Media Articles

Budget A-Z : A guide to tackling Budget jargon

Media: The Straits Times

PUBLISHED FEB 11, 2019

Sue-Ann Tan 

Do you know you have to meet TDSR when taking out a home loan and pay ABSD if you are buying a second property?

And what's the difference between Basic Retirement Sum, Full Retirement Sum and Enhanced Retirement Sum under the tweaked Central Provident Fund (CPF) scheme?

If you are a business owner, do you know what the PIC scheme is about?

Confused by the list of acronyms, financial jargon and terms? Here's a guide on "decoding" the Budget speech:

A IS FOR...
Additional buyer's stamp duty (ABSD): This was introduced in December 2011 to cool a red-hot market. The rates were revised in July 2018. Now, Singaporeans pay an additional 12 per cent for their second properties and an additional 15 per cent for third and subsequent properties. Foreigners pay an additional 20 per cent stamp duty on all purchases.

B IS FOR...
Baby Bonus scheme: This scheme, launched in 2001 to boost birth rates, gives out a cash "bonus" to parents. The Government also matches dollar-for-dollar parents' contribution to their children's Children Development Accounts (CDA). Budget 2011 introduced the Child Development Credit Scheme, which deposits cash grants into the CDA accounts of children aged six and below.

Basic Retirement Sum: Under CPF changes which took effect on Jan 1, 2016, there are different retirement sums for different needs that people can commit to at age 55, instead of a single minimum sum requirement. There are now three options: a Basic Retirement Sum, Full Retirement Sum, and Enhanced Retirement Sum.

The Basic Retirement Sum is a minimum sum, set aside at age 55, that will ensure a Basic Payout to CPF members when they turn 65. This is set at $88,000 for 2019, and is estimated to generate a payout of $730 to $790 a month via the CPF Life annuity scheme.

Budget surplus/deficit: A Budget surplus is when the revenue exceeds the expenditure; a deficit is when expenditure exceeds revenues.

C IS FOR...
Central Provident Fund (CPF): Set up in 1955, the CPF is a compulsory savings scheme for workers to save part of their monthly wages. In 2015, the Government accepted a set of recommendations to improve its flexibility. Changes which came into effect from Jan 1, 2016, include an option to withdraw up to 20 per cent of a member's Retirement Account savings when he or she turns 65.

Community Health Assist Scheme (Chas): This scheme, which subsidises treatment for chronic ailments at private neighbourhood clinics, is now open to every family member in a household with a monthly per capita income of $1,800 or less.

ComCare Fund: This is the Government's main fund for the financially needy. Set up in 2005, it provides short-term financial and social assistance of up to six months.

D IS FOR...
Dependency Ratio Ceiling (DRC): The DRC is a quota setting the maximum number of foreign workers a firm can hire for every full-time local worker it employs.

E IS FOR...
Economic Restructuring Shares (ERS): The ERS scheme was a major part of the GST offset package announced in Budget 2002. Its aim was to help offset the increase in GST from 3 per cent to 5 per cent in 2003. It ended in 2008.

Enhanced Retirement Sum: This is for CPF members who want to have higher monthly payouts from age 65. They can top up their CPF savings to a sum set at three times the Basic Retirement Sum or $264,000 in 2019. The payout for this amount is estimated to be $1,960 to $2,110 per month at age 65.

Edusave Endowment Fund: This scheme was started in 1993 to help Singaporean children fund school programmes and encourage their participation. The money in this fund is invested and the returns used to fund Edusave for schoolchildren, paying for things such as scholarships, yearly Edusave funds for all Singapore MOE pupils and Good Progress Awards.

F IS FOR...
Fair Consideration Framework: This is aimed at ensuring that Singaporeans have a full and fair chance in the job market. New rules that kicked in from August 2014 required employers to prove that they tried to hire Singaporeans first by advertising for 14 days at the national jobs bank. The move followed a heated debate in 2013 on whether job openings were being filled by foreigners rather than locals.

Foreign worker levy: The levy scheme was introduced in 1982. The foreign worker levy is one of three levers to control the flow of unskilled foreign workers into the country, the others being the Dependency Ratio Ceiling (DRC) quota and the minimum qualifying salary.

Full Retirement Sum: This is the minimum sum required for CPF members who do not own their homes, or do not wish to pledge their property. It is set at $176,000 for an estimated monthly payout of $1,350 to $1,450 at age 65.

Future Economy: Set up in 2015, the Future Economy Committee looks at key areas that are crucial to sustaining economic growth vital to Singapore's future. It is made up of 30 members, including government officials and business leaders.

