Last Updated on January 10, 2023 by Parentology
The Baby Bonus Scheme, as part of the Ministry of Social and Family Development’s Marriage and Parenthood Package, was introduced to Singapore in 2001 to encourage parents in Singapore to have more children by offsetting the financial burdens of having one. To that end, as more aspects are added to the scheme, the more difficult the scheme gets to understand over time.
This article will cover those aspects that may get a little confusing, like the difference between the cash gift and the First Step cash gift, as well as matters such as who can use the money in the Child Development Account (CDA).
CDA First Step Grant
To clarify, the Child Development Account is a part of the Baby Bonus Scheme, and the CDA First Step Grant is also a part of the CDA, and therefore a part of Baby Bonus by extension. You can think of it a little bit like this:
The First Step Grant was introduced relatively recently to encourage more parents to open the Child Development Account in the first place. In essence, it is a one-time $3,000 cash gift that is directly credited into the Child Development Account once it has been opened. There are no caveats, and you do not even need to have put any money in the account; as long as parents have opened a Child Development Account, the First Step cash will be disbursed within 2 weeks (not including any public holidays). You can check if you have received this grant in your account by checking on Baby Bonus Online via the ‘View Statement’ function, located under ‘View/Update My Baby Bonus Details’
In terms of eligibility, however, the First Step Grant’s cash gift is only available to children born on or after 24 March 2016, and who are also Singaporean Citizens (or who have become citizens). The old CDA scheme, therefore, does not have this cash grant available, so CDAs for children born before 24 March 2016 will not qualify for the gift. For children born on or after the above date, as mentioned, parents will automatically receive the grant, and then they can continue saving within the CDA to obtain the second benefit: government co-matching of every dollar saved, up to a certain cap. This cap ranges from $3,000 to $15,000 depending on the child’s birth order under the new scheme, for children born on or after 24 March 2016.
To make up for this difference, however, this cap is different from children born before: it ranges instead from $6,000 to $18,000 depending on birth order. You can check which benefits your child may be eligible for by logging into Baby Bonus Online and using the ‘Check Eligibility’ function. MSF has also released a series of videos on how to navigate the Baby Bonus Online, under the tagline #BiteSizedBabyBonus, which you can view on the Baby Bonus Parenting Resources Facebook page.
Who can use the CDA funds and how do I use them?
The CDA of a child can be used for the other siblings of the child as well; however, it cannot be used for any persons other than the child and their siblings. This includes any other children who are not their siblings, or any adults as well. There are no age limits for the usage of the Child Development Account by the child’s siblings, and it can be done until the CDA is closed when the child in question turns 12.
The CDA is meant for the use of a specific child, to ensure that they are able to grow up well and their educational and health-related needs are well taken care of. This is why the usage of the funds is restricted to a child and their siblings, to ensure dedicated finances for the wellbeing of the child in question.
The CDA funds are used only with Approved Institutions – most of them are educational and healthcare or medical institutions under the purview of the government. When you open the Child Development Account for your child, the CDA trustee is provided with a NETS card by the bank (UOB, DBS, or OCBC). If you would like to view the designs of the card, you can do so under Baby Bonus Online, under ‘Baby Bonus Card’ which you can find within ‘Useful Links’. Approved Institutions use direct debit (GIRO) or the Baby Bonus NETS service to deduct money from the CDA. You can view the transactions of the account on Baby Bonus Online as well, under ‘View Statement’.
Using the NETS service will be done on the spot, and is quite straightforward. Authorisation of the Approved Institution to collect GIRO fees from the Child Development Account, however, will require the following steps:
- Your bank (UOB, DBS, OCBC) will have its own GIRO application form. You must authorise the Approved Institution to deduct fees directly from the CDA.
- The Approved Institution will complete their part of the bank’s GIRO application form and send it directly to the CDA bank (in some cases you may need to submit it yourself).
- The bank then processes the form. It will return the form for adjustments as needed. You (and the Approved Institution) may need to re-submit the form with corrected details if it was originally rejected by the CDA bank.
- Once approved and accepted, the Approved Institution will be able to send instructions to their own bank to deduct the relevant amount from your CDA, and will then verify whether the deductions have been successful. The CDA trustee (the direct caregiver of the child, who has control over the CDA) will be notified by the bank if the GIRO application is successful, and will also inform them when any deductions are made.
As this progress is specific to each bank, please contact any of the above banks if you would like to know more about the process.