Singapore Deposit Insurance Corporation (SDIC) explainer: How it safeguards our hard-earned savings

Keeping our hard earned savings in a bank account is one of the safest ways we know to store our cash. Not only do we earn interest on our money, but we also trust that the banks have the financial capabilities to safekeep our money and allow us to withdraw them when the time arises. 

However, no company is fail-proof, especially with the access consumers have to alternative digital platforms. This is where the role of the Singapore Deposit Insurance Corporation (SDIC) comes into play, helping to alleviate fears consumers might have when it comes to leaving their money with banks, finance companies, or insurance companies.

What exactly is the SDIC? 

The Singapore Deposit Insurance Corporation (SDIC) is a company that administers the Deposit Insurance (DI) Scheme and the Policy Owners’ Protection (PPF) Scheme in Singapore. In short, they they insure the deposits you have with banks and finance companies, and insurance policies with insurance companies.

• About the Deposit Insurance (DI) Scheme

Singaporeans would be familiar with the phrase: Insured up to $75,000 by the SDIC. 

The DI Scheme protects the insured deposits you hold with a full bank or finance company. As a depositor, you will be compensated up to $75,000 in the event a DI Scheme member fails. Previously, before 1 April 2019, deposits were only insured up to $50,000. 

This means that if DBS were to collapse one day, the deposits you keep with DBS will be protected for up to $75,000. 

This function is similar to the FDIC in the US, an agency that provides deposit insurance to depositors in US depository institutions. 

How does the SDIC fund this protection? The SDIC has a DI Fund which is built up from the premiums that SDIC collects from DI Scheme members annually. All full banks and finance companies in Singapore are members of the scheme, unless exempted by the Monetary Authority of Singapore (MAS).

• About the Policy Owners’ Protection (PPF) Scheme

The PPF Scheme protects policy owners like yourself in the event a life or general insurer, which is a PPF Scheme member, fails. It covers both life insurance policies and certain general insurance policies. 

What does the SDIC cover? 

1. Savings accounts and current accounts

The money you keep in a savings account or a current account with the bank will be insured up to $75,000 by SDIC. This includes the likes of your DBS Multiplier, OCBC 360, UOB One, Standard Chartered JumpStart and CIMB FastSaver. If you're keeping your savings in an insurance savings plan (offered by an insurance company) like the Singlife Account, you'll be glad to know that the Singlife Account is covered as well.

Hold up, so does that mean I should hold multiple savings accounts in order to have more of my money protected by the SDIC? 

The SDIC covers your deposit per bank, per person. For example, if you hold both an OCBC 360 account and a regular savings account with a bank like OCBC, the deposits in both OCBC accounts will be aggregated and covered up to $75,000. This also means that if you were to have savings accounts with other banks, those would be covered up to $75,000 separately. 

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2. Joint accounts 

Joint accounts also add to your individual deposit coverage cap of $75,000 per bank. 

The SDIC will assume that both account holders have an equal share of the funds in the joint account, unless an account holder has records that show otherwise. Each account holder’s share will then be combined with their own accounts, with the total amount of insured deposits adding up to a maximum of $75,000. 

Here’s an example from SDIC: Assuming you and your partner have $70,000 in a joint account and you have your own, separate account of $60,000, $35,000 from the joint account is counted as yours. This adds up to a total of $95,000 in deposits. However, only $75,000 of that $95,000 is covered by SDIC. 

3. Fixed deposits

Your fixed deposits are also covered by the SDIC. However, as the SDIC covers your deposit per bank, per person this means that your fixed deposit coverage is aggregated with the money in your savings accounts. 

For example, if you have $50,000 in fixed deposits and $40,000 in your savings account with the same bank, only $75,000 of the total $90,000 will be insured by the SDIC. 

4. Insurance plans 

Beyond your savings, the SDIC also protects the sum assured and surrender value under your insurance plans. This falls under the Policy Owners’ Protection Scheme that covers life and general insurance policies in the event of the failure of your life or general insurer.

However, not all insurance plans are covered. Life insurance plans that are protected include: 

• Life insurance policies, both term life and whole life
• Endowment plans 
• Annuities
• Long-term accident and health policies 

Life insurance policies: Coverage is based on guaranteed benefits only and is subject to caps. For example, for individual life policies, there is a cap of $500,000 for the aggregated guaranteed sum assured. However, no caps are imposed for accident and health policies or riders. 

General insurance plans that are covered include:

• Personal motor insurance policies
• Personal travel insurance policies
• Personal property (structured and contents) insurance policies
• Foreign domestic maid insurance policies

General insurance policies: Coverage is not subject to any cap, with the exception a few specific instances. 

5. CPF money

Your CPF money and deposits placed under the CPF Investment Scheme (CPFIS) and the CPF Retirement Sum Scheme are aggregated and insured separately up to $75,000 for each depositor. 

6. Supplementary Retirement Sum (SRS) funds

If you've opened a Supplementary Retirement Scheme (SRS) account, your money in your SRS account will be aggregated with other deposits you have with the bank and is subject to the $75,000 cap. You can only open an SRS account with any of these three providers: DBS, OCBC or UOB. 

What SDIC doesn’t cover

Besides the products listed above, other products as prescribed by MAS could also be covered. 

However, SDIC does not cover the following: 

• Foreign currency deposits 
• Structured deposits
• Investment products such as unit trusts, shares and other securities

Yes, that means your investments with robo-advisors or the stocks you hold in your brokerage accounts are not covered by the SDIC. This is unsurprising, considering investments come with a degree of risk that you have to be willing to take on as an investor. 

Cash management accounts offered by robo-advisors, while they serve as an alternative solution to high-yield savings accounts, are ultimately not savings accounts and hence are not covered by the SDIC. 

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Stashing your cash with a safety net in place

This understanding of the SDIC should give you a vote of confidence to keep your money with the banks we have here in Singapore, even though the coverage is limited to $75,000.