Budget 2023 continues to focus on strengthening the social compact while giving assurances to families and building collective resilience. A specific group - young families - will be provided with targeted support this year. In addition, to cushion the impact of rising cost of living for the lower and middle-income groups amidst the uncertain economic outlook, various initiatives received additional funding to enhance their effectiveness.
Enhanced well-being measures for young families
Budget 2023 provides more support measures to young families to cope with the cost of raising children. To increase the financial support in the child’s early years, and to encourage more parental involvement to care for young children, the following measures were announced:
- Increase the Baby Bonus Cash Gift by $3,000 for all newborns.
- Extend the $3,000 Baby Support Grant to eligible children born between 1 October 2022 and 13 February 2023.
- Enhance the Child Development Account by increasing the First Step Grant from $3,000 to $5,000 and raising the co-matching cap for the first and second child by $1,000 each.
- Extend the Unpaid Infant Care Leave by six days per parent per year for those with children aged under two.
- Double the Government-paid paternity leave from two weeks to four weeks. This move encourages more paternal involvement by giving fathers more time to be involved in their child’s early development. To ensure a smooth transition for businesses, the initial two extra weeks of paternity leave has been kept voluntary for employers with the Government reimbursing the employers who grant the extra leave.
Support for working mothers
In another move to make the personal tax system more progressive, working mothers will now be given a fixed amount of Working Mother’s Child Relief (WMCR) according to the number of children, instead of a stated percentage of their earned income.
With effect from YA 2025, working mothers will be able to claim relief of $8,000 for the first child, $10,000 for the second child and $12,000 for the third and subsequent child born or adopted on or after 1 January 2024. It is expected that working mothers in the lower to middle income groups, i.e. those with annual earned income of approximately $53,000 and below, who have their first child born or adopted on or after 1 January 2024, may benefit to a greater extent from the fixed amounts of WMCR rather than relief based on a percentage of their earned income.
Concurrently, the Government will pare off the tax relief for Foreign Domestic Worker Levy with effect from YA 2025 while relaxing the conditions for the Grandparent Caregiver Relief (GCR) from YA 2024. To give caregivers the flexibility to work, working mothers may claim GCR where the caregivers’ total income from a trade, business, profession, vocation and/or employment does not exceed $4,000, subject to conditions.
Ensuring retirement adequacy
Amid Singapore’s decreasing birth rate and rapidly ageing population, there is a need for further measures to address concerns over retirement adequacy. Budget 2023 contains the following:
- An increase to the CPF contribution rates for senior workers (aged above 55 to 70) from 1 January 2024. This would help in building up their retirement nest eggs. In order to alleviate the burden on businesses, the Government will provide employers with a one-year CPF Transition Offset equivalent to half of the additional employer CPF contributions payable in 2024.
- An increase in the Minimum CPF Monthly Payouts for Seniors (aged 65 and above) under the Retirement Sum Scheme from the current $250 to $350 from 1 June 2023.
- Raise the CPF monthly salary ceiling in stages from $6,000 to $8,000 by 2026 given generally rising salaries.
Special attention was also given to gig economy workers with a proposal to align the CPF contribution rates for these workers with those for employers and employees generally, to be phased in over five years. The Platform Worker CPF Transition Support scheme will be introduced to help alleviate the impact on lower-income platform workers.
Although these CPF changes should go some way in helping the employees better provide for their retirement needs, the attendant increase to business costs will likely be of a concern to businesses.
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