G IS FOR...
Goods and Services Tax (GST): GST was introduced in 1994 at the rate of 3 per cent and then increased to 4 per cent from Jan 1, 2003, 5 per cent from Jan 1, 2004 and 7 per cent from July 1, 2007. In Budget 2018, it was announced that GST would be raised to 9 per cent sometime from 2021 to 2025. The introduction of the GST in 1994 was part of broader tax reform that also involved lowering the corporate tax rate from 30 per cent to 27 per cent. The lower corporate tax was aimed at boosting Singapore's competitiveness with the GST helping to make up for the loss in revenue.

GST Voucher: Introduced in 2012 to help lower and middle-income families with their living expenses, the GST Voucher scheme has three components - cash, Medisave and Utilities-Save (U-Save).

Growth Dividends: Growth dividends were given out in cash - for the first time - in Budget 2006. Previously, they were issued through a shares scheme where holders could opt to earn dividends over time or to encash their shares. Two other rounds of growth dividends were given out, in 2008 and 2011.

H IS FOR...
Household income ceiling: This is used to determine eligibility for various government assistance schemes, handouts and subsidies.


Interim Upgrading Programme: Interim Upgrading Programme (IUP) and the Main Upgrading Programme (MUP) are two pillars of the Housing Board's two-decade long upgrading scheme.

The IUP has since been replaced by the Neighbourhood Renewal Programme, and the MUP, the Home Improvement Programme. Under the Selective En Bloc Redevelopment Scheme, which was introduced in 1995, old estates are redeveloped. Affected owners get compensation and rehousing benefits, including new replacement flats at subsidised prices.

The majority of old HDB blocks are upgraded through MUP and IUP but blocks in areas with high redevelopment potential will be rebuilt through Sers.

J IS FOR...
Jobs Credit Scheme: This scheme was introduced in 2009 as the world was poised on a global downturn. A wage subsidy given to employers over two years to help companies stay afloat so they could retain workers. The Special Risk-Sharing Initiative was also introduced that year to help cash-strapped firms get credit.

K IS FOR...
Kindergarten Fee Assistance Scheme (KiFAS): Started in 2004, KiFAS subsidises up to 90 per cent of a child's kindergarten fees, depending on the applicant's household income. The scheme was previously for families with a monthly household income of up to $3,500. This was raised to $6,000 in 2015.

L IS FOR...
Lifelong Learning Endowment Fund: This was set up in 2001 to fund training programmes so that Singapore's workforce retains its edge in a world where people compete not on cost alone but also on skills, quality and productivity.

M IS FOR...
Maid levy: A flat $120 levy was imposed on domestic maids from November 1984. The levy is $265, but families with young children, elderly parents or family members with disabilities pay the concessionary rate of $60. From April 1 the levy rate for the first foreign domestic worker will be $300, while the rate for the second worker will be $450. The concessionary rate will remain the same.

MediShield Life: The scheme, which replaces MediShield, took effect on Nov 1, 2015. The compulsory all-inclusive health insurance scheme provides lifetime coverage for all Singaporeans and permanent residents, regardless of age or pre-existing conditions.

Merdeka Generation: Announced during the National Day Rally in 2018, this generation covers those born in the 1950s. They will get the Merdeka package, which covers benefits similar to the Pioneer package, such as outpatient subsidies, Medisave top-ups, MediShield Life premium subsidies and payouts for long-term care.

N IS FOR...
Net Investment Returns (NIR): Previously called the Net Investment Income (NII) framework. The NIR, introduced in 2009, allows the Government to spend up to 50 per cent of long-term expected real returns generated from assets managed by GIC, the Monetary Authority of Singapore and now, Temasek Holdings.

O IS FOR...
Opportunity Fund: Started in 2006, this scheme issues grants to schools to help needy students pay for school fees, enrichment programmes and overseas learning trips.

P IS FOR...
Pioneer Generation Package: The Pioneer Generation Package, announced in 2014, set aside $8 billion to help Singapore's first generation of pioneers pay for the cost of their health care, with no strings attached. The subsidies and Medisave top-ups for 450,000 Singaporeans for life were one of the most generous Budget packages ever.

Productivity and Innovation Credit (PIC) scheme: The PIC scheme was introduced in 2010 and offers tax deductions or cash payouts to companies that invest in areas such as staff training, information technology or automation equipment to boost their productivity.

Progressive wage model: Cleaners went on this new wage model in 2014, when a new law requiring cleaning companies to be licensed took effect. To be licensed, cleaning firms must pay cleaners a basic wage of at least $1,000 a month.

