Category: Providend

Singapore Budget 2024 – Highlights on Personal Finance

An article written by the Solutions Team and first published on Providend website here:
https://providend.com/singapore-budget-2024-highlights-on-personal-finance/

On 16 February 2024, Deputy Prime Minister and Finance Minister Lawrence Wong gave his Budget Speech “Building Our Shared Future Together”. The Singapore Budget 2024 has come after a year filled with geopolitical tensions, and a subdued global economy, resulting in rising costs for individuals, families, and businesses.

Recognising the inflationary pressures faced by our families and businesses, the government has set out this year’s budget to address these concerns and take steps to realise our vision for a better Singapore under Forward Singapore.

Key focus of Singapore Budget 2024:

  1. Tackling immediate challenges
  2. Pursuing better growth and jobs, and equipping our workers for life
  3. Creating more paths towards equality and mobility
  4. Providing more assurance for families and seniors
  5. Forging a stronger and more united nation

In this article, we will focus on those measures in the budget that have a direct impact on our personal finance. The changes due to those measures are indicated in bold and/or parentheses.

Enhancing Support Measures for Singaporeans

The government is meting out enhancements to various support measures to help Singaporeans tackle the immediate challenges of the rising cost of living.

a. Enhancement to Community Development Council (CDC) Voucher Scheme [One-Time]
Every Singaporean household will receive an additional $600 CDC Vouchers on top of the existing vouchers they had received earlier. They will receive the $600 vouchers in 2 tranches, $300 in June 2024 and $300 in January 2025.

b. 2024 Cost of Living (COL) Special Payment [One-Time]
All eligible adult Singaporeans will receive one-off cash payment of between $200 and $400 in September 2024, depending on their assessable income and property ownership.

c. 2024 COL U-Save Rebate [One-Time] 
All eligible Singaporean households living in HDB flats and whose household members do not own more than one property will receive one-off 2024 COL U-Save Rebate to help offset their regular utilities expenses. This rebate will be disbursed in April 2024, July 2024, October 2024, and January 2025.

d. 2024 Service and Conservancy Charges (S&CC) Rebate [One-Time]
All eligible Singaporean households living in HDB flats will receive one-off 2024 COL S&CC Rebate to offset 0.5 months of S&CC in January 2025. In total, eligible HDB households will receive up to 4 months of S&CC rebates in FY2024.

e. 2024 National Service (NS) LifeSG Credit [One-Time]
All eligible national servicemen enlisted by 31 December 2024 will receive $200 in LifeSG credits in November 2024. 

Equipping Our Workers for Life

The government is investing heavily in our human capital through education. We need to systematically support our workers in reskilling and upskilling, equipping them with the necessary skills to harness new technologies more effectively and remaining high in the value chain.

a. SkillsFuture Level-Up Programme
i. $4,000 SkillsFuture Credit (SFC) Mid-Career Top-Up [One-Time]
Every Singaporeans aged 40 and above will receive the $4,000 SFC top-up in May 2024. The new SFC will be more targeted at selected courses that are industry-oriented and have better employability outcomes.

ii. Mid-Career Enhanced Subsidy for Full-Time Diploma [One-Time]
Every Singaporean aged 40 and above will have another bite of the education subsidy to pursue a full-time diploma at a subsidised rate from Academic Year 2025 onwards, even after they have graduated from an Institution of Higher Learning.

iii. SkillsFuture Mid-Career Training Allowance [Monthly up to 24 Months]
Every Singaporean aged 40 and above will receive a training allowance for undertaking full-time long-form training from early 2025 onwards.

b. Temporary Financial Support Scheme for the Involuntarily Unemployed [TBD] 
The government will introduce a temporary financial support scheme for the involuntarily unemployed while they undergo training or look for better-fitting jobs. More details to be provided later this year.

Strengthening Retirement Adequacy

The government is strengthening and rationalising the retirement system.

a. Increase in CPF Contribution Rates for Senior Workers [Ongoing]
The government will continue to raise CPF contribution rates for senior workers aged above 55 to 70 from 1 January 2025, with employer contributions to be raised by +0.5% and employee contributions by +1.0%, a +1.5% increase in total.

b. Increase in Enhanced Retirement Sum (ERS) [Ongoing]
The government will raise the ERS from three times to four times the Basic Retirement Sum (BRS) from 1 January 2025. This will allow CPF members to make more voluntary top-ups to their CPF Retirement Account (RA) and receive higher CPF LIFE monthly payouts.

c. Closure of CPF Special Account (SA) for Members Aged 55 and Above [One-Time]
The government examined the current 2 CPF accounts that hold savings intended for retirement payouts for members aged 55 and above: the CPF SA and RA. Both SA and RA savings earn the same long-term interest rate, but SA savings can be withdrawn on demand from age 55 if RA savings has met the cohort Full Retirement Sum (FRS).

As a principle, only savings that cannot be withdrawn on demand should earn the long-term interest rate, and savings that can be withdrawn on demand should earn the short-term interest rate. To better align CPF interest rates to the nature of CPF savings in each CPF account, the government will close the SA for members aged 55 and above from early 2025.

When the SA is closed, SA savings will be transferred to the RA up to the cohort FRS, which will continue to earn the long-term interest rate. Any remaining SA savings will be transferred to the Ordinary Account (OA), where they remain withdrawable and will earn the short-term interest rate.

After the SA is closed, members can choose to transfer their OA savings to their RA at any time, up to the prevailing ERS. Once transferred to the RA, the RA savings will earn the long-term interest rate and will be committed towards higher CPF LIFE payouts.

Impact on CPF contributions:
The portion of CPF contributions allocated to the SA will go to the RA instead. If the RA has reached FRS, the excess over FRS will go to the OA.

Impact on CPF Investment Scheme for SA (CPFIS-SA):
Members can continue to stay invested in their CPFIS-SA investment. Once the investments are sold, the proceeds will first go towards making the cohort FRS in the RA, and the excess over FRS will go to the OA.

d. Enhancements to Silver Support Scheme (SSS) [Ongoing]
The government will raise the qualifying per capita household income threshold to $2,300 and increase the quarterly payment by 20% for Singaporeans aged 65 and above who had low incomes during their working years and have less family support.

e. Enhancements to the Matched Retirement Savings Scheme (MRSS) [Ongoing]
The government will continue the MRSS beyond the current pilot, expand the age eligibility and increase the matching grant cap from 1 January 2025. With the increase in matching grant already a significant benefit extended by the government, the tax relief will be removed from the cash top-ups that attract the MRSS matching grant.

f. Majulah Package for Young Seniors and above
i. Earn and Save Bonus (ESB) [Yearly]
All eligible working Singaporeans born in 1973 or earlier will receive the ESB yearly in their RA or SA. The first annual ESB payout will be made in March 2025.

ii. Retirement Savings Bonus (RSB) [One-Time]
All eligible Singaporeans born in 1973 or earlier will receive the RBS in their RA or SA in December 2024.

iii. MediSave Bonus (MSB) [One-Time]
All eligible Singaporeans born in 1973 or earlier will receive the MSB in their CPF MediSave Account (MA) in December 2024.

Keeping Healthcare Affordable and Accessible for All

a. MediSave Bonus for Members Aged 21 to 50 [One-Time]
All eligible Singaporeans born between 1974 and 2003 will receive the MediSave Bonus in their MA in December 2024.

Tax Changes

a. Personal Income Tax (PIT) Rebate for Year of Assessment (YA) 2024 [One-Time]
All tax resident individuals will be granted a PIT Rebate of 50% of tax payable for YA 2024, capped at $200 per taxpayer.

b. Raise Dependant’s or Caregiver’s Income Threshold for Dependant-Related Reliefs [Recurring]
The government will increase the annual income threshold for dependant-related reliefs from $4,000 to $8,000 with effect from YA 2025.

