Proportion of Children in Cohort Whose Parents Maximise Co-matching Amount for CDA
Ministry of Social and Family DevelopmentSpeakers
Summary
This question concerns Child Development Account (CDA) savings for the 2006 birth cohort and the proposal to extend the account closure age to 16. Mr Zainal Sapari asked for data on average and median CDA balances and the percentage of parents maximizing the government co-matching amount. Minister for Social and Family Development Desmond Lee stated that 64% of accounts maximized co-matching, with average and median balances of $3,300 and $500. He noted that CDA balances transfer to the Post-Secondary Education Account (PSEA) when the account closes at the end of the child's twelfth year. Minister for Social and Family Development Desmond Lee added that parents may continue saving in the PSEA to receive government co-matching if caps were not reached.
Transcript
51 Mr Zainal Sapari asked the Minister for Social and Family Development (a) what is the average and median amount in the Child Development Account (CDA) for children born in 2006 when they reached 12 years of age by 31 December 2018; (b) what is the percentage of children in this cohort where the parents are able to fully maximise the co-matching amount for their child's CDA; and (c) whether the Ministry can extend the closure of a CDA to when the child is 16 years old before the balance is transferred to the child's Post-Secondary Education Account which will then allow the child's parents more years to co-match up to the allowable cap.
Mr Desmond Lee: Children born in 2006 were eligible for up to $6,000 in Government co-matching in the Child Development Account, or CDA, if they are the second child, and up to $12,000 if they are the third or fourth child. In addition, the 2006 birth cohort was a transitional cohort where parents could choose to either close the CDA at the end of the year their child turned six, or extend the CDA till the end of the year their child turned 12. Parents who chose the latter also had the flexibility to close the CDA at any time when the child was between seven and 12 years old.
For those whose CDAs were closed at the end of 2018, the year in which the 2006 birth cohort turned 12, the average and median amounts remaining in the CDA were about $3,300 and $500 respectively. Sixty-four percent of these accounts maximised the Government co-matching in the CDA.
When the CDA is closed, the balance is transferred to the child's Post-Secondary Education Account, or PSEA. Today, parents can already continue saving in the PSEA to enjoy Government co-matching if they have not saved up to the co-savings caps in the CDA.