On 18 August 2019, Singapore Prime Minister Lee Hsien Loong delivered his National Day Rally 2018 speech.
For those who didn’t catch PM Lee’s speech, here is a summary of the key announcements that will have a direct impact on Singaporeans’ personal finances, mainly revolving around Education and Older Workers.
#1 Income Ceiling And Amount Of Pre-School Subsidies To Increase
In the past, government support for education has been designed to begin at the Primary 1 level. However, research has shown the importance of the formative pre-school years, while MPs have also brought up concerns of Singaporeans over the cost of pre-school education.
PM Lee announced that starting from next year, the household income-ceiling for means-tested pre-school subsidies will increase from $7,500 to $12,000, which will allow 30,000 more households to qualify for pre-school subsidies.
In addition, the quantum for these pre-school subsidies will be increased across the board. While the exact details of the quantum increase have not been announced, PM Lee said that with the increase in subsidies, full-day pre-school expenses should be reduced to around $300 a month, which is similar to the cost of primary school and after-school student care.
In addition, PM Lee announced that government-supported pre-school options will be expanded to make quality and affordable pre-school education available to all Singaporeans. Today, about 50% of all pre-school places are government supported (via the MOE kindergartens and ECDA’s operator schemes). The aim is to eventually increase this figure to 80%.
#2 Increase In Bursaries For Tertiary Education
As a foundation of Singapore’s meritocratic system, PM Lee said that students must not be deterred from pursuing further education on the grounds of financial ability. Towards this end, PM Lee said that the government will continue to ensure that all Singaporeans can fulfil their educational aspirations.
Starting from next year, fees for general degree programmes at Singapore Institute of Technology (SIT) and Singapore University of Social Sciences (SUSS) will be reduced from $8,000 to $7,500.
Bursaries for tertiary education – comprising education at university, polytechnic, ITE, as well as NAFA and Lasalle – will be significantly increased.
For example, bursaries for students at Singapore’s 6 public universities will cover 75% of fees, up from the current 50%. Bursaries for polytechnic students will increase from the current 80% to 95%.
PM Lee said 6 in 10 students are eligible for government bursaries, which means that many middle-income families would benefit from the expanded bursaries.
#3 Increase In Retirement Age And Re-Employment Age From 2022
As Singaporeans live longer and healthier, many Singaporeans wish to stay active in the workforce for longer. Thus, the Tripartite Workgroup on Older Workers was formed last year to study and make recommendations on how to best support older Singaporean workers’ aspirations.
On the Workgroup’s recommendations, PM Lee announced that the statutory retirement age will be gradually increased from 62 to 65, while the re-employment age will be increased from 67 to 70. This increase will be done gradually starting in 2022, where both the employment and re-employment ages will be increased by one year, and the full increase will be completed in 2030.
As a major employer, the government will take the lead by voluntarily raising the retirement and re-employment a year ahead of schedule by 2021, and PM Lee encourages companies to follow suit if that are able to.
PM Lee emphasised that there are NO CHANGES to CPF withdrawal ages and policies.
#4 Increase In CPF Contributions For Older Workers
To support older workers in building up their retirement nest eggs, the CPF contribution rates for workers aged 55 to 70 will be gradually increased from the year 2021 and taking place over the next decade, depending on economic conditions.
Today, CPF contribution rates begin to taper down after workers turn 55. The age in which contribution rates will taper down will be increased to 60, before they level off after the age of 70.
To help businesses adjust to these changes, a support package will be announced by DPM Heng Swee Keat at next year’s Budget.
* This post originally appeared on dollarsandsense.sg