Expats who are currently on a Dependant Pass (DP) with a Letter of Consent to work in Singapore yesterday received some rather unwelcome news that is still being digested. As part of their measures to support local employment in Singapore given the effects of Covid-19, the Ministry of Manpower (MOM) has announced that as of 1 May 2021, those who are working in Singapore on a DP with a Letter of Consent would need to apply for a work pass, such as an S Pass or an Employment Pass (EP).
This announcement will affect many Australian expat and other nationality couples and families in Singapore, so I wanted to share an update quickly to outline what the key changes are, what your options may look like, and what you may need to start considering and planning for when it comes to your personal finances.
Let’s first explore what the current rules look like
Under the current framework, an individual on a Dependant’s Pass (DP) or those on a Long-Term Visitor Pass who are the spouse or unmarried children of a Singaporean or Permanent Resident (PR) can look to secure a Letter of Consent to work in Singapore. It is the employer that would apply for the Letter of Consent for the employee based on the job that is being offered. Importantly for many employers, there is no fee associated with such an application, nor does it form part of the Foreign Worker Levy or Quota, which has been one of the criticisms of the system by many.
The Letter of Consent model, particularly amongst Australian expats, has been a popular one for those who wish to work around their kids’ school hours, work on a part-time basis such as relief teaching, or even run a small business while they’re in Singapore. Both Employment Passes and S Passes carry minimum wage requirements, which have been steadily increasing over recent years, which has meant that for many, applying for either was not an option.
What are the options going forward?
For those that are currently working on a Letter of Consent, they may continue to do so until the expiry, at which point they will need to progress with one of the following options:
- Apply for an S Pass or Employment Pass
- If running your own business, you may continue to do so on a Letter of Consent providing the following conditions are met:
- The DP holder is a sole proprietor, partner, or director and owns at least 30% of the company.
- The business hires at least one Singaporean citizen / Permanent Resident earning at least S$1,400 per month and receives CPF contributions for at least 3 months.
- For those that don’t meet these criteria, you can apply for an extension of the Letter of Consent until 30 April 2022.
- Cease working in Singapore
- Consider volunteer work or other hobbies
While I certainly recognise that volunteer work or unpaid hobbies are not going to necessarily generate an income, for many Australian expats work is about much more than just a regular salary, it’s about mental health. The connections or sense of fulfillment that many generate from actively participating in the workforce is vital and should not be overlooked. There are some incredible organisations in Singapore that would love to have you on board. I’ve written about a number of opportunities here that you can check out. If you’re feeling stressed or overwhelmed, it may also be worthwhile considering getting involved in some of the support groups.
If we consider the first option, the requirements for an S Pass or Employment Pass, based on the current statistics at March 2021, would be as follows:
- Salary of at least S$4,500 per month, or higher for those in financial services
- Be in a managerial, executive, or specialised job.
- Have relevant qualifications, such as a university degree, that is related to the job.
- It’s important to note here that the required minimum salary does tend to increase for older applicants.
- Salary of at least S$2,500 per month, again with a higher requirement for older applicants.
- Have a relevant degree or diploma related to the job.
- Have relevant work experience to the position being offered.
For many Australian expat families, the options to continue working outlined above may simply not be feasible, which may result in the loss of a portion of your household income. On this basis, let’s explore some options to see how you can create some quick savings without having to pack your bags and leave Singapore.
Let’s explore some quick savings for your household
- Refinance your mortgage to a lower interest rate
Interest rates in Australia are at record lows, and if your rate starts with a 4, then it’s very likely that you’re simply paying too much. This could be a quick option to save you money by reducing your loan repayments. The lowest investment rates for Australian expats at present are in the low to mid 2’s, so this could be a significant saving. Reach out to an investment-savvy mortgage broker to explore your options and their recommendations here.
- Transfer credit card balances to 0% credit cards
If you’re carrying credit card debt and not clearing it each month, it may be time to consider your options here to avoid paying unnecessary interest. There are many banks and institutions that will allow you to transfer your balance over to their card at a rate of 0% for a fixed period of time allowing you to eradicate the debt in a less expensive manner.
- Review your household budget
Given that we can’t travel anywhere or head out to too many large functions, these discretionary monthly expenses are all currently on hold. If you’re concerned about meeting your expenses, review your budget and explore what you can get rid of. It’s a good opportunity for you to review your monthly subscription expenses for providers such as Spotify, Dropbox or other apps. Spend a moment to go through your bank or credit card statement and examine those expenses that you’ve forgotten about for anything you can get rid of.
- Seek a reduction in your rental expense
Rental prices have been relatively stable over the past 3 – 6 months, however, in many areas they still remain under pressure. If your lease is coming up for renewal, do your homework by reviewing what similar units have recently been lease for at the URA website here, and if feasible consider asking your landlord for a reduction. You can of course considering moving into a cheaper unit in the same building or area to reduce your monthly rental expenses.
- Review your personal insurances
When was the last time you reviewed your personal insurances? Are you still insured for an appropriate amount or could you consider reducing your cover and therefore reduce your ongoing premium. If you currently hold income protection or a form of salary continuance and won’t be working going forward, there may also be some potential savings here. It’s important to seek professional advice here before canceling any policies to ensure that it’s a fully informed decision.
- Consider where you shop
As Australian expats, we all know that certain items in Singapore can be considerably more expensive than they are back home. Good quality lamb cutlets, Australian milk, and wine are just three that immediately spring to mind. However, it’s important to consider where you’re doing your regular shopping as this can make a significant difference to the price. Consider online options such as Redmart, Shopee, and QB Food for your meat. You may just find some easy savings here and also avoid the need to even have to leave your home to do your shopping, which could also reduce impulse buying.
We know that this could be a very stressful time for many Australian expat families in Singapore, and until we have more clarification on whether any new options will be added, this could be a difficult period. Our key message here is to start talking through your options as soon as you can, ensure that you’re exploring all of the possible pathways, and making fully informed decisions.
If you would like to discuss your options, or even how you might be able to reduce some of your expenses, please do feel free to reach out and book a complimentary chat.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.
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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives, or needs. You should consider your own financial position and requirements before making a decision.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.