CDA: 1 to 42% subscribed – discriminates poorer famiies?

Are we discriminating against lower-income families and contributing to inequality, by having schemes like the Child Development Account in its current form?

I refer to the article “Parents of 4 in 10 firstborns have benefited fully from CDA” (Straits Times, May 21).

It states that “A Ministry of Social and Family Development spokesman told The Straits Times that 42.1 per cent of firstborns since 2016 – the First Step grant was started in late March that year – have hit the maximum government matching contribution. For the second child, the figure is 35.8 per cent, and it is 10.9 per cent for the third, 4.8 per cent for the fourth, and 1.2 per cent for the fifth child and beyond.”

As to “For the 2011 birth cohort, which hit its halfway mark for saving last year, 71.2 per cent of the firstborns have received the maximum government matching contribution, and it is 66.6 per cent for the second child, 38.8 per cent for the third, 23.7 per cent for the fourth, and 9.8 per cent for the fifth child and beyond” – why is the subscription rate apparently quite low?

Isn’t it arguably, a no-brainer to contribute because of the matching grant?

After all, “the money in the CDA can be used for childcare fees, medical expenses and more, at approved institutions.

In the year that the child turns 13, the unused funds in the CDA go into the Post-Secondary Education Account (PSEA) under the Ministry of Education (MOE).

When the account user turns 30, the unused money goes into the Central Provident Fund (CPF) account”.

Is the primary reason for not contributing due to the financial difficulties of the parents?

Why do we continue to have such a scheme which may arguably contribute to greater inequality?

With regard to “For lower-income families who are unable to put in enough money to get the maximum government contribution, there are other schemes available to defray their child-raising costs, according to a spokesman for the strategy group in the Prime Minister’s Office (PMO).

Families with working mothers and monthly household incomes of $7,500 and below can apply for further subsidies for childcare and infant care.

“Low-income families with extenuating circumstances and (who) face affordability issues despite the subsidies may apply for childcare financial assistance through the childcare centre.”

They can also apply for a one-time grant to cover the initial costs of enrolling the child.

Such subsidies mean families can pay a few dollars monthly for pre-school, said the spokesman” – these schemes are in addition to the CDA, and should not be a substitute or alternative to the CDA.

Leong Sze Hian


About the Author

Leong Sze Hian has served as the 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), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.