*HAVE KIDS? Don’t leave government benefits idle on the table*
Angela Tan
Senior Business Correspondent
2026-09-06
The Straits Times
For years, the Singapore Government’s support for young couples contemplating parenthood has been heavily front-loaded around a child’s birth, from the Baby Bonus Cash Gift and the Child Development Account (CDA) to grants, subsidies and childcare support.
Prime Minister Lawrence Wong’s new SG Child Support Package unveiled during his National Day Rally speech on Aug 23 changes that equation.
Rather than concentrating support around birth, it spreads help across the years of raising a child, from infancy to adolescence.
From April 1, 2027, every Singaporean newborn will receive a Baby Gift of $10,000, a MediSave grant of $5,000, and a CDA with an initial grant of $5,000 and dollar-for-dollar matching by the Government for up to $5,000 deposited.
The support will not stop there.
From age one to 16, every child will continue to get $2,000 in annual Child Credits, alongside Edusave top-ups every year in primary and secondary school. At 17, they will get a further top-up of $10,000 in their Post-Secondary Education Account (PSEA).
Taken together, every Singaporean child, regardless of birth order, will receive almost $70,000 in direct financial support as they grow up.
Children born before April 1, 2027, will also receive selected benefits under the new package.
With the Government’s “cradle-to-17” support, parents may consider investing surplus money previously budgeted for their children.
Optimise the two buckets
While the headline support is about $70,000, not all the money can be used freely or invested.
Close to $27,000 sits in restricted accounts and is tied to specific purposes: the $5,000 MediSave grant for healthcare; the $5,000 CDA grant, with up to another $5,000 from government matching of contributions, for approved childcare and healthcare expenses; Edusave and the $10,000 in the PSEA for approved school-related expenses.
But roughly $42,000 – the $10,000 Baby Gift, and annual Child Credits that total $32,000 over 16 years – can be invested or used to top up a child’s Central Provident Fund (CPF) accounts.
But before you consider any of these, set aside what you need to support your child and meet household expenses.
You may also want to put aside funds for the dollar-for-dollar government matching on CDA contributions of up to $5,000. If you expect to use the CDA for eligible child-related expenses, making full use of this matching should come before investing the excess elsewhere.
Ideally, before thinking about investing, parents should also ensure the family has a six-month emergency fund and adequate insurance protection. There is little point building an education fund if it has to be raided when the family faces a serious financial emergency.
Put the money to work
How you put the annual $2,000 Child Credits to work depends on what you would like the money to help your child achieve.
“Treated in isolation, it becomes a school shoes and enrichment class payment and disappears without a trace. Treated as a stream, it is a 16-year commitment of capital, and that is a completely different animal,” says Ayush Goyal, Singapore country manager at MoneyHero Group, a Nasdaq-listed personal finance comparison firm.
Some parents may want to give their child a financial head start in adulthood. Others may want to give their child an early start on retirement savings. Money set aside at birth could compound for more than 60 years – and this is where the CPF may become more relevant.
These longer investment horizons give the money time to grow, ride out market volatility, and potentially recover from losses.
A newborn has a longer investment horizon, which means you can take more risk than if you were to need the money in five years.
This makes a diversified equity portfolio worth considering. Investment options to consider include exchange-traded funds such as an S&P 500 ETF or an STI ETF.
Just by investing the $2,000 in Child Credits at the beginning of each year from a child’s birth to age 16 and earning an assumed 4 per cent annual return, the money could grow to about $45,000 by the child’s 17th birthday. That could cover a meaningful part of a local university education.
Or suppose you invest the $10,000 Baby Gift when your child is born, then invest the $2,000 in Child Credits each time it is received from age one to 16.
In total, you would invest $42,000. Assuming a 4 per cent annual return, your portfolio could grow to $67,500 by the time your child is 18.
While the figures are illustrative, the idea is that if you invest the money as it comes in, you would have effectively been dollar-cost averaging over the years.
The important thing is to automate the process rather than rely on willpower, Ayush says. Otherwise, the money can easily disappear into the next holiday, renovation or other tempting expense.
Lock up the savings in CPF?
There may be a temptation to lock away the recurring cash in a vehicle offering a guaranteed return.
But parents should think carefully before putting the Child Credits into a child’s CPF account simply to earn higher returns, Ayush says.
