Last Updated on June 26, 2023 by Parentology

The Child Development Account is one of the primary benefits of the Baby Bonus Scheme and is essentially a bank account specifically dedicated to your child’s educational and healthcare needs. Due to the nature of the account and where it comes from, many potential parents are often a little confused about how to manage it; that is what this article will attempt to cover.

 

CDA Basics

The Child Development Account is opened when you register your child for the Baby Bonus Scheme – if you pre-registered for it, it will open when your child is born; if you registered for it after your child is born, it will be opened within a few weeks from registration. You open the account via Baby Bonus Online as you register for the scheme, not with the bank itself, and when it has been set up you will receive the NETS card (pre-activated, no action needed) attached to the Child Development Account in a few days. You can, however, select the bank you prefer while filling out the application.

Do note that the different banks (DBS, UOB, OCBC) do provide additional benefits for opening accounts with them; you may want to check with the respective banks what those benefits look like, and which ones you prefer. You are able to change the bank that holds your accounts later on, but that will certainly mean giving up the benefits that come with the prior bank.

In order to open the account, you will be asked to nominate people for two roles (the same person can occupy both roles): the first role is as the CDA trustee. This is the person who holds the NETS card that has access to the Child Development Account and therefore its funds and needs to be at least 18 and not bankrupt. This minimum age is due to the fact that the CDA trustee will be the person in charge of the child’s bank account, and also because 18 is the minimum age to open and manage a bank account.

The CDA trustee is generally the person who is the direct caregiver of the child. The second person is the nominated bank account holder. This person will provide their bank account information for any non-CDA cash gifts (e.g. the original Baby Bonus cash gift provided when the child is first born or registered), and this is the account into which the money is credited. As mentioned, both the CDA trustee and the nominated bank account holder can be the same person or different people. The applicant may also nominate themself.

Direct family members (e.g. your spouse) that are appointed will receive an email instructing them to agree to the terms and conditions of becoming a trustee. However, when appointing foreigners or third parties (e.g. grandparents, other caregivers) as CDA trustees and bank account holders, the third party may be sent an authorisation letter from MSF before they will need to go to any one of the banks to open a bank account. The reason why foreigners and third parties will need to go to the bank while everyone else can do it online is because the particulars of most foreigners and third parties would not be included in the MSF records, and thus will need to be verified by the bank.

Upon opening the account, you are credited with the First Step Grant – a $3,000 one-time cash gift for simply opening the account in the first place. This amount is sent to the CDA within 2 weeks of opening. You do not need to provide an initial deposit or maintain a minimum balance in the CDA after opening; there will also not be any fees associated with the account even if the balance maintains at zero. MSF does encourage savings in the account, however, as in addition to the cash gift they also co-match every dollar you save in the account (up to a cap). This co-matching amount will also be provided to the account within 2 weeks of the deposit from your end.

You can check for your child’s eligibility on the Baby Bonus Online portal using the ‘Check Eligibility’ tool, which takes into account your and your child’s citizenship, their birth order, and other relevant details.

 

Using the Child Development Account

The CDA can be used with Approved Institutions (AIs) in Singapore in the education and healthcare industries; money can be spent with them to ensure that your child has their needs fulfilled in both of these aspects, either via regular NETS or via GIRO arrangements.

You can use the CDA to pay for certain insurance, but it is limited to paying for premiums for MediSave-approved Integrated Shield Plans. Unfortunately, you will not be able to use the CDA to pay for riders, which are not part of the ISPs and do not meet MediSave requirements for CDA usage.

As CDAs are generally managed by the banks, you will be able to view all information related to the CDA by using the bank’s digital interfaces on the website and the app. The banks will also update MSF about any deposits every week; subsequently, if you are still eligible for government co-matching, the co-matching amount will then be credited to your CDA within 2 weeks. You should be able to view updated statements every Tuesday on the Baby Bonus Online portal on top of the regular internet banking services provided by your selected bank.