The dependant-related reliefs are:

  1. Spouse Relief
  2. Parent Relief
  3. Qualifying Child Relief
  4. Working Mother’s Child Relief
  5. CPF Cash Top-up Relief for top-up to the CPF account of spouse or siblings
  6. Grandparent Caregiver Relief

c. Revision of Annual Value (AV) Bands for Owner-Occupied Residential Property Tax (PT) Rates [Recurring]
In view of the sharp rise in AVs over the last two years, the boundaries of the AV bands of the owner-occupied residential PT will be adjusted upwards from 1 January 2025.

d. New Additional Buyer’s Stamp Duty (ABSD) Concession for Single Singapore Citizen (SC) Seniors [Recurring]
The government will extend an ABSD concession to single SC aged 55 and above who wish to right-size their residential property (RP). These seniors will be able to claim a refund of ABSD paid on their replacement private property if they sell their first property within six months after purchasing a lower-value replacement private property. This extension will take effect from 16 February 2024.

Ending Remarks

The above is a highlight of various measures in the Budget 2024 that have a direct impact on personal finance. This budget should bring cheer to many Singaporeans in terms of providing financial support to cope with the rising cost of living, improving employability, strengthening retirement adequacy, and enjoying higher tax savings.

The most surprising change announced in the budget is the closure of CPF SA for members aged 55 and above from early 2025. This change affects those who use SA as a withdrawable high-interest risk-free retirement savings account after setting aside FRS in their RA.

But this move is made in the right spirit as it aligns with the principle of “higher interest rates with a longer lock-in period account”. To compensate for the closure of the high-interest SA, the increase of ERS to 4 times BRS gives affected members an option to move their SA savings into RA, and continue enjoying the high interest rate with a longer lock-in period.

The details of the measures can be found on the Ministry of Finance (MOF) budget website and other relevant government websites. The links to these websites are given at the end of this article for your reference.

Warmest regards,
Solutions Team

Reference Links

MOF Singapore Budget Website:
https://www.mof.gov.sg/singaporebudget

FY2024 Singapore Budget Statement:
https://www.mof.gov.sg/singaporebudget/budget-2024/budget-statement

FY2024 Singapore Budget Speech Video:
https://www.mof.gov.sg/singaporebudget/about-budget/videos

FY2024 Singapore Budget Booklet:
https://www.mof.gov.sg/singaporebudget/resources/budget-booklet

FY2024 Singapore Budget Infographics:
https://www.mof.gov.sg/singaporebudget/resources/budget-infographics

FY2024 Singapore Budget Support for Households:
https://www.mof.gov.sg/singaporebudget/resources/support-for-households

Singapore Budget Support Calculator:
https://supportgowhere.life.gov.sg/budget/support-calculator

Assurance Package (AP) Scheme:
https://govbenefits.gov.sg/

Community Development Council (CDC) Voucher Scheme:
https://vouchers.cdc.gov.sg/

GST Voucher (GSTV) Scheme:
https://www.gstvoucher.gov.sg/

Forward Singapore (ForwardSG):
https://www.forwardsingapore.gov.sg/

CPF Budget Highlights 2024:
https://www.cpf.gov.sg/member/infohub/news/cpf-related-announcements/budget-highlights-2024

Legacy Planning: Going Beyond Your Financial Assets

An article first published on Providend website here:
https://providend.com/legacy-planning-going-beyond-your-financial-assets/

In the previous article, we touched on estate planning, which focuses on distributing your financial assets after death. In this article, we go beyond your financial assets to look at legacy planning. Both are dealing with what you leave behind after your passing, but there are key differences between them: 

  • Scope:
    Estate planning primarily focuses on the distribution of your financial assets, whereas legacy planning encompasses a broader perspective, including passing down your values, principles, and non-financial matters such as family traditions, stories, and personal legacies.
  • Objectives:
    The primary objective of estate planning is to facilitate the efficient transfer of wealth to your beneficiaries, whereas legacy planning aims to preserve your family’s values, traditions, and cultural heritage, and passing down your wisdom, ethics, and life experiences in addition to wealth transfer.
  • Components:
    Estate planning typically involves components such as CPF, insurance, wills, trusts, plus stakeholders’ designations (nominees, beneficiaries, executors, trustees, protectors, etc.) in those components, whereas legacy planning often includes a more comprehensive approach, and may involve documenting family histories, writing letters to share personal values, recording personal messages in audio/video formats, and perhaps establishing charitable giving strategies to support causes important to you.
  • Communication:
    Family communication in estate planning primarily revolves around financial matters and the distribution of assets, whereas legacy planning encourages open and meaningful communication about your values, principles, and non-financial matters within the family.
  • Impact:
    Estate planning has a more immediate impact on the transfer of wealth and assets to the next generation upon death, whereas legacy planning can have a long-term impact by ensuring that your family’s values, traditions, and non-financial legacies are carried forward for generations.

Why Is Legacy Planning Important?

The importance of legacy planning is a personal and individual matter, varying greatly from one person to another. It is a deeply reflective process that centres on what matters most to you and how you wish to be remembered. It goes beyond the usual financial considerations of providing for your loved ones and acknowledges that your legacy is not solely defined by your material possessions, but by the imprint you leave on the hearts and minds of your loved ones. 

Some key reasons why legacy planning is important are:

  • Preserving Family Values and Traditions:
    Legacy planning allows you to pass down your family’s values, traditions, and cultural heritage to future generations. It ensures that your family’s identity and shared history are preserved and celebrated.
  • Fostering Family Unity:
    By engaging in open and meaningful conversations about your values and principles, legacy planning can strengthen family bonds and promote unity. It provides a platform for family members to connect and understand each other better.
  • Transmitting Wisdom and Life Lessons:
    Legacy planning provides an opportunity to share your life experiences, wisdom, and life lessons with your loved ones. These insights can be invaluable for guiding younger generations and helping them make informed decisions.
  • Providing Clarity and Guidance:
    A well-crafted legacy plan can offer clarity and guidance to your beneficiaries. It can outline your wishes for the future, including your expectations regarding wealth, education, philanthropy, and other matters.
  • Minimizing Family Conflicts:
    Clear and documented legacy plan can help reduce the potential for disputes and conflicts among family members after your passing. When everyone understands your intentions and values, there is less room for misunderstandings and disagreements.
  • Creating a Lasting Legacy:
    Beyond financial wealth, legacy planning helps you create a lasting and meaningful legacy that extends beyond your lifetime. It ensures that your family’s legacy continues for generations to come.
  • Personal Fulfilment:
    Legacy planning can be personally fulfilling, as it allows you to reflect on your life, values, and aspirations. It gives you the opportunity to make a positive and lasting contribution to your family and society.

Some Topics for Consideration in Legacy Planning

While there are structured legal documents and planning processes in later-life planning and estate planning, there is no universally standardized document or process for some non-financial matters in legacy planning. Such non-financial matters are highly personalized and may include a wide range of considerations. We can only suggest some topics for your consideration in legacy planning.

Funeral Arrangement

When someone passes away, it is usually an overwhelming and emotional time for the family. Planning ahead and sharing your funeral wishes in advance can make a difference in such a time. A few things to consider in funeral arrangement: 

  • Choose someone to handle your funeral affairs. 
  • Choose a funeral service provider. 
  • Decide on the type of funeral service (Buddhist, Christian, Muslim, Hindu, non-religious). 
  • Decide how the remains will be handled (burial, cremation, store ashes in a crematorium or at home, or scattering of ashes at sea or on land). 
  • Choose a location for the funeral wake (funeral parlour, church, HDB void deck, mosque). 

For more details in funeral arrangement, you may refer to My Legacy website here:
https://mylegacy.life.gov.sg/when-death-happens/arrange-the-funeral/

Family Values

Family values are the guiding principles and beliefs that shape the character, behaviour, and identity of a family unit. They can serve as a moral compass, influencing decision-making, relationships, and the overall culture within the family. In the context of legacy planning, documenting and passing down family values is a significant and deeply personal aspect of ensuring that your family’s identity and principles are preserved for generations to come. 

Family values can encompass a wide range of ideals and principles, and they often reflect the unique experiences and traditions of a family. Some examples of common family values are faith and spirituality, love and mutual support, respect and empathy, integrity and honesty, lifelong learning, hard work and perseverance, generosity and giving back. 