From June 30, 2016, around 3,000 landscape maintenance workers started benefiting from it, earning at least $1,300 a month, up from about $1,100 on average. It also applied to security guards from September 2016.

Q IS FOR...
Quality Growth Programme: The Quality Growth Programme, unveiled in Budget 2013, involved the Government spending $5.9 billion over three years to help companies restructure in a tight labour market. The Wage Credit Scheme (see below) was a centrepiece of this programme.

R IS FOR...
Reserves: Singapore's Constitution stipulates that the Budget must be balanced over the term of government. Any leftover surpluses at the end of the term of government will be locked away as past reserves. And if there is a need to dip into the past reserves, the President must give his consent. The reserves are managed by the Monetary Authority of Singapore (MAS), the Government of Singapore Investment Corporation (GIC) and Temasek Holdings.

During the economic recession in 2009, the Government sought the President's approval to draw a total of $4.9 billion - the first time it had ever dipped into past reserves to help cover Budget expenditure.

S IS FOR...
S-Pass: S-Pass holders are mid-level skilled foreign workers who earn at least $2,200 a month. Employment Pass holders are for foreign professionals, managers and executives who earn at least $3,300 a month and have acceptable qualifications. Work Permit holders are unskilled and semi-skilled workers.

Special Transfers: One-off transfers to businesses and households, as well as top-ups to endowments and trust funds created by the Government for specific expenditure objectives. Examples of one off-transfers include the Wage Credit Scheme, Productivity and Innovation Credit, Medisave top-ups and GST vouchers.

Silver Support Scheme: Announced during Budget 2015, the permanent initiative aims to help the bottom 20 per cent of Singaporeans aged 65 and above. About 150,000 eligible Singaporeans get a quarterly payout of $300 to $750.

SkillsFuture Credit: The SkillsFuture Credit was announced in Budget 2015 and supports Singaporeans in their pursuit of lifelong learning. From Jan 1, 2016, an initial SkillsFuture Credit of $500 was given to more than two million Singaporeans aged 25 and above. It can be used to fund government-approved courses in at least 57 areas.

Supplementary Retirement Scheme (SRS): The SRS is a voluntary retirement savings programme that complements the Central Provident Fund system.

T IS FOR...
Taxes: Singapore's tax revenues mainly come from collection of corporate and individual income tax and goods and services tax (GST). Property tax, stamp duty, betting taxes, customs and excise duties and other miscellaneous taxes fill in the remaining gaps.

Total debt servicing ratio (TDSR): TDSR, introduced in June 2013, requires borrowers to keep all debts within 60 per cent of their gross monthly income. The MAS fine-tuned the rules in September 2016 to make it easier for borrowers with existing home loans to refinance their mortgages and pay off their debts at lower interest rates.

U IS FOR...
Utilities Save Scheme: Under this scheme, HDB residents get grants to help pay for utilities bills.

V IS FOR...
Voluntary Welfare Organisations: These are non-profit organisations that provides welfare services and/or services that benefit the community at large.

Vers: This stands for Voluntary Early Redevelopment Scheme, which allows owners in flats aged 70 years and older to vote for the Government to buy back their homes before their leases run out, if their precinct is selected for the scheme.It also gives more Singaporeans a chance to experience large-scale redevelopment - something previously restricted to those part of the Selective En-bloc Redevelopment Scheme (Sers).

W IS FOR...
Wage Credit Scheme: Announced in 2013, this scheme subsidises part of wage increases for Singaporeans for the next three years. It was the centrepiece of the Quality Growth Programme.

Workfare Bonus: Introduced in 2007, workfare bonus is given out in the form of cash payments and CPF contributions to older lower-wage workers who were on the wrong side of the skills gap. This was upgraded to the Workfare Income Supplement (WIS) scheme the following year. The WIS pays cash into the CPF accounts of low-wage workers aged 60 or more to encourage them to continue working.

X IS FOR...
eXpectations: The upcoming Budget will cover social programmes that focus on the elderly, healthcare and education as well as pay special attention to helping the disadvantaged and underprivileged, said Second Minister for Finance and Education Indranee Rajah.

Y IS FOR...
Youth Corps Singapore (YCS): YCS is the first national-level programme of its kind to encourage young Singaporeans to take up community work and continue to do so beyond their school years. Its members have to undergo a residential training programme and take part in local and an overseas volunteering stints.

Z IS FOR...
Zero net debt: Singapore's assets are much larger than its liabilities. There is no net Government debt, according to the Ministry of Finance website. Singapore is a net creditor country, not a debtor country.