From The Straits Times    |

To be honest, when I received the brief from Her World’s editors to pen a piece about the Budget 2024, I was tempted to turn down the job. Reason: While the Budget hordes headlines in the local media every year, I’ve never been one to follow the coverage. Then a girlfriend excitedly messaged me about the $4,000 SkillsFuture Credit (Mid-Career) Top-Up, and I had to dig a little deeper and ask myself, why the apathy? 

There are many Singaporeans who keenly follow the Budget Statement. The initiatives run the gamut. From addressing concerns around cost of living for the everyday man to making Singapore more attractive to overseas businesses and investors, our government stays close to the central theme of building a more resilient nation. 

In my younger days, I had assumed a passive attitude whenever it came to the Budget. I tended to see myself as someone who would neither reap the maximum benefits nor was old enough to feel the bite of any changes made to our retirement system. Instead, I chose to spend my time focusing on what I could do for my finances and saw any benefits from the government as a bonus.

Today, the runway I have to build a nest egg for retirement has become considerably shorter. There is also the very real worry about my employability as a middle-aged worker. Despite my initial reluctance, it does make sense for me to study the Budget 2024 more closely. 

How the Budget will help us win in the workplace of tomorrow   

In May 2024, Singaporeans aged 40 and above will receive a $4,000 SkillsFuture Credit (Mid-Career) Top-Up. They can use this top-up for selected courses that are industry-oriented and would provide for better employability outcomes. Another great initiative is that starting from Academic Year 2025, Singaporeans aged 40 and above will be eligible for subsidies if they want to do a full-time diploma course at the Polytechnics, ITE, and Arts Institutions. Depending on the course, one can look to receiving up to or at least 90 percent of the programme costs. 

While these top-ups and subsidies aren’t going to help you get an MBA, you will not be starved of choices either. Since the inception of SkillsFuture 10 years ago, the kind of courses one can enroll in range from hobby-related, such as baking, to certification programmes offered by Google. Unlike the basic tier of $500 that can be used for almost any kind of courses, this $4,000 top-up can only be used for selected training programmes. 

What we can do – While we wait for that top-up to arrive, I would recommend eligible Singaporeans to take some time to think through what employability means for them. If it means continuing in your current industry in an increased capacity, you need to stay abreast of all new developments and innovations. If you are looking to start your own business, then picking up new skills in digital marketing, bookkeeping, and basic legal know-how would be important. Like a career plan, we need to have a plan for our upskilling and identify what skills are required to enhance our individual competitiveness in the workplace. 

Image: Getty Images

How the Budget will help us manage today’s cost-of-living 

In January 2024, each Singaporean household received $500 worth of CDC (Community Council Development) vouchers. The vouchers were divided into two categories: $250 could be used at heartland merchants and hawkers, the other $250 could be used at participating supermarkets. 

With the recent Budget Statement, about 1.4 million Singaporean households will receive a further $600 in CDC vouchers – $300 in June 2024 and $300 in January 2025. In addition, depending on your income level, the type of HDB flat you live in, the number of dependents living with you, etc., you may get to enjoy yet more payouts and subsidies. 

What we can do – It is true that for many of us these savings may add up to less than $1,000. With careful planning, however, you may just be able to work these savings harder. At time of writing, Syfe’s Cash+Guaranteed portfolio, for example, gives a return rate of up to 3.8% per annum, with no minimum deposit required. It does have a lock-in period of three months. Granted this isn’t going to make anyone a millionaire but if the CDC vouchers and subsidies are a nice-to-have for you, consider investing the savings. 

How the Budget will prepare us for retirement  

Arguably, the most talked-about initiative in this year’s Budget are the adjustments made to the CPF system. These changes will immediately affect citizens aged 55 and above. Nonetheless, it does not mean the rest of us cannot plan ahead and find the best way forward for ourselves. 

First, CPF contribution rates (Employer + Employee) for those aged 55 and above will gradually increase over the next decade or so. Second, for those above 55, from 1 January 2025, the rise in contribution rates will be allocated to their CPF Special Account or Retirement Account. Third, the Enhanced Retirement Sum (ERS) will be raised to four times the Basic Retirement Sum (BRS) from 1 January 2025. You may commit your CPF Ordinary Account savings or make cash top-ups to receive higher monthly payouts upon your retirement. Finally, from early 2025, the Special Account will be closed for those aged 55 and above.

What we can do – The BRS is meant to provide you with a monthly payout in retirement to cover your basic living needs. If you wish to receive higher monthly payouts, you have the option to top-up your Retirement Account which earns you an interest of up to 4.08 percent per annum. Any amount left over in your Special Account will be moved to your Ordinary Account where you’ll enjoy a lower interest rate but you’ll be able to withdraw your money when you want. 

How you choose to plan your retirement is up to you. For some, you may wish to simply meet the BRS amount, withdraw the balance in your CPF account and invest the money for higher returns. It really depends on the market conditions at the time of your retirement. At 55, we have about 20 years left and it is up to you whether you want to continue to grow your money so you leave behind a considerable legacy for your children or preserve what you have to maintain your lifestyle at a level you’ve grown accustomed to. 

Deborah Tan-Pink is Senior Vice President of Marketing & Communications at Sygnum Pte Ltd and the co-host of the podcast Good Girls Talk About Money. Special thanks to Linawati Gunawan for her help in explaining the finer details of the Budget to me.