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What is the CDA and how to use it efficiently

3 min read
CDA

The Child Development Account (CDA) is a special savings account offered to all eligible Singaporean children. The funds in the account can be used for a variety of purposes related to helping offset spending used for your child. This account can be opened at any of the local Singapore banks. .

Becoming a father is the beginning of a lifetime of joy and an experience that does not end. In Singapore, the Government has special instruments to help provide a positive experience at the beginning. The Government created the Baby Bonus scheme that provides all Singapore parents with a cash gift of SGD 8,000 as well as the Child Development Account (CDA).

The CDA is a special savings account and can be opened at any of the three local banks – DBS, OCBC and UOB. Eligible (Singapore citizen) children will receive a SGD 3,000 CDA First Step when the CDA is opened. Thereafter, every dollar saved in the CDA will receive a matching dollar amount by the Government. The cap to the Government matching contribution is determined by birth order of the child.

Eligibility is based on the child being a Singaporean citizen where the child’s parents are also lawfully married. A child of unwed parents might also be eligible.

CDA
Source: https://www.madeforfamilies.gov.sg/raising-families/baby-bonus

For new families with children born from 1 October 2020 to 30 September 2022, there will also be a one-off Baby Support Grant (BSG) of SGD3,000. Holistically, new parents (and fathers!) can potentially receive up to SGD 21,000 in cash and cash-like benefits on the birth of their first child. This includes benefits such as parental leave, as well as subsidised preschool and healthcare.

CDA funds are automatically transferred to your child’s Post-Secondary Education Account when they turn 13 years old.

Here are some steps to consider to make efficient use of the CDA.

Tap on the dollar matching contribution by the Government

As explained earlier, the government will make dollar-for-dollar contributions for savings made to the CDA. Depending on birth order, from the first child to the fifth child and beyond, this matching contribution ranges from SGD 3,000 to SGD 15,000. The contribution period is from the opening of the CDA until the child turns 12 years old.

Fathers considering to tap on this scheme can consider saving into the CDA in regular contributions.

If fathers have the ability to do so, contributing a lump sum to get the dollar-matching earlier will help the amount earn interest from an earlier time. Fathers should consider their source of funds and not rush to deposit if it means experiencing tight cashflow.

Pay for vaccinations and medical-related expenses

Your child will have a series of vaccinations to go through up to about 18 months of age. Your child’s CDA or Medisave Account can be used to pay for these vaccinations and some out-patient treatments.

Fathers can check the Approved Institution Search portal to see whether the preferred healthcare institution is registered to accept CDA payments.

Optimise use of CDA for childcare and kindergartens

At some point, Fathers might consider placing your child in childcare, or a kindergarten for a variety of learning, socialisation and development reasons. These organisations can accept CDA payment as long as they are an Approved Institution. Use the search portal shared earlier to check prior to registration. The portal can also filter such institutions by name and postal code, in case Fathers are searching for proximity.

Other uses of the CDA

The CDA can also be used to pay premiums for MediShield Life or Medisave-approved private integrated plans. It can also be used for optical services and products such as spectacles and contact lenses, as well as vitamins and health supplements at approved institutions.


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Photo by Wes Hicks on Unsplash