POST-SECONDARY EDUCATION ACCOUNT

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22 August 2005

POST-SECONDARY EDUCATION ACCOUNT

Additional support for Singaporeans to pursue further education

1. As part of the Government’s efforts to encourage every Singaporean to complete post-secondary education, the Government will create a Post-Secondary Education Account (“PSE Account”) for every child currently eligible for the Children Development Account (“CDA”). The Prime Minister announced the PSE Account at the 2005 National Day Rally.

2. The PSE Account helps parents to save for their children’s post-secondary education, and provides Government co-funding for such savings. It underscores the Government’s commitment to support families in investing in further education for their children, and to prepare them for the economy of the future.

3. The CDA is the co-savings component of the Baby Bonus scheme.[1] Under the scheme, the Government matches parents’ co-savings in the CDA dollar-for-dollar over 6 years from a child’s birth, up to the maximum of $6,000 for the second child and $12,000 for the third and fourth child.

4. Unused savings in the CDA will be transferred to the PSE Account once a child enters primary school. Further, parents can continue to contribute to the PSE Account until the child is 18. The Government will match the amount of savings the parents contribute. This will give parents more time to contribute and therefore benefit fully from Government co-savings in their child’s account, beyond the child’s first 6 years.

5. The features of the PSE Account are summarised below:

a. Every Singaporean child with a CDA will be given a PSE Account

when he enters primary school. Unused CDA funds will be

automatically transferred to the PSE Account. Those who are eligible

for a CDA (i.e. 2nd, 3rd and 4th child) but did not open one before

entering primary school can open the PSE Account anytime before

they reach 18 years old;

b. Edusave monies will also be transferred to the PSE Account when

the child reaches 16 years old or when he leaves secondary school,

whichever is later;

c. The PSE Account will earn the same rates of interest as the Edusave

accounts (2.5% currently);

d. In order to give parents a longer timeframe and thus more flexibility in

taking advantage of the PSE Account, they can contribute to their

children’s PSE Accounts until their children turn 18 years old;

e. The Government’s combined contribution to the CDA and PSE

Account will be capped at the current maximum Government

contribution to the CDA, which is $6,000 for the 2nd child and $12,000

each for the 3rd and 4th child. (Including parents’ contributions, the

maximum amount is $12,000 for the 2nd child and $24,000 each for

the 3rd and 4th child.);

f. Funds in the PSE Account can be used for post-secondary education

in the Junior Colleges, Institute of Technical Education, locally-based

polytechnics and universities;

g. Parents can use funds in each child’s PSE Account for any of the

other siblings; and

h. Unutilised PSE Account balances will eventually be transferred to the

account holder’s Central Provident Fund – Ordinary Account.

6. The first batch of children will have their CDA funds transferred to their PSE Account in 2008. Further details regarding the PSE Account will be announced at a later date.

[1]The other component of the Baby Bonus scheme comprises a cash gift that is disbursed in 4 equal instalments over 18 months for the first to the fourth child. The first and second child gets $3,000 while the third and fourth child gets $6,000.