No Brainer: 5% don’t put money in CDA?

New CDA First Step grant benefits lower income families most

I refer to the article “New CDA First Step grant benefits lower income families the most: Tan Chuan-Jin” (Straits Times, Mar 25).

It states that “A new grant that will give parents $3,000 upfront for their children’s Child Development Account (CDA) will benefit families that find it hard to save money, said Minister for Social and Family Development Tan Chuan-Jin on Friday (March 25).

5% do not deposit money into CDA?

He said about 5 per cent of account holders do not deposit money into these special savings accounts, for which the Government matches, up to a ceiling, parents’ deposits.

The money can be used at approved institutions to pay for childcare fees and medical expenses, among other things.”

“No-brainer” to put money in CDA?

People tell me that it is arguably a “no-brainer” to put money in the CDA because of the “dollar matching” and that the money can be used “almost straight away”, as the CDA funds can be used for “educational and healthcare expenses:

a)   At Baby Bonus Approved Institutions (AIs)
– Child care centres, kindergartens and special education schools
– Providers of early intervention programmes
– Providers of Assistive technology devices
– Hospitals and clinics
– Pharmacies
– Optical shops

(b)   For medical insurance: Medishield or Medisave-approved private integrated plans”.

Alarming to have so many who don’t deposit money?

So, don’t you find it rather alarming that “about five per cent of account holders do not deposit money into these special savings accounts”?

Many “financially stretched”?

Does this mean that they may be so financially stretched that they can’t even put in any money to get matching money from the Government that they can use for their children?

And this may be in spite of the various assistance schemes from the Government and Voluntary Welfare Organisations (VWOs).

How many do not deposit up to the ceiling?

If five per cent ” do not deposit money” – how many do not deposit up to the matching ceiling?

Regressive procreation policy?

Such a procreation policy is regressive as it may penalise the lower income.

Why not just give the same amount to every child?

Another regressive procreation policy – ECR?

Another regressive procreation policy may be the Enhanced Child Relief which gives as much as 25 per cent of income to working mothers.

This skews the procreation benefits to the higher income.

Again, why not give the same amount to every child like as I understand it is the case in most developed countries?

The above is perhaps underscored by “The tax system will be more progressive under a new measure that caps the amount of personal income tax relief an individual can claim.

The limit will be set at $80,000 from Year of Assessment 2018, and is expected to raise an additional tax revenue of $100 million a year.

It is estimated that 99 per cent of taxpayers will not be affected”.

“Regressive” to a degree?

If one per cent of taxpayers had personal income tax reliefs (like the enhanced child relief) in excess of $80,000 – isn’t this still “very regressive”?

Leong Sze Hian




About the Author

Leong Sze Hian has served as president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.