It is possible to use the online banking interfaces and most of the internet banking features with the CDA account, including PayNow. To register or de-link the CDA account you may go through the phone applications; since this is related to the bank features, you will not be able to use Baby Bonus Online.

If you have multiple bank accounts with the CDA bank, you may want to keep track of which account is the CDA account, as only deposits in the correct account will qualify for government co-matching benefits. You can check this information on Baby Bonus Online.

To prevent misuse, you will not be able to transfer the money out of the CDA into another child’s CDA (you can use the CDA for the child’s siblings, however) or a non-AI bank account. You would also not be able to close the account and withdraw the money. The CDA will be closed automatically in the year that your child turns 12, on the 31st of December. A new account is then opened, called the Post-Secondary Education Account (PSEA), and a certain amount of the funds previously in the CDA will be automatically transferred to the PSEA. Any excess from this transfer will be refunded to the nominated bank account that is listed in your profile on Baby Bonus Online. At this point, if you have not met the government co-matching cap, it will continue with the PSEA account until the cap is met as well.

Due to the inability to withdraw cash, any accidental deposits will need to go through an appeal via MSF – you will need to email msf_babybonus@msf.gov.sg and explain your situation; at this point, your appeal will be considered on a case by case basis.

 

Changing the CDA trustee, names

 

CDA trustee

If you have previously assigned one person to be a CDA trustee, but need to update it to a different person, the default would be to go onto Baby Bonus Online to get the prior trustee to approve the change to a new person. Log in to Baby Bonus Online, select ‘View/Update My Baby Bonus Details’ and then click on ‘Request to Change CDA Trustee’ before completing the form and submitting it. This is applicable in cases of divorce, or in cases of your spouse’s passing.

In other cases where the trustee is not contactable, you may need to email MSF at msf_babybonus@msf.gov.sg. Indicate your request in the subject matter (e.g. “CDA Trustee/Cash Gift Bank Account Holder Change”) and include your details.

In cases where you have been legally assigned custody, care and control, or care and control of a child, and where you would like to update the CDA trustee to yourself, you will also need to email them. This time, include a copy of the court order for care and control, and you will be provided with a form to complete and submit. Once submitted, you will then agree to the terms and conditions and it will be processed. The new NETS card will then be sent to the new trustee’s registered address once approved.

 

Names

If the names of anyone relevant to the Baby Bonus Scheme have been changed (parents, third parties, nominated bank account holders, CDA trustees, the child themself), you will need to email msf_babybonus@msf.gov.sg with the Deed Pool or Certificate of Extract from the Registry of Births to update the changes with MSF. As the bank is a separate entity, you will also need to notify your CDA bank separately according to their guidelines – generally, it is sufficient to visit a bank branch with the Deed Poll or Certificate.

There are no penalties or fees charged for any changes made to the details relating to the account. However, if your CDA is linked to any fixed or time deposit accounts (e.g. GIRO arrangements) and any changes that affect them cause a missed payment, you may be penalised. Should you make any significant changes, do ensure that these arrangements can continue to be upheld. These penalties cannot be deducted from the CDA; you will need to pay for them separately.

 

For any banking-related issues:

DBS Bank	Tel: 1800 339 6666 Website: www.dbs.com.sg
OCBC Bank	Tel: 1800 438 6088 Website: www.ocbc.com/babybonus
UOB	Tel: 1800 222 2121 Website: www.uob.com.sg
MSF Baby Bonus	Tel: 1800 111 2222 Email: msf_babybonus@msf.gov.sg
Baby Bonus NETS Service	Sales & Customer Service Centre Tel: 6274 1212 Website: www.nets.com.sg

 

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Whether it’s maximizing the benefits of the Child Development Account, planning for your child’s education, or securing your family’s financial future, our advisor is here to help. Contact us today for a personalized consultation and take the first step towards a secure and prosperous future for your family.