Utilisation Rate of Government Co-Matching Child Development Accounts across Household Income and Caregiving Arrangements
Ministry of Social and Family DevelopmentSpeakers
Summary
This question concerns the utilization rates of government co-matching for Child Development Accounts (CDA) across income bands and caregiving arrangements, as raised by Mr Victor Lye. Minister Masagos Zulkifli B M M stated that while most families maximize savings for their first two children, lower-income households often save less than the caps from the third child onwards. Consequently, lower-income children have smaller CDA balances at age 12, though Minister Masagos Zulkifli B M M noted these cohorts lacked access to newer grants like the First Step Grant and ComLink+ package. Minister Masagos Zulkifli B M M further observed that savings behavior may be influenced by changing family circumstances or the introduction of newer financial support schemes after 2011. Finally, the Ministry has not yet conducted a study regarding the differences in CDA utilization rates across varying caregiving circumstances.
Transcript
9 Mr Victor Lye asked the Minister for Social and Family Development (a) whether the Ministry has studied the differences in the utilisation rate of the Government co-matching of Child Development Account across (i) household income bands (ii) caregiving circumstances; and (b) if so, what broad trends have been observed.
Mr Masagos Zulkifli B M M: The Ministry of Social and Family Development (MSF) studied the utilisation rates of Child Development Account (CDA) monies for the birth cohorts from 2008 to 2011, across income bands from the time the child is zero to 12 years old.
Most parents saved close to the Government co-matching caps to maximise the Government co-matching for the first two birth orders across all income bands. However, lower-income families tended to save lower than the Government co-matching caps from the third child onwards. Consequently, the CDA accounts of children from lower income bands also have less balances compared to the other income bands at the point of account closure when the children turn 12 years old.
The income data used in the study was based on the parents' declaration at the point of application and family circumstances could have changed over time. The cohorts studied also do not qualify for First Step Grant and the ComLink+ Package for Preschool, as these schemes were introduced after 2011 and may influence savings and utilisation behaviour especially in low-income families.
MSF has not conducted a study on differences in utilisation rate of the CDA monies across caregiving circumstances.