A child’s CPF Special Account (SA) earns 4 per cent interest, which is higher than that for most savings accounts. The first $60,000 of the combined CPF balances will also receive an additional 1 per cent interest, subject to CPF rules.
For example, $10,000 left to compound at 4 per cent a year from birth would grow to about $128,000 by age 65, even without further contributions.
However, the bigger consideration is access to funds. Money put in the SA is locked up until the child turns 55.
Unlike funds in the Ordinary Account, the SA savings cannot be used for major expenses such as polytechnic or university fees, or a first flat – precisely the kinds of expenses parents may want to prepare for as the child grows up.
For most families, the Child Credits may be more useful if the money remains accessible and is saved or invested for nearer-term goals such as education.
Parents should also note that topping up a child’s CPF account does not qualify for the same tax relief that may apply to top-ups for eligible family members.
Put childcare savings to work, too
If there is one measure that could have a more immediate impact on household finances, it is more highly subsidised childcare.
The cost of full-day childcare could fall to around $150 a month by 2030, from nearly $600 today. That means a family could save about $5,400 a year.
Infant care could drop from more than $1,000 to $300 a month, saving families around $8,400 a year.
The lower childcare cost can translate into regular savings at a time when family expenses are often highest.
“That freed-up cash can be put to work earlier, and in investing, time in the market does far more heavy lifting than clever selection,” Ayush says.
A family that starts investing for education when the child is two rather than nine has roughly seven extra years of compounding, which is worth more than most people realise, he says.
Importantly, the benefit also applies to families that earn too much to qualify for other subsidies but still face significant childcare costs.
Don’t build a lifestyle around today’s policy
There is another risk – that families may start treating the government financial support as permanent household income. That would be a mistake.
Parents should build the household budget around their own income and treat the government support as a bonus.
Ask yourself whether the family could still manage if the support were cut by half. If the answer is no, the household is too dependent on the support.
Ayush highlights three main risks of families becoming over-reliant on government financial support.
The first is lifestyle creep. This happens when the government support is used to pay for higher monthly spending rather than to increase savings. For example, if childcare costs fall by $450 a month but the family uses that money to upgrade their car, their financial position has not really improved.
The second is anchoring. Parents may make long-term decisions, such as buying a bigger home or choosing an international school, based on the Government’s ongoing support.
The third and biggest concern is the failure to plan when support ends or declines just as major costs begin. University fees, a laptop, overseas exchanges and the child’s living expenses can all come at the same time.
Used wisely, government support should help the family save more for education and build a stronger financial buffer, rather than encourage higher fixed monthly spending.
Reassess financial plans as the child grows up
The government package makes it possible to think about family finances in phases:
From birth to age six, the main opportunity is to save on childcare and infant care costs. Instead of spending the savings elsewhere, parents could redirect them into an education fund while there is still a long time for the money to grow.
From age seven to 12, costs usually shift towards student care, tuition, enrichment activities and the everyday expenses of a growing child. At this stage, the extra childcare leave available to parents can be more valuable than cash savings.
From age 13 to 16, the annual Child Credits and Edusave top-ups continue, while household income is often at its strongest. This can be a good time to increase savings and build up the education fund rather than slow down.
From age 17 onwards, the $10,000 PSEA top-up provides an additional boost, but regular support starts to fall away. By this time, the education fund needs to do more of the heavy lifting.
Every year, parents should reassess a few key things.
Has income changed? Has another child arrived? Is the insurance coverage still adequate? Is the education fund on track? Is the investment mix appropriate for a goal that is now closer?
Money that will be needed in three years should be managed differently from money that will not be needed for 15 years.
There are also policy changes to watch, with more measures to be unveiled in the coming months, including at the next Budget in 2027. A higher income ceiling for Build-To-Order flats and executive condominiums, along with additional ballot chances for families with children, could affect housing plans.
The next 12 months may be a good time to review and adjust your plans rather than assume things will stay the same.
Use support to strengthen family balance sheet
The new package makes the income streams for future expenditures more predictable. That is financially significant.
The best response from families is not to spend the extra support, but to use the certainty to make better decisions today.
Put the recurring credits to work. Redirect childcare savings. Build an emergency fund. Avoid lifestyle creep. Match investments to future liabilities. Keep retirement savings on track.
The important thing is to start early, and don’t leave the goodies idle on the table.
angelat@sph.com.sg
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