To document family values in your legacy plan, consider creating a written statement or letter that outlines these principles. You may share personal anecdotes and stories that illustrate the importance of each value in your family’s history and encourage discussions among family members about how these values influenced their lives and decisions.

Special Needs

In the previous article on estate planning, we talked about one of the reasons for trust set up is to take care of beneficiaries with special needs. One such trust company specifically set up to provide affordable trust services for persons with special needs is the Special Needs Trust Company (SNTC)[1]. SNTC is a non-profit trust company set up in 2008 with the support of the Ministry of Social and Family Development (MSF)[2].

To set up an SNTC Trust for the beneficiaries with special needs, an initial $5,000 deposit is required. Once the trust account has been set up, you can choose to top up the trust account anytime via cash savings, CPF nomination, insurance nominations, and/or will. 

The specific CPF nomination for special needs is the Special Needs Savings Scheme (SNSS)[3], developed by MSF in partnership with the Central Provident Fund (CPF)[4]. It enables you to nominate your children with special needs to receive a pre-determined monthly payout instead of a lumpsum distribution upon your demise. It is intended to provide long term care for them.

Lifetime Gifting

Lifetime gifting refers to the practice of giving gifts or transferring assets to individuals or entities during your lifetime, as opposed to leaving them as part of your estate to be distributed after your passing. This gifting strategy can be an effective way to manage your wealth and reduce the overall value of your estate, potentially minimizing estate taxes. 

While Singapore does not have gift tax, there are stamp duty implications on a conveyance or transfer of Singapore real estate or stocks and shares. Despite the cost, it is worthwhile to consider lifetime gifting for various reasons:

  • Wealth Transfer:
    Lifetime gifting allows you to provide financial support to your loved ones when it is needed most. For example, you might help your children to pay for downpayment in buying their house.
  • Asset Protection:
    You may transfer your assets to a trust and place them beyond the reach of creditors while still benefiting from the income or use of those assets.
  • Probate Avoidance:
    Assets transferred through lifetime gifting can bypass the lengthy probate process, expediting your loved ones’ access to those assets.
  • Family Harmony:
    Lifetime gifting can help address financial inequalities among your loved ones, potentially reducing disputes and conflicts among family members after your passing.
  • Charitable Causes:
    Lifetime gifting allows you to support charitable organizations and causes you care about. Singapore offers tax incentives for charitable donations, making it financially advantageous to give to charity. 

Investment Mandate

You might have taken many years to learn, practice, finetune and eventually establish your investment approach, and you probably wish to impart your knowledge to your loved ones who would take over your portfolios in your legacy planning. In this case, you may consider writing an investment mandate, which is a document or set of guidelines that describes your investment philosophy and strategy. 

If you don’t have anyone savvy enough to take over your portfolios, you may consider setting up a trust to help you manage your investment according to your investment mandate. You would have the flexibility to put in place a distribution plan from the trust assets to your beneficiaries.

Business Succession

Business succession is a critical area to consider for business owners in legacy planning. You want to ensure not only a smooth transition of your business to the next generation, but also its continued success and stability under the new leadership. 

The key to business succession planning would be the selection of successor. If you plan to pass the business to family members, you need to consider their interests, skills, and willingness to take on leadership roles. This involves identifying potential successors within the family, grooming them through adequate education, training, mentorship, and practical experience.

Conclusion

Beyond financial assets, your legacy encompasses the stories you share, the knowledge you impart, and the wisdom you accumulate over a lifetime. Your legacy is found in the relationships you nurture, the memories you create, and the causes you champion. 

Legacy planning is about crafting a narrative of your life with values, purpose, and love that continues to resonate through generations. It is a testament to the idea that we leave behind not just what we own, but also who we are and the positive change we bring to our family. It truly goes beyond your financial assets. 

For a case study involving later-life planning, estate planning and legacy planning, check out:
https://providend.com/life-decisions-first-before-legacy-decisions/


– Footnotes –

[1] Special Needs Trust Company: https://www.sntc.org.sg/about-sntc

[2] Ministry of Social and Family Development: https://www.msf.gov.sg/

[3] Special Needs Savings Scheme: https://www.cpf.gov.sg/member/account-services/providing-for-your-loved-ones/making-a-cpf-nomination/special-needs-savings-scheme

[4] Central Provident Fund: https://www.cpf.gov.sg/

Estate Planning: Distributing Your Financial Assets After Death

An article first published on Providend website here:
https://providend.com/estate-planning-distributing-your-financial-assets-after-death/

In this article, we focus on estate planning, which is the process of strategically managing and distributing your wealth and assets to future generations after death. It involves creating a comprehensive plan that ensures the smooth transition of assets and values, while minimizing estate complications and conflicts among beneficiaries.

Most people would think of Wills when we mention estate planning, but it is a lot more than just Wills. There are other important areas to consider, such as Jointly Owned Asset, CPF Nomination, Insurance Nomination and Trust Set Up. We will cover all these areas in this article.

Why is Estate Planning Important?

We are no longer around to make or amend decisions after death, hence the greater need for estate planning while you are alive to ensure that your assets are distributed according to your wishes after your passing.

Without an estate plan, your assets will be distributed according to Intestate Succession Act[1] or Muslim Inheritance Law[2] (known as the Faraidh), which might not reflect what you wish for your estate distribution. The entire probate process may take up to six months or more, with increased hassle, stress and cost more for your family members.

Some practical questions to ponder before making your estate plan:

  • Who do you want to appoint to manage and distribute your estate?
  • What are the assets you want to distribute?
  • Who do you want to distribute each asset to?
  • What percentage of your assets you want to distribute to each of your beneficiaries?
  • When do you want to distribute your estate to your beneficiaries?

Wills Writing

Will is a legal document governed by the Wills Act[3] and it outlines how your assets and property should be distributed after death. A few key aspects of a Will are:

  • Asset Distribution:
    A Will specifies how your assets should be distributed among their beneficiaries. The assets might include financial accounts, insurance policies, personal belongings, real estate, and investments. You would need to consider which beneficiaries are suitable for inheriting which assets. For example, you would prefer someone who are investment savvy to inherit your investments.
  • Executor Appointment:
    A Will appoints an executor who is responsible for carrying out the instructions outlined in the Will. The executor manages the estate’s administration, including paying debts, taxes, and distributing assets according to the Will’s provisions. Therefore, you would want to appoint someone you can trust and capable of handling the estate administration.
  • Guardianship for Minor Children:
    If you have minor children, the Will can designate guardians to care for them when you pass on. Obviously, you want to designate someone who you can trust and who love your minor children to be their guardians.
  • Will Drafting:
    You can draft the Will yourself through online will-writing services if your distribution wishes are relatively straightforward. However, to ensure validity of your Will, it is best to engage a lawyer or professional Will writer to draft up the Will. You need to sign the Will in the presence of 2 or more witnesses.
  • Will Storage:
    You can keep your Will in a safe deposit box or with your lawyer. You can upload a digital copy of your Will to My Legacy Vault[4]. Alternatively, you may consider registering your Will with the Wills Registry[5] at Singapore Academy of Law (SAL).

However, not all your assets can be distributed via Will. There are non-estate assets which must be handled by other means, such as Jointly Owned Asset, CPF, Insurance Policies and Trust.

Jointly Owned Asset

In general, the rule of “Right of Survivorship” applies to jointly owned asset, which can be passed to the surviving owner outside the probate process.

For joint bank account, most banks would have right of survivorship clauses in their terms and conditions to facilitate the payout of all the money in the account to the surviving joint account holder, but things might not be straightforward should there be legal dispute from the estate distribution.

For joint property, there are 2 manners of holding, namely joint tenancy and tenancy-in-common. Right of survivorship rule would apply to joint tenancy property, where the property will pass automatically and fully to the surviving tenants. However, right of survivorship rule does not apply to tenancy-in-common property, each tenant owns a distinctive share in the property and the deceased’s interest in the property remains in his own estate, not pass on to the surviving tenants.

To avoid complications, it is generally advisable to spell out how jointly owned assets are distributed in your Will, especially if you intend to deviate from the default right of survivorship rules.

