Just as Budget 2020 had short-term, midterm and long-term implications, we can also adjust our personal finances across these time periods to better prepare for our financial future.
In the short term, think about how you can better manage your cash flows. With the goodies provided by the Care and Support package that can amount to $1,300 for a young family, is there room to save/invest more in 2020?
In the midterm, you will have $500 to $1,000 more in SkillsFuture credit to upskill or pursue your interest. Knowing that we are our most important financial asset, use this opportunity to build up new capabilities and improve your earning capacity.
In the long-term, you or your parents can benefit from the enhanced retirement support for seniors. Specifically, the Matched Retirement Savings Scheme that is effective between 2021 and 2025 can give you up to $3,000 of government matching over 5 years when you top up your CPF.
For example, if you turn 55 next year with $60,000 in your Retirement Account, you can expect to get about $570/month through CPF LIFE. If you take advantage of this scheme and top up $600/year to your RA over the next 5 years (and the government matches with another $600/year), your CPF LIFE payout can increase by $480/year for life!
1. The government announced measures to cope with the outbreak of COVID-19.
These are grouped under two packages.
1a. Stabilisation and Support Package for businesses
This package focuses on helping all businesses retain their workers through the Jobs Support Scheme and support wage increases through a special Wage Credit Scheme.
To help businesses with their cashflow, a Corporate Income Tax Rebate for YA2020 at 25% of tax payable, capped at $15,000 per company, will be granted.
There will also be specific support for sectors directly affected by COVID-19, i.e. tourism, retail, aviation, food services and point to point transport. These come in the form of tax rebates, bridging loans and additional funding.
1b. Care and Support Package for households
- All Singaporeans aged 21 and above will get a cash credit of $100 to $300; while every adult with a child aged 20 and below will receive another $100 payout
- A $100 top-up to PAssion Card holders aged 50 and above
- U-Save rebates will be doubled for eligible HDB households, with more for larger households of 5 or more people
- Rebates of Service and Conservancy charges of 1.5 to 3.5 months will be extended by one more year
- Workers under Workfare will get a special payment of 20% more for work done in 2019 with a minimum of $100 in cash
- Needy households to get $100 grocery vouchers for use in major supermarkets in 2020 and 2021
2. The GST rate will remain at 7% in 2021.
Though the increase cannot be put off indefinitely. GST increase from 7% to 9% will still happen sometime between 2022 and 2025.
- Transitional support to help households cope with this change.
- Households will receive at least 5 years’ worth of offsets to deal with the additional GST expenses, and up to 10 years’ worth for lower income households.
- Under the Assurance Package, every adult Singaporean will receive a cash payout of S$700 and S$1,600 over five years.
- This is in addition to permanent support given annually via GST vouchers.
3. To grow our economy and transform our businesses.
In light of the challenges in the global environment, we need to continue to develop our people.
- One-off SkillsFuture credit top-up of $500 for all Singaporeans aged 25 and above.
- One-off SkillsFuture credit for an additional $500 for all Singaporeans aged 40 -60.
- These credits will be credited by Oct 2020 and will expire within 5 years on 31 Dec 2025
4. To take care of Singaporeans at every stage of their life specifically for our seniors in their retirement years
- Adjustments to Basic Retirement Sum (BRS) will continue to increase by 3% in the next two years to keep up with basic retirement expenses
- $93,000 and $96,000 respectively for the next two cohorts of members turning 55 in 2021 and 2022.
- Introduction of a Matched Retirement Savings Scheme which will be in effect from 2021 to 2025
- Those aged 55 and 70 and who have yet to set aside the BRS, they will get a government matching of up to $600 per year for every dollar they top up.
- Enhanced Silver Support Scheme
- Broaden the eligibility criteria to cover more Singaporeans, i.e. raise the ceiling for total CPF contributions by the age of 55 to $140,000 from the current $70,000.
- Seniors with monthly household income per person above $1,300 but do not exceed $1,800 can now also benefit from a new Silver Support payout tier.
- Quarterly payouts will be raised by 20%, a $150 increase from $750 previously.
The author of this article, Lena Teng, is the Lead, Solutions Team at MoneyOwl.