Tan, Chan & Partners - Budget 2004

Changes were made to the Central Provident Fund (CPF) voluntary contribution cap to encourage saving for retirement. With immediate effect, the voluntary cap has been increased to the mandatory contribution cap of 17 months of the CPF salary ceiling, with voluntary contribution rates aligned with the actual mandatory contribution rate of 33%.

For the tax relief cap on voluntary CPF contributions for the self-employed, see Tax relief cap on voluntary CPF contribution by the self-employed below.

The threshold for CPF Minimum Sum top-ups to the Retirement Accounts of parents and non-working spouses will be relaxed. Individuals would only require net balances in their Ordinary and Special Accounts (Including amounts withdrawn for investment) of more than 1.5 times the prevailing Minimum Sum to make the top-ups. Currently, a member must have a regrossed CPF balance of more than twice the prevailing Minimum Sum cash component. The CPF board will release details later.

The Government will also simplify the Supplementary Retirement Scheme so that there is a common absolute contribution cap of 17 months of the prevailing CPF salary ceiling for both employees and the self employed. This will take effect from year of assessment 2006.

In an attempt to distribute some of the budget surplus back to Singaporeans and to foster a caring and inclusive society, the Government has announced the following:

A special one-off contribution of $100 to the Edusave Account of every eligible primary and secondary student, over and above the Edusave contribution given annually by the Government.

A top-up of Medi-save accounts of all adult Singaporeans to help them cope with higher Medishield premiums. The top-ups, which range from S$50- $350 for each Medisave account, will vary according to the edge of the recipient. Older Singaporeans will receive larger top-ups. See table on Medisave Top-ups.

An injection of an additional $100 million to bring the Medifund to $1.1 million with the purpose of helping lower income and older Singaporeans meet their healthcare expenses.

A top up of $100 to the CPF Special / Retirement Accounts of Singaporeans aged 50 and above to help them save for their retirement needs.

Rebates in utility bills through the utilities Save Scheme for one- to - five room HDB households. The rebate range from $60 to $200 according to the size of the flats. The rebates will be paid in two instalments in July 2005 and January 2006. See table on Utilities Save Rebates.

Creations of a Comcare Fund starting with $500 million to do more for needy Singaporeans. With a target size of $I billiom, the Comcare Fund will deliver assistance programmes support needy families, children from disadvantaged backgrounds, and senior citizens and disabled persons who may need longer term assistance.

Table 1. Medisave top-ups

	Age as at 1 Jan 2005
	21-39	40-49	50-59	60 and above
Top-Up Quantum	$50	$100	$250	$350

Table 2. Utilities save scheme rebates

HDB Flat Type	Rebate in July 2005	Rebate in Jan 2006	Total rebate quantum
1 -room	$100	$100	$200
2 -room	$100	$100	$200
3 -room	$50	$50	$100
4 -room	$40	$40	$80
5 -room	$30	$30	$60

q Baby Bonus Scheme

To give parents more flexibility, they are now allowed to save up to the co-savings limit at any time within the six-year period.

In addition to existing uses like infant care, childcare and kindergarten, the range of uses will also be widened to include health insurance and early intervention programmes for children with special needs.