CPF Nomination

A CPF nomination allows you to specify who will receive your CPF savings in cash and the proportion of your savings each nominee will receive when you pass away. It is needed even if you have already made a Will because CPF savings are excluded from your estate and therefore cannot be covered by the Will.

You can make a CPF nomination online at https://www.cpf.gov.sg/member/tools-and-services/forms-e-applications/make-a-cpf-nomination at your own convenience. Alternatively, you may make an appointment and visit any of the CPF Service Centres to make your nomination.

A CPF nomination covers your CPF savings in your Ordinary, Special, MediSave and Retirement Accounts, unused CPF LIFE premiums, and discounted Singtel shares, but not properties bought with your CPF savings, payout from Dependants’ Protection Scheme (DPS), and investments under CPF Investment Scheme (CPFIS). The latter will form part of your estate and you should list them in your Will for distribution.

For more details in making your CPF nomination, you may refer to CPF website here:
https://www.cpf.gov.sg/member/account-services/providing-for-your-loved-ones/making-a-cpf-nomination

Insurance Nomination

Insurance nomination is governed by the Insurance Act[6] and it allows policyholders to nominate beneficiaries to receive the insurance proceeds. With proper insurance nomination, the insurance proceeds do not form part of your estate, which means your nominees can bypass the lengthy probate process and claim the proceeds in shorter time.

There are 2 main types of nominations:

  • Revocable Nomination:
    You can make revocable nomination to anyone and revoke it in the future by a new revocable nomination or a Will. It is only applicable to the death benefits and not living benefits. For example, critical illness claims are paid to policyholder.
  • Trust (Irrevocable) Nomination:
    You can only make trust nomination to spouse and children, and it cannot be revoked without the written consent from all the nominees. It is applicable to both living and death benefits. One major benefit of a trust nomination is the protection of the proceeds against claims from your creditors.

You can make insurance nomination by filling in a Revocable Nomination Form or Trust Nomination Form obtained from your insurance company.

For more details in Insurance Nomination, you may refer to “Your Guide to the Nomination of Insurance Nominees” by the Life Insurance Association (LIA)[7]:
https://www.lia.org.sg/media/2076/nomination-of-insurance-nominees_english_2019.pdf

Trust Set Up

Trust is a legal arrangement governed by the Trustees Act[8] in which you (known as the Settlor) appoint a Trustee to administer and manage your assets for the benefit of the Beneficiaries. You may also appoint a Protector to supervise the actions of the Trustee and to ensure that the Trustee acts in accordance with your intentions.

Trust is optional for estate planning. You may consider setting up a Trust instead of a Will or in combination with a Will for various reasons:

  • Probate Avoidance:
    A Trust does not pass through probate, which is a legal process that involves the validation of a Will and the distribution of assets under court supervision. Assets held in a Trust can pass directly to the beneficiaries outside of probate.
  • Confidentiality:
    When a Will goes through Probate, it becomes a public document, and anyone can access it to see how your assets are distributed. On the other hand, a Trust are typically private arrangements, and the details of asset distribution remain confidential.
  • Flexible Distribution:
    A Trust can be structured to provide a high degree of control and flexibility. You can specify how and when beneficiaries receive distributions under what conditions or restrictions.
  • Asset Management:
    If you have complex assets, such as multiple properties, business interests, or investments, a Trust can include specific instructions for managing and distributing those assets that may be more detailed than what a Will can provide.
  • Special Needs:
    If you have beneficiaries with special needs, such as minor children, individuals with disabilities, or spendthrift tendencies, a Trust can be tailored to address those needs by providing for their financial well-being while ensuring that assets are managed responsibly.

Practical Considerations

Start Early While Still Able

It is beneficial to start estate planning early, especially when you have assets to protect and loved ones to provide for. Some key milestones and life events that often trigger the need for estate planning are:

  • Marriage:
    When you get married, you would want to create or update your estate plan to ensure that your spouse and loved ones like parents and siblings are provided for.
  • Children:
    Once you have children, it is crucial to establish guardianship provisions in your estate plan.
  • Assets Acquisition:
    As you accumulate assets, such as a home, savings accounts, investments, or a business, you should consider how these assets will be managed and distributed in the future.
  • Life Changes:
    Any significant life changes, such as divorce, remarriage, or death of loved ones, can warrant updates to your estate plan.
  • Retirement:
    As you plan for retirement, consider how your assets and income sources will sustain you during retirement and what will happen to your assets when you pass on.

Getting Professional Help

There are various professionals and services you can engage for estate planning:

  • Wealth/Financial Advisers:
    Wealth/Financial advisers can help you assess your financial situation and develop a comprehensive estate plan that takes into account your investments, insurance policies, retirement accounts, and other financial assets.
  • Estate Planning Lawyers:
    Estate planning attorneys specialise in creating legally sound estate plans that meet your specific needs and comply with Singapore laws.
  • Private Trust Companies:
    Private trust companies can act as a trustee to your Trust and manage your assets according to your instructions.
  • Insurance Agents:
    Insurance agents can help you select appropriate policies and coverage for your protection needs. Life insurance can be used for instant estate creation. 

At Providend, our Client Adviser would work with you and engage a network of lawyers and private trust companies to coordinate and execute a comprehensive estate solution for you.

Conclusion

Estate planning is another crucial aspect of life planning. The primary objective of estate planning is to ensure that your assets are managed, preserved, and distributed according to your wishes after your passing. Ultimately, we want to ensure that our loved ones are provided for financially with proper estate planning.


– Footnotes –

[1] Intestate Succession Act: https://sso.agc.gov.sg/Act/ISA1967

[2] Muslim Inheritance Law: https://www.syariahcourt.gov.sg/Inheritance/Overview

[3] Wills Act: https://sso.agc.gov.sg/Act/WA1838

[4] My Legacy Vault: https://mylegacy.life.gov.sg/vault/

[5] SAL Wills Registry: https://wills.sal.sg/

[6] Insurance Act: https://sso.agc.gov.sg/Act/IA1966

[7] LIA: https://www.lia.org.sg/

[8] Trustees Act: https://sso.agc.gov.sg/Act/TA1967

Later-Life Planning: Living Your Later Life with Dignity

An article first published on Providend website here:
https://providend.com/later-life-planning-living-your-later-life-with-dignity/

Later-Life Planning, commonly known as End-of-Life Planning, is the process of making important decisions and arrangements for your future medical care, financial matters, and personal preferences as you approach the later stages of your life or if you become unable to make decisions due to terminal illness or mental incapacity. It involves thoughtful consideration, communication, and documentation of your wishes to ensure that they are respected and honoured during the final stages of life.

In 2020, the Ministry of Health (MOH) and Public Service Division (PSD) set up the My Legacy portal[1] to serve as a one-stop resource to provide information on Later-Life Planning and Legacy & Estate Planning. It also provides a vault to securely store your legal, healthcare and estate documents, and share them only with the people you trust.

Agency for Integrated Care (AIC)[2] has a nicely done infographic[3] that shows you the tools for Later-Life Planning and Estate Planning, and when you should apply and activate these tools at different stages of your caregiving journey:


In this article, we focus on the often-neglected Later-Life Planning in Singapore context.

Why is Later-Life Planning Important?

In the later stage of our life, we may encounter a medical crisis which impairs our own capacity to make decisions. In such cases, we need our loved ones to participate in decisions related to taking care of our health, managing our personal welfare, property and affairs, and deciding whether to carry out extraordinary life-sustaining treatment when we become terminally ill and unconscious.

Planning ahead can help you document your wishes on receiving the care you want and make things easier for your loved ones in deciding how to care and manage for you. It involves thinking and talking about:

  • How would you want to be cared for at the later stage of your life?
  • Who can make decisions for you when you lose mental capacity?
  • How would you want your assets to be managed when you are mentally incapacitated?
  • Do you want extraordinary life-sustaining treatment to prolong your life?

Later-Life Planning Components           

The components for Later-Life Planning in Singapore are Advance Care Planning (ACP) [4], Lasting Power of Attorney (LPA)[5], and Advance Medical Directive (AMD)[6].

Advance Care Planning (ACP)

ACP is a planning process, not a legal document. It lets you communicate what you want for your own health care and guide your loved ones in making important care decisions for you when you encounter a medical crisis which impairs your capacity to make decisions.

Some examples of care preferences would be:

  • Comfort-focused treatment, which aims to provide you with a reasonable quality of life, or full treatment, which pulls out all the stops to keep you alive.
  • Location of care in nursing home, hospital, hospice facility, or at home.
  • Do-Not-Resuscitate (DNR) Order, where you indicate that you do not want resuscitation attempts in the event of cardiac arrest.
Steps to Draft Your ACP
  1. Reflect on what you want:
    Think about the quality of life you want, and the medical treatment you are comfortable with. To explore and share your care preferences, you may use the ACP Workbook here: https://www.aic.sg/resources/Documents/Brochures/ACP Publications/Workbook/ACP Workbook-EN.pdf
  2. Choose your Nominated Healthcare Spokesperson (NHS):
    Your Nominated Healthcare Spokesperson is someone you can trust to convey your care preferences, should you no longer be able to do so. This someone is usually a family member or close friend.
  3. Record your choices:
    Find a certified ACP facilitator to discuss and submit your ACP to the National Electronic Healthcare Record (NEHR)[7]. You may find an ACP facilitator here: https://mylegacy.life.gov.sg/find-a-service/find-advance-care-plan-facilitator/.
  4. Review your ACP:
    ACP is a reflection of you. As your life changes, you may make new decisions. When you do, update your ACP and loved ones.

For more details in making your ACP, you may refer to My Legacy website here:
https://mylegacy.life.gov.sg/end-of-life-planning/make-an-advance-care-plan/

Some Consequences if You Don’t Have ACP
  • Healthcare providers may be uncertain about the types of treatment you would want or refuse in critical medical situations and can lead to delays in treatment.
  • Medical professionals may default to providing aggressive treatments to prolong life, even if those interventions are not aligned with your preferences.
  • Family members may have differing opinions about the appropriate medical care for you and can lead to disagreements, conflicts, and added stress for your loved ones.

Lasting Power of Attorney (LPA)

LPA is a legal document governed by the Mental Capacity Act (MCA)[8] passed in 2008. It allows you (the ‘Donor’) to appoint one or more trusted people (the ‘Donee’) to help you make decisions on your behalf when you lose mental capacity.

A mental incapacity could happen due to advanced dementia, a mental health illness, a coma, and unconsciousness caused by illness or medical treatment. Once your loss of mental capacity is certified by a registered medical practitioner, your Donee(s) can use the LPA to manage your personal welfare and/or property & affairs.

Steps to Draft Your LPA
  1. Choose your Donees:
    You can appoint 1 or more Donees to manage your personal welfare and/or property & affairs. You can also appoint replacement Donees as a standby to take over all or some of the authority that the original Donee has been given when he/she is no longer able to carry out the responsibilities.
  2. Complete your LPA Form 1 or Form 2:
    • With LPA Form 1, you may appoint 1 or 2 Donees, appoint 1 replacement Donee, and grant Donee(s) general powers with basic restrictions. You can draft your LPA Form 1 through the Office of Public Guardian Online (OPGO) portal:
      https://opg-eservice.msf.gov.sg/OPGO/Login.aspx
    • However, if you want to appoint more than 2 Donees, more than 1 replacement Donees, or grant Donee(s) customized powers, you have to engage a lawyer to draft your LPA Form 2.
  3. Certify your LPA:
    Once all your Donees have accepted their appointments, you will need to certify your LPA by visiting a Certificate Issuer (CI), who can be an Accredited Medical Practitioner, a Practising Lawyer, and/or a Registered Psychiatrist. You may find a CI here:
    https://opg-eservice.msf.gov.sg/LPA/CIMapService.aspx
  4. Register your LPA:
    Your LPA will only be valid after it has been registered with Office of Public Guardian (OPG)[9].

For more details in making your LPA, you may refer to My Legacy website here:
https://mylegacy.life.gov.sg/end-of-life-planing/make-a-lasting-power-of-attorney/

What Happens if You Don’t Have LPA?

If you lose your mental capacity without an LPA, your loved ones must apply to the Family Courts to be appointed as your deputy before they are authorized to make decisions and act on your behalf. The deputyship application process can be time-consuming, costly, and potentially stressful for your loved ones.

While the court process is underway, there may be delays in making important decisions about your medical treatment, personal welfare, and financial matters. These delays can be problematic, especially for urgent decisions.

The deputyship application must state the care and financial plan for you, the deputy powers to apply for and which powers various organisations need to let you perform transactions as your deputy. It is a legally demanding process, likely involve lawyers, and the outcome is subject to the Courts’ approval.

For more details in Deputyship Application, you may refer to the SG Courts website here:
https://www.judiciary.gov.sg/family/deputyship

Advance Medical Directive (AMD)

AMD is a legal document governed by the Advance Medical Directive Act (AMDA)[10] passed in 1996. It allows you to state whether you want any extraordinary life-sustaining treatment to prolong your life when you are suffering from an incurable terminal illness and incapable of expressing rational judgement on the treatment.

Some reasons you might opt out of extraordinary life-sustaining treatment:

  • Quality of life deteriorate due to severe pain, unnecessary suffering or loss of autonomy
  • Avoid financial burden on your families from expensive medical treatment
  • Emotional and psychological impact on your loved ones watching you undergo aggressive treatment with little chance of recovery
Steps to Draft Your AMD
  1. Obtain an AMD form:
    You can obtain the forms from medical clinics, polyclinics, hospitals, or download the AMD Form 1 online from:
    https://www.moh.gov.sg/docs/librariesprovider5/forms/form1amd(270905).pdf
  2. Consult a doctor with a witness:
    The AMD must be made through a doctor, who has the responsibility to ensure that you are not being forced into making the AMD, not mentally disordered, and understand the nature and implications of making the AMD.
  3. Return the form to the Registrar of AMD:
    The completed form must be submitted in a sealed envelope by mail or by hand to the Registrar of AMD at MOH, located at College of Medicine Building, 16 College Road, Singapore 169854.

For more details in making your AMD, you may refer to the MOH website here:
https://www.moh.gov.sg/policies-and-legislation/advance-medical-directive

What Happens if You Don’t Have AMD?

If you lose your mental capacity and suffer from an incurable terminal illness without an AMD, your doctor will discuss with your family members and decide on whether to prolong your life by giving or applying extraordinary life-sustaining treatment. This would place emotional burden on them in making difficult decisions on your behalf, especially if they are unsure about your wishes.

There could be disagreements among family members about the best course of medical treatment for you, rendering the decision-making process more difficult to reach a consensus. The absence of clear decisions could lead to delays in receiving necessary medical treatment.

Practical Considerations

Start Early While Still Able

Later-Life Planning is a critical aspect of life that often goes unaddressed until it’s too late. Many would think that accidents or medical mishaps won’t happen to them when they are young. Mental incapacity is usually the furthest concern in their mind. However, we know that such crisis can strike anytime in our life.

Starting Later-Life Planning early is a proactive and prudent step that offers numerous benefits to us and our loved ones. Initiating the planning process well in advance can lead to better outcomes and greater peace of mind for everyone involved. We can ensure our wishes are respected, reduce emotional stress for our loved ones, facilitate honest conversations with family members, avoid hasty decisions in times of crisis, secure legal documents (LPA and AMD) in place, give you time to evaluate various care options, and provide clarity to your loved ones.

Make Use of National Registry Services

Do make use of the following National Registry and Depository Services to register and store your Later-Life Planning documents:

  • ACP: National Electronic Health Record (NEHR), ACP facilitator will submit for you
  • LPA: Office of Public Guardian (OPG)
  • AMD: Registry of Advance Medical Directives, need to submit at MOH office
  • My Legacy Vault: https://mylegacy.life.gov.sg/vault/

The My Legacy Vault is particularly useful to consolidate all your documents in one secure storage, and you can share them with your trusted loved ones.

Engage Professional Help

As you can tell from the steps in making ACP, LPA and AMD, the process involves a fair amount of cultural, medical, legal, and practical considerations in preparing these documents. Therefore, it is beneficial to engage professionals to help you in preparing these tools.

