You will be able to include caregiving, housework and lost income in your idea of a fair split.
Imagine it's three years from now. Hui Min and Daniel have a baby, and Hui Min has gone back to the hospital on a three-day week so that she can be home the rest of the time. Her take-home pay has dropped. She now spends about four days a week on childcare, cooking, the laundry, the paediatrician appointments and the infant care waitlists. On paper, her contribution to the household has shrunk. Anyone who has looked after a baby knows that is not what happened.
A split based only on cash leaves out a large part of what keeps a household running. This lesson is about bringing the rest of it into your idea of fair.
When a partner cuts their paid hours to look after children or an ageing parent, the household gains something real. Someone is caring for the baby, so you are not paying for infant care for those hours. A parent gets taken to appointments without either of you losing a day's leave. Meals are cooked, forms are filled in, the home runs. The other partner can work longer hours, travel for work or go for a promotion because someone else is covering home.
None of that appears on a payslip. But if you priced it, by asking what it would cost to pay someone else to do it, the number would not be small. Courts take the same view in another setting, as lesson 8.1, How matrimonial assets are divided, explains: non-financial contributions to a family count when a marriage ends. It makes sense to count them while the marriage is going well too.
Lost income has a second cost that is easy to miss. In Singapore, CPF contributions are paid on wages. When a partner's pay falls