: You have to apply through your employer.
For self-employed, here is an online demo on how to apply for paternity leave HERE (ie. how to get cash like the baby bonus!).
Child Care Leave (or cash equivalent for self-employed)
A working parent whose child is a Singapore citizen, below 7 years old and has worked continuously for 3 months is entitled to 6 days per year of childcare leave. 3 days of these child care leave is paid by the government.
How to apply: Via your employer.
For self-employed, here is the online demo on how to apply Child Care Leave HERE (i.e. how to get 3 days’ worth of cash like a baby bonus!)
Extended Child Care Leave (or cash equivalent for self-employed)
A working parent is entitled to 2 days child care leave if the child is a Singapore citizen, between 7 and 12 years old and the parent worked continuously for 3 months. The entire 2 days are paid by the government.
How to apply: Via your employer.
For self-employed, here is the online demo on how to apply Child Care Leave HERE (i.e. how to get 2 days’ worth of cash!)
Infant Care Leave
A working parent is entitled to 6 days of unpaid infant care leave a year if the child is a Singapore citizen. This is not an incentive actually because it is not difficult to take no-pay leave from employer anyway. Definitely nothing to do with baby bonus.
Subsidies For Centre-Based Infant Care And Child Care (Basic)
Singapore citizen children gets $600 and $300 a month of subsidy for infant and child care respectively.
How to apply: Via the infant / child care center.
Subsidies For Centre-Based Infant Care And Child Care (Additional)
This Additional Subsidy for infant and childcare requires the mother to be working
The lower the household income and per capital income, the more subsidy - up to $540 and $440 for infant and child care respectively.
The purpose of the Additional subsidy is to help lower and middle income families although I found it to be ridiculous as the household and per capital income of a family with a non-working mother is always lower compared to another family with a working mother all things being equal.
How to apply: Via the infant / child care center.
Rent a flat while waiting for new flat (Parenthood Provisional Housing Scheme )
This scheme allows couples with child below 16 years old to rent at an affordable flat while waiting for their new flat either via the Build-to-Order (BTO) or Sale of Balance flat.
While there is no baby bonus type of incentive, the affordable housing rental is presumably below the market price (i.e. subsidised rental).
Increased chance of application of new flat (Parenthood Priority Scheme)
Under the Parenthood Priority Scheme (PPS), up to 30% of the Build-To-Order (BTO) flat supply and 50% of the Sales of Balance Flat are allocated to first-timer married couples with children below 16 or is expecting first child.
This is not a baby bonus style incentive but it is significantly increased one’s chance of having a successful application for a new flat.
Small increased chance of application of new flat (Third-Child Priority (TCP) Scheme)
If you have more than 2 children, 5% of the available supply of new flat will be set aside for TCP applicants. If you are unsuccessful for the TCP ballot, it will be balloted again under the PPS (see above).
Parenthood Tax Rebate (PTR)
Working parents is able to claim Parenthood Tax Rebate to offset their tax liabilities. The rebate amounts are $5000, $10000, $20000 for 1st, 2nd and 3rd and subsequent child respectively.
For income tax payers, the PTR is as good as cash like a baby bonus.
Qualifying Child Relief (QCR)
The tax relief for each child under the is $4000 per child.
Working Mother’s Child Relief (WMCR)
The WMCR is for working mothers and the tax relief as follows: 15% of mother’s earned income, 20% and 25% for 1st, 2nd and 3rd and subsequent child respectively.
The QCR + WMCR is capped at $50,000 per child.
The WMCR can be very large. Take for instance a working mother who has three children and assuming she does not claim QCR, the total WMCR is 15+20+25 = 60% ! It is this reason that the WMCR is more advantages to working woman with high income.
Strangely, the father is not allowed to claim WMCR. This is unlike PTR and QCR which a woman can claim from both.
Foreign Maid Levy (FML) Relief
This is a tax relief to for working woman or her husband who hires a domestic foreign worker. The tax relief is twice that of the foreign worker’s levy. A male tax payer cannot claim this relief.
Foreign Domestic Worker Levy Concession
The normal levy rate to employ a foreign domestic worker is $265 a month. But for those with Singapore citizen child or grandchild both below 16 years old living with them, the levy is only $60 a month.
Get the Case Study on Financial Planning for Young Family
There are numerous schemes and baby bonus to help lower the cost of raising a family. It is important to examine every one of them and to consider how to fully utilise them. Majority of these incentives are not automatic and require the young parent to take action. How many of these incentives have you missed out?
This is what financial planning is all about as majority of one’s financial well being requires you to take action. Sometimes no action is the worst form of action.
For young parents, there are so many other things to take care of and they are not "automatic". I have an article on an actual case on how I conduct a comprehensive financial plan for a couple with a young child. Existing subscribers to my mailing list can get the article by keying in your name and email below.
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