Here are some reasons for getting professional help:

  • Complex Legal Framework:
    There are specific legal requirements and regulations governing matters such as LPA and AMD. Legal professionals can help you in navigating these legal complexities and ensuring that your documents are valid and compliant.
  • Cultural and Religious Considerations:
    Singapore is a diverse society with a range of cultural and religious practices. You will need professionals who understand these nuances in creating a later-life plan that respects your cultural and religious beliefs, ensuring that your wishes are upheld while adhering to cultural norms.
  • Minimizing Family Conflict:
    In a culture that value family harmony, professional guidance can help prevent potential conflicts among family members. Professionals can provide an objective perspective and guide discussions to ensure that everyone is on the same page regarding your preferences.
  • Safeguarding Assets and Finances:
    Engaging financial planning professionals ensure that your financial assets are properly managed and distributed according to your wishes.
  • Navigating Healthcare Decisions:
    Medical professionals can help you understand the implications of healthcare and medical choices and guide you and your caregivers in making well-informed medical decisions.

Conclusion

Later-Life Planning is a crucial aspect of Life Planning that ensures our desires and preferences are respected during times of vulnerability. In Singapore context, we can tap into various organizations that provide resources in making later-life plan with ACP, LPA, and AMD. By embracing Later-Life Planning, we can find peace of mind, relieve our loved ones of burdensome decisions, and live our later life stage with dignity.


– Footnotes –

[1] My Legacy: https://mylegacy.life.gov.sg/

[2] AIC: https://www.aic.sg/

[3] Infographic: https://www.aic.sg/caregiving/PublishingImages/Content%20Images/What-You-Should-Apply.jpg

[4] ACP: https://www.aic.sg/care-services/all-about-acp

[5] LPA: https://www.msf.gov.sg/what-we-do/opg/lasting-power-of-attorney/what-is-a-lasting-power-of-attorney

[6] AMD: https://www.moh.gov.sg/policies-and-legislation/advance-medical-directive

[7] NEHR: https://support.healthhub.sg/hc/en-us/articles/15823581714073-What-is-National-Electronic-Health-Record-NEHR-

[8] MCA: https://sso.agc.gov.sg/Act/MCA2008

[9] OPG: https://opg-eservice.msf.gov.sg/

[10] AMDA: https://sso.agc.gov.sg/Act/AMDA1996

Wealth Planning for Your Child’s Tertiary Education (Part 2) – Achieving the Financial Goal

This is part 2 of my second article written in the capacity of Solutions Specialist at Providend looking at wealth planning for children tertiary education. The article was first published on Providend website here:
https://providend.com/wealth-planning-for-your-childs-tertiary-education-part-2-achieving-the-financial-goal/

In Part 1 of this article, we established a baseline financial goal for your children’s tertiary education. We now turn our attention to wealth planning for achieving this goal.

Inflation of Financial Goal

Based on the country selection (Singapore, Australia, United Kingdom, or United States) and academic field (medicine vs non-medicine), we have determined a baseline lump sum goal to set aside for tertiary education from our research data in Part 1.

By considering the inflation rates for tuition fees and living expenses, we projected the inflation-adjusted lump sum goal that you should aim for when it is time to send your children for tertiary education. The following graph shows the cost inflation for non-medicine courses in the 4 countries we cover:


We can see from the graph that the total education cost will inflate over time, approximately doubling in 20 years. Therefore, you would want to start planning for your children’s education fund early.

For overseas universities, there is an added uncertainty in the currency exchange rate. We won’t be able to predict the foreign currency movement in the future with certainty. So what you can do is to add a buffer amount to the goal for any possible SGD depreciation against the targeted foreign currency.

With so many moving parts, we know the targeted education fund amount is based on best estimates. You would need to review and revise the amount regularly to cater for changes in education needs, university landscape, inflation rates, and currency movement.

Creating a Financial Plan

After setting a goal to achieve in a suitable time horizon, you can create a financial plan using the following steps:

  1. Assess your current financial situation
    Take stock of your current assets, liabilities, income, and expenses. Determine how much you can commit to your children’s education goals.
  2. Calculate the required savings/investment amount in your children’s education fund
    Consider expected investment returns to determine how much you need to save and invest to reach your goal. Open a separate account to deposit the initial lump sum and set up a regular saving mechanism if necessary.
  3. Select an appropriate investment vehicle
    Consider various investment options based on your risk tolerance, time horizon, and expected returns. Diversify your investments to manage risk and returns.
  4. Monitor and adjust your plan
    Regularly review your financial goal amount and track your investment returns against your goal. If necessary, adjust your plan to cater for changing circumstances.
  5. Consider professional advice
    If you are not comfortable about financial planning and investing on your own, consider engaging a trusted financial advisor to guide you in creating a plan based on your specific situation.

Risk Tolerance

An important factor that determines the appropriate investment vehicle is your risk tolerance, which is how much volatility you can tolerate in the investment. At Providend, we use a process of risk profiling to determine your willingness, ability and need to bear risk:

  • Willingness to bear risk
    This refers to your emotional comfort level with uncertainty and the potential for loss. Your willingness to bear risk can vary depending on factors such as personal temperament, past experiences, and risk preferences.
  • Ability to bear risk
    This refers to your financial capacity to absorb and recover from potential losses, and the ability to hold through the time horizon without having the need to liquidate your investment prematurely. Your ability to bear risk is determined by your personal financial health, such as having adequate emergency funds, sufficient insurance coverage and job stability.
  • Need to bear risk
    This refers to the amount of risk you need to take to achieve your financial goal. Your need to bear risk is influenced by factors such as growth target, time horizon and desired level of return on investment. The higher the investment return you seek, the higher is your need to bear risk.

It is important to consider these 3 factors when assessing your risk tolerance and making decisions related to your financial plan and investment instruments. This will allow you to make more informed investment and cash flow decisions that are more likely to help you achieve your financial goals.

Case Study

Let us look at an example. Suppose you have 2 kids, who will be entering university 8 and 16 years later respectively. You plan to send them to non-medicine courses, one to a local university and the other to Australia. The following table shows the projected education costs based on our research data in Part 1:

planning-for-your-childrens-education-part-2-2

The inflation-adjusted education cost is projected to be $126,400 and $575,300 when your 2 kids are starting their respective university courses. Let us assume that you can set aside $300,000 for their university education, and that your risk profile is assessed to be high risk.

We can consider 2 portfolios[1], one for each child’s education fund. Portfolio 1 for child 1 is a balanced portfolio of 60% equity and 40% bond delivering 4.5% p.a. return. Portfolio 2 for child 2 is a 100% equity portfolio delivering 6.5% p.a. return.

The table below presents two portfolios in which the $300,000 is divided, along with a comparison to the portfolio values if the same capital is invested in a fixed deposit with a 2% p.a. interest rate:

planning-for-your-childrens-education-part-2-3


We can see that the 2 portfolios proposed would be able to meet the financial goals you set for the 2 kids if your capital is invested in equities and bonds. If you choose to place your capital in fixed deposits, you will need larger capital, almost double the capital for portfolio 2 to meet its goal.

Conclusion

With the anticipated rise in education costs due to inflation, it is vital to include a children’s education fund in your wealth planning for the family.

The total cost of university education can range from $100,000 to $1 million in SGD today, depending on many factors such as country, university, academic field, degree level, inflation, and foreign currency exposure. It is not a small amount to set aside and requires a well-considered financial plan to achieve successfully.

Effective education planning entails careful consideration of your children’s education needs and thus the financial goal, which we examined in the first part of this article; and proactively formulating and managing a financial plan to achieve this goal, which we explored in the second part.

Neither the goal nor the plan are cast in stone. You need to regularly review the financial goal, to see if it needs to be adjusted to meet your children’s education needs during their formative years. You also need to regularly review the financial plan, to ensure the investment performance is on track to meet our goal. Should there be deviations in the goal and performance, you will need to adjust your plan accordingly.

In conclusion, planning for your children’s education is a proactive and thoughtful approach to securing a bright future for them. By understanding their unique needs, setting clear goals, making financial plans, and adapting the plans over time, you can be in a much better position to provide your children with the necessary foundation and opportunities to thrive academically, personally, and professionally.

