5 child-related benefits you can get from the government

With an 'abysmal' fertility rate of 1.2 (far below the replacement rate of 2.1) and declining birth rate cited as the 'biggest threat to Singapore's survival' by the late Mr Lee Kuan Yew, it is little wonder that the government has been cracking its brains to reverse this trend.

Although it remains to be seen whether monetary incentives are effective in solving the problem, the fact remains that having a baby is one of the few ways in Singapore to receive angpows from the government. So, what does the buffet spread of benefits look like for new parents?

1. Baby Bonus Cash Gift

For each Singaporean child born, you will receive upfront cash of $6,000 for each of your first and second child, and subsequently $8,000 for each of your third and fourth child. This cash gift is disbursed over three installments in the first 12 months of the birth of your child.

Hey wait, I only received $4,000 for my three-year old son when he was born! That's right, the dollar amount was raised for babies born from Aug 26, 2012 onwards, by $2,000 for each child. Isn't it awesome that the government keeps up with inflation for baby bonus?

How about the fifth child onwards? Well, there doesn't seem to be any information on this for now but if you are one of the (very) rare couples who have reached this stage, you may write in to the Ministry of Social & Family Development. We'd love to hear about the outcome from you.

2. Baby Bonus Child Development Account

This is essentially a dollar-for-dollar matching savings scheme for your children, which can be opened with either OCBC or Standard Chartered Bank. These funds can be used for prescribed withdrawal purposes like childcare centre fees, medical expenses and approved healthcare items. You may do a search of the approved institutions here.

The cap for this matching scheme is $6,000 from the government for each of your first and second child, and $12,000 for each of your third and fourth child, and $18,000 for each subsequent child.

Any unused balances from this account will be transferred to your child's Post-Secondary Education Account when your child turns 13. It can then be used for your child or his/her siblings' post-secondary education expenses.

You may continue contributing to this account and receive the government's dollar-for-dollar matching up to the ceilings mentioned above until your child turns 18.

3. Jubilee Baby Gift Pack

Want something other than cash gifts from the government? It is not too late to do so. Babies born next year will receive a special package of eight birthday presents from the government. These include a special medallion, practical items like a baby sling, multi-functional shawl and diaper bag, and also a scrapbook for memories.

Throughout the history of nations, the Jubilee Year has been associated with the cancellation of debts and release of prisoners. A gift package for new babies is uniquely Singaporean, and apt for this new-age 'crisis' (of fading into oblivion) that we are facing.

4. Tax Incentives

Having children also means you can claim for tax rebates from the government, under the Parenthood tax rebate (PTR) and working mother's child relief (WMCR). The PTR grants you a rebate of $5,000 for your first child, $10,000 for your second child and $20,000 for your third child and subsequent children.

If you are in the high income tax bracket, the WMCR is even more powerful. It is a per cent of your earned income - 15 per cent for your first child, 20 per cent for the second, and 25 per cent per child thereafter, subject to a maximum of 100 per cent. This means that if you have five children (which constitutes less than four per cent of total births) and are a working mother (is this humanly possible?), you do not have to pay tax at all. If you are a director earning $320,000 a year, this would save you $42,350 in gross taxes.

5. Parenthood Leave

Besides 16 weeks of paid maternity leave, fathers can also enjoy one week of paternity leave within 12 months of your baby's birth.

The cap for maternity leave is $10,000 per four weeks including CPF contributions, with some variation between your first two children and subsequent children, whilst the cap for paternity leave is $2,500 including CPF contributions.

Alas, if you are a CEO earning a million bucks a year, you won't be paid $19,230 to take care of your baby for a week, but instead receive a token sum of $2,500 for this labour of love.

Final note: While there are certainly plenty of other things to consider when having a child, it isn't bad to receive something to the tune of $50k++ when you add everything up.

But are these measures enough in the grand scheme of all the costs involved to encourage people to procreate? What about other costs like childcare? Does there need to be some initial kickback on insurance for your child?

Stay tuned with us on Facebook as we keep abreast of all these issues.

This article first appeared in MoneySmart at http://blog.moneysmart.sg/family/5-child-related-benefits-you-can-get-from-the-government/

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