The journey of parenthood in Singapore comes with many responsibilities, and among them is the challenge of managing the rising costs of raising a child. From infant care to healthcare, education, and enrichment, these expenses can mount rapidly. Recognising these demands, the Singapore government offers several pro-family financial support schemes—one of the most notable being the Child Development Account (CDA).
But while most parents are aware of the CDA’s existence, many do not fully leverage its features. In this article, we dive deep into how Singaporean parents can maximise the CDA to stretch every dollar and plan more effectively for their child’s future.
Understanding the Child Development Account (CDA)
The CDA is part of the Baby Bonus Scheme, an initiative by the Ministry of Social and Family Development (MSF). It is a special savings account automatically opened for eligible Singaporean children upon birth and is designed to help defray the costs of raising a child in their early years.
There are two key components to the CDA:
- First Step Grant
The government provides an initial deposit—called the First Step Grant—of S$5,000, without requiring any parental contribution. - Dollar-for-Dollar Matching
Beyond the grant, the government will match every dollar deposited into the CDA by parents dollar-for-dollar, up to a cap depending on the child’s birth order:
- 1st & 2nd child: up to S$3,000 matching
- 3rd & 4th child: up to S$9,000 matching
- 5th and subsequent children: up to S$15,000 matching
The funds in the CDA can be used until 31 December of the year the child turns 12, after which the balance is automatically transferred to the Post-Secondary Education Account (PSEA).
1. Contribute Early to Maximise Government Matching
Time is money—and this couldn’t be truer for the CDA. The sooner parents contribute to the account, the sooner they can unlock the full benefits of the government matching.
Why Early Contributions Matter:
- Compounded Interest: CDA accounts earn interest (up to 2% per annum, depending on the bank). Early contributions mean more time to accrue interest.
- Maximising Grants: If you wait too long, you might miss the opportunity to hit the government matching cap before your child turns 12.
Action Tip: If financially feasible, parents should aim to deposit the full matching amount (e.g., S$3,000 for the first child) as early as possible. Even splitting it into smaller monthly contributions can still help in meeting the cap gradually.
2. Choose the Right CDA Bank Partner
Three banks are currently authorised to administer CDA accounts:
- DBS/POSB
- OCBC
- UOB
Each offers different interest rates and perks. Choosing the right bank can result in additional returns or cost savings over the years.
| Bank | Base Interest | Bonus Perks |
|---|---|---|
| DBS/POSB | 1.00% – 2.00% | CDA-related discounts, bundled insurance |
| OCBC | 1.00% – 2.00% | OCBC Mighty Savers® benefits, health screenings |
| UOB | 1.00% – 2.00% | Baby insurance plans, welcome vouchers |
Action Tip: Compare the interest rates and ongoing promotions. Some banks offer free insurance coverage or vouchers for children’s needs. If you have an existing relationship with the bank, check whether that provides extra benefits.
3. Spend CDA Funds Strategically
The CDA isn’t just a savings account; it’s a dedicated spending wallet for child-related expenses at approved institutions, known as Baby Bonus Approved Institutions (AIs). These include:
- Childcare and infant care centres
- Kindergartens
- Special education schools
- Medical and dental clinics
- Optical shops
- Hospitals and pharmacies
Instead of dipping into your regular savings for these expenses, always consider using CDA funds when the service provider is an approved AI.
Action Tip: Check if your current clinic or childcare provider is an approved AI via the Baby Bonus Online portal. If not, consider switching to one that is.
4. Use CDA for Insurance Premiums
Education and healthcare are often considered the biggest child-related costs, but insurance is another area where CDA funds can come in handy. Many parents are unaware that CDA funds can be used to pay for Integrated Shield Plan (ISP) premiums offered by MediShield Life private insurers.
These policies provide enhanced coverage for hospitalisation beyond the basic MediShield Life plan.
Action Tip: Check with your insurer to confirm CDA eligibility for premium payment. Using CDA to pay premiums helps reduce out-of-pocket expenses and protects your child from unexpected medical costs.
5. Supplement Educational Expenses
From Montessori to bilingual kindergartens, preschool education is becoming increasingly diversified and expensive. Fortunately, CDA funds can be used to pay for preschool fees at ECDA-licensed institutions.
Moreover, CDA can cover:
- Enrolment and monthly fees
- School bus transportation
- Uniforms and books (from approved vendors)
Action Tip: Before enrolling your child in a preschool, check if they are ECDA-licensed and a Baby Bonus AI. Prioritising these institutions will ensure you can tap into your CDA to offset costs.
6. Budget Your Deposits to Reach Matching Cap
Not all parents can afford to deposit the full matching amount upfront. However, with proper budgeting, you can hit the cap through monthly instalments.
Example for a 1st Child:
- Government matching cap: S$3,000
- Monthly deposit over 36 months: S$84/month
- Total parental contribution = S$3,024 → Government matches S$3,000
Action Tip: Set up a monthly GIRO or standing instruction to transfer a manageable amount into the CDA. Automating this helps maintain discipline and takes advantage of time.
7. Understand What Happens After Age 12
Funds left in the CDA when the child turns 13 are transferred to the Post-Secondary Education Account (PSEA), which can be used to pay for education at:
- ITEs
- Polytechnics
- Junior Colleges
- Universities (local)
This encourages long-term planning and ensures that funds continue to serve educational purposes.
Action Tip: If your child is nearing 12, consider whether the CDA should be topped up further to benefit their future education via the PSEA.
8. Tap Into the Child Support Schemes Beyond CDA
The CDA is just one component of Singapore’s broader ecosystem of child-related financial assistance. Other schemes include:
- Edusave Account (from age 7): Government top-ups and awards for school achievements.
- PSEA (post-12): Transferred CDA funds and additional government top-ups.
- MOE Financial Assistance Schemes for low-income families.
Action Tip: Monitor your child’s eligibility for other accounts and support measures and integrate them into your overall financial planning.
9. Educate Yourself Continuously
Government policies evolve over time. What applies today might be enhanced or revised tomorrow. Staying informed ensures that parents can make the most of these schemes.
Action Tip: Subscribe to updates from MSF and Baby Bonus Online. Periodically review your child’s CDA usage and adjust your plans if new benefits or changes are introduced.
10. Model Financial Responsibility for Your Child
Although the CDA is a tool for parents, it can also become an educational platform. As your child grows older, involve them in understanding the purpose of the account, how funds are used, and why saving is important.
This fosters early financial literacy, helping your child value money, budgeting, and the importance of government schemes.
Action Tip: Let your child “participate” in budgeting CDA funds for certain purchases (e.g., choosing school supplies). It turns the experience into a learning moment.
Final Thoughts
The Child Development Account is more than a simple savings vehicle; it’s a strategic financial tool for Singaporean parents. By contributing early, spending wisely, choosing the right bank, and aligning the CDA with your family’s broader financial goals, you can extract maximum value from what the government has generously made available.
In a society that places strong emphasis on education, healthcare, and child development, the CDA serves as both a lifeline and a launchpad—enabling your child to access resources while teaching families the importance of planning and saving.
Let every dollar in the CDA work harder—for your child, your family, and your peace of mind.