– Footnotes –

[1] The returns of the 2 portfolios are stated for illustration purposes and would depend on the actual performance of the underlying assets.

My Series of Providend Media Content

This blog post serves as a content page for a series of media content written/recorded and released on Providend website. I would update the list as I add more content in the capacity of Solutions Specialist at Providend to the blog.

Wealth Planning for Your Child’s Tertiary Education (Part 1) – Setting a Financial Goal

This is my second article written in the capacity of Solutions Specialist at Providend looking at wealth planning for children tertiary education. The article has 2 parts, and part 1 was first published on Providend website here:
https://providend.com/wealth-planning-for-your-childrens-tertiary-education-part-1-setting-a-financial-goal/

For many Singaporean parents, sending their children to university is an important life goal. A good tertiary education gives their children a head start on their future career. As education costs are expected to increase in the future, it is important to plan and set aside a children’s education fund as part of their wealth planning for the family.

At Providend, we believe in supporting our clients to achieve their life goals by providing them with honest, independent, and competent advice. In the area of children’s education planning, we have put in many hours of research to examine the total cost of a university degree at both local and overseas institutions.

The total cost includes 2 main components, namely tuition fees and living expenses. This information will give our clients a rough idea of the amount they need to set aside for their children’s education fund. Once the amount is determined, they can add this financial goal to their wealth plan.

In this 2-part article, we will examine the cost of tertiary education in Part 1, and look at the financial planning aspect in Part 2.

Education Planning Philosophy

Providend’s planning philosophy is to first make life decisions before making financial decisions. Planning for children’s education is no exception. Therefore, we begin education planning by considering the following factors:

  • Time Horizon: When will your children begin their tertiary education?
  • Country Selection: Will you send your children to local or overseas universities? Which country if overseas?
  • University Selection: Which university will you send your children to?
  • Academic Field: Which course of study will your children go to?
  • Degree Level: Which degree level will your children attain? Bachelor’s, Masters, or PhD?

You may not have definite answers for the above factors initially, but they set you thinking about your children’s education needs. These needs might be based on your wishes while your children are still young, and revised regularly according to your children’s characters, talents, interests, and inspiration during their growing up years.

Once the above factors are determined, we can estimate the amount you need to set aside.

Education Research Methodology

The most recent education research we conducted was completed in April 2023. The main objective was to estimate the total cost of university education in various countries, universities, and academic fields.

Source of Research Data

Information on tuition fees and living expenses were retrieved from each selected university’s portal. CPI inflation data were taken from Singapore Department of Statistics (DOS) database[1] and World Bank database[2] for Singapore and overseas universities respectively.

Country Selection

The scope of our research covered universities in Singapore and other popular countries for Singapore parents. The top 3 overseas study destinations[3] we covered were Australia (AU), United Kingdom (UK), and United States of America (US).

University Selection

In each country, we chose the top universities in that country for conservative figures. Specifically, we selected all 6 autonomous universities[4] in Singapore, 3 universities from the Group of Eight[5] in Australia, 3 Universities from the Russel Group[6] in United Kingdom, and 3 Universities from the Private and Ivy League[7] in United States.

Academic Field

Since academic fields are very broad, we divided them into two general categories called medicine (including Dentistry) and non-medicine (Law, Business, Science, etc). The tuition fees for the courses under the non-medicine field do not generally deviate much to warrant further generalization into finer granularity.

Degree Level

We focused our research on undergraduate degrees. This is the first degree level for tertiary education, and it determines the duration for completing the whole programme. Anything beyond the first degree would mean additional years of study resulting in higher total education costs.

Tuition Fees

Tuition fees can vary widely across different universities and different academic fields. We used the 75th percentile to arrive at a good representative figure for tuition fees while avoiding being skewed by extremely high tuition outliers.

Tuition fees generally increase yearly due to inflation. We retrieved historical tuition fees from each university’s portal as far back as possible and used them to calculate the average tuition fees inflation. This enabled us to estimate the projected tuition fees in future.

Different universities adopt different fee structures. Singapore universities offer a cohort-based fee system, where the annual tuition fees for students who matriculate in a specific year are fixed throughout the duration of study. For overseas universities, tuition fees are typically calculated per unit, per term, or per quarter, and the fees are reviewed and adjusted regularly.

The total tuition fees for the entire course would be annual tuition fees multiplied by number of years of study for Singapore universities, and the sum of inflation-adjusted tuition fees over the number of years of study for overseas universities.

Living Expenses

Each university portal presented this information in different ways. We ended up normalising the living expenses into categories, such as accommodation (hostel and utilities), food (campus meals with occasional dining out), personal expenses (basic lifestyle), transport (public transport with occasional taxi or private hire rides), study cost (books and stationery) and miscellaneous expenses.

We calculated the average annual increase in living expenses by averaging the past 30 years of CPI inflation rates. The total living expenses would be the sum of inflation-adjusted living expenses over the number of years of study.

Foreign Currency Exchange Rate

For overseas universities, both the tuition fees and living expenses were quoted in their respective currencies. We converted the foreign currency to the Singapore Dollar (SGD) using the exchange rate on 31 March 2023. The exchange rates used were 1 Australia Dollar (AUD), 1 British Pound (GBP) and 1 United States Dollar (USD) to 0.8895, 1.6410 and 1.3306 SGD respectively.

Key Findings in University Education Research

Based on the above research methodology, we present a summary of the total university education costs in various countries in the following tables:


Some key findings from the research data:

  • The total cost of university education ranges from slightly under $100,000 to almost $1 million in 2023.
  • The total cost of overseas university education is higher than that of local study, with United States being the costliest location, followed by United Kingdom, Australia, and Singapore.
  • The total cost of a medicine course is higher than that of a non-medicine course, due to 2 factors, i.e., higher tuition fees and longer duration of study.
  • Each university in each country have different inflation rates for their tuition fees and living expenses. The average inflation rates are 4% and 3% for tuition fees and living expenses respectively.
  • On average, the total cost for Singapore university education has increased by 8% since our previous research done in May 2021.
  • Over the same period, the total cost of overseas university education also increased in terms of their respective currencies, but the increases were softened in SGD terms as we saw a strengthening SGD against those foreign currencies.
  • Specifically, we saw total costs for an Australia education reduced by an average of 4.5% amidst the backdrop of AUD weakened by about 15% against SGD.
  • On the other hand, total cost for United Kingdom and United States education increased by an average of 5% and 6% respectively, while GBP and USD weakened by about 13% and less than 1% against SGD respectively.

With an estimated cost in 2023, we can project the amount needed based on the average inflation rates when it is time to send our children for university studies. This serves as the baseline financial goal of our wealth planning. In the next part, we will explore how to achieve this goal.

– Footnotes –

[1] DOS: https://www.singstat.gov.sg/find-data/search-by-theme/economy/prices-and-price-indices/latest-data

[2] World Bank: https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG

[3] AECC Global: https://www.aeccglobal.sg/blog/top-5-study-overseas-destinations-for-the-singapore-students/

[4] MOE: https://www.moe.gov.sg/post-secondary/overview/autonomous-universities/

[5] Group of Eight: https://go8.edu.au/

[6] Russell Group: https://russellgroup.ac.uk/about/our-universities/

[7] Private and Ivy League: https://www.uopeople.edu/blog/what-are-the-12-ivy-league-schools/

Singapore Budget 2023 – Highlights on Personal Finance

This is my maiden article written in the capacity of Solutions Specialist at Providend highlighting the personal finance aspect in the Singapore Budget 2023. The article was first published on Providend website here:
https://providend.com/singapore-budget-2023-highlights-on-personal-finance/

On 14 February 2023, Deputy Prime Minister and Finance Minister Lawrence Wong gave his Budget Speech “Moving Forward in a New Era” amidst a background of fighting COVID-19 for more than three years, a surprise Ukraine war at the start of 2022, escalating oil and gas prices, a global shortage of food items, and a brutal worldwide inflation reaching historic levels in many advanced economies. Singapore was not spared of such inflationary pressures.

This year’s budget focused on five key areas to deal with inflation and move forward in a new era:

  1. Enhancing support measures for Singaporeans
  2. Growing our economy and equipping our workers
  3. Strengthening our social compact
  4. Building a resilient nation
  5. Maintaining a competitive, resilient, and fair tax system

Area 2 is targeting businesses through various funds, credits, and grants for building capabilities, nurturing innovation, dealing with cost pressures, training workers, and enhancing employment support. Area 4 is focusing on building resilience in organisations, the economy, infrastructure, climate, and people in Singapore. Their impact on our personal finance is indirect.

Therefore, we will focus on the remaining three areas and provide a summary of those measures that have a direct impact on our personal finance in this article. The changes due to those measures are indicated in bold and/or parentheses. The details of the measures can be found on the Ministry of Finance (MOF) budget website (links are given at the end of this article for your reference).

Enhancing Support Measures for Singaporeans

The government is helping Singaporeans cope with the increase in daily expenses due to higher inflation and GST increase by enhancing the permanent GST Voucher (GSTV) and Assurance Package (AP) schemes.

a. Enhancement to GSTV Scheme
The GSTV – Cash quantum will be further increased over 2023 and 2024. The amount of increase is determined by the Annual Value (AV) of the property.

b. Enhancement to AP Scheme
All eligible adult Singaporeans will receive additional AP Cash in December over the remaining years of the AP.

c. Enhancement to Community Development Council (CDC) Voucher Scheme
Every Singaporean household will receive additional $100 CDC Vouchers in January 2024.

d. 2023 Cost of Living (COL) Special Payment
All eligible adult Singaporeans will receive one-off cash in June 2023.

e. 2023 COL Seniors’ Bonus
All eligible senior Singapore citizens will receive one-off cash in June 2023.

f. 2023 COL U-Save Special Payment
All eligible Singaporean households will receive double the amount of the regular GSTV – U-Save in April 2023, July 2023, and October 2023.

g. 2023 Top-ups to Child Development Account (CDA), Edusave Account, and Post-Secondary Education Account (PSEA)
Families will receive additional one-off support for their children’s expenses in 2023.

Implications of Support Measures

There are altogether 7 measures to defray the increased cost of inflation and GST. The first three measures (a to c) are enhancements to the existing GSTV and AP supports announced in the 2022 budget, and the last four measures (d to g) are new one-off support announced in this year’s budget.

The benefits are given in various forms: cash for general expenses (a, b, d, e), CDC vouchers for spending at participating hawkers, merchants, and supermarkets (c), U-Save Rebates for utility expenses (f), and CDA/Edusave/PSEA top-ups for education expenses (g).

It might be a daunting task trying to estimate the total benefits one can receive from all the measures announced in the past and present budgets. Fortunately, the government has provided a Support Calculator just for this purpose. The link to this calculator is given at the end of this article.

Strengthening Our Social Compact

The government is strengthening our social compact in three key areas: families, income inequality, and ageing population.

a. Building a Singapore Made for Families
i. Increase the CPF Housing Grant by $30,000 for eligible First-Timer Families buying a 2- to 4-room resale flat, and by $10,000 for those buying a 5-room or larger resale flat.

ii. Increase the CPF Housing Grant by $15,000 for eligible First-Timer Singles buying a 2- to 4-room resale flat, and by $5,000 for those buying a 5-room resale flat.

iii. Change in Working Mother’s Child Relief (WMCR) from Percentage of Earned Income to Fixed Dollar Tax Relief with effect from Year of Assessment (YA) 2025.

iv. Lapse the Foreign Domestic Worker Levy Tax Relief (FDWLR) with effect from YA2025, in view of the concessionary migrant domestic worker levy that benefits all families who need help with caring for their dependents.

v. Increase the Baby Bonus Cash Gift (BBCG) by $3,000 for eligible Singaporean children.

vi. Increase Government Contributions to CDA by Increasing First Step Grant (FSG) and Co-matching Cap.

vii. Extend the Baby Support Grant (BSG) of $3,000 to eligible Singaporean children born from 1 October 2022 to 13 February 2023.

b. Providing Assurance in Our Silver Years
i. Increase in Senior Worker CPF Contribution Rates gradually from 2023 to 2030.

ii. Increase in Minimum CPF Monthly Payouts to $350 for all seniors on the Retirement Sum Scheme (RSS).

iii. Increase in the CPF Monthly Salary Ceiling from $6,000 to $8,000 by 2026, while maintaining the CPF Annual Salary Ceiling at $102,000.

Implications of Social Compact

1. The CPF Housing Grant will help eligible First-Timer families and singles in purchasing resale HDB flats. They can either opt for taking a smaller loan to reduce their monthly mortgage payments, or casting their net wider for a resale flat with an increased budget.

2. The change in WMCR from percentage to fixed dollar amount will help lower-income working mothers in getting higher tax relief than they could previously. Together with the increase in BBCG, CDA’s FSG and Co-matching cap, and the extension of BSG to include children born before the budget day, they help married couples in their parenthood journey.

However, working mothers with assessable income above $53,333 (1st child), $50,000 (2nd child) or $48,000 (3rd child and beyond) will get lower tax relief and need to budget more for their personal income tax.

3. The increase in senior worker CPF contribution rates was announced in 2019 and the first two steps of increases had already taken place by 1 January 2023. The next increase will happen on 1 January 2024. These gradual increases will allow senior workers in saving more for their retirement.

4. The increase in minimum CPF monthly payout to $350 will help those seniors currently receiving less than $350 on RSS with a higher amount to spend. However, it also means that their RA savings will be depleted sooner. These seniors can opt to join CPF LIFE any time before turning age 80 to receive lifelong payouts.

5. The increase in CPF monthly salary ceiling will help those drawing more than $6,000 salary but less than $30,000 bonus with higher CPF contributions, which will help them achieve a higher retirement nest egg, but reduce their disposable income from lower take-home pay.

Maintaining a Competitive, Resilient, and Fair Tax System

The government is making further adjustments to our tax structure.

a. Increase Buyer’s Stamp Duty (BSD) rates for higher-value properties
BSD is increased for residential property in excess of $1.5 million and non-residential property in excess of $1 million.

b. Increase Additional Registration Fee (ARF) rates for higher-end and luxury cars
ARF is increased for cars with Open Market Value (OMV) of more than $40,000.

c. Cap Preferential ARF (PARF) rebates at $60,000 to avoid excessive rebates to more expensive cars upon deregistration

d. Increase excise duty on tobacco products by 15% to discourage their consumption

Implications of Tax Changes

Obviously, the tax changes will impact more on the buyers of higher-value properties and vehicles through BSD and ARF respectively. In addition, PARF rebates are also capped when more expensive cars are deregistered. Last but not least, the consumption of tobacco products is discouraged by the increase of excise duties.

Warmest regards,
Solutions Team

Reference Links

MOF Singapore Budget Website:
https://www.mof.gov.sg/singaporebudget

FY2023 Singapore Budget Statement:
https://www.mof.gov.sg/singaporebudget/budget-2023/budget-statement

FY2023 Singapore Budget Speech Video:
https://www.mof.gov.sg/singaporebudget/resources/videos

FY2023 Singapore Budget Booklet:
https://www.mof.gov.sg/singaporebudget/resources/budget-booklet

FY2023 Singapore Budget Infographics:
https://www.mof.gov.sg/singaporebudget/resources/budget-infographics

FY2023 Singapore Budget Navigator:
https://www.mof.gov.sg/singaporebudget/resources/budget-navigator

FY2023 Singapore Budget Support for Households:
https://www.mof.gov.sg/singaporebudget/resources/support-for-households

FY2023 Singapore Budget Support Calculator:
https://supportgowhere.life.gov.sg/budget/support-calculator

GST Voucher (GSTV) Scheme:
https://www.gstvoucher.gov.sg/

Assurance Package (AP) Scheme:
https://govbenefits.gov.sg/

Community Development Council (CDC) Voucher Scheme:
https://vouchers.cdc.gov.sg/

Design a site like this with WordPress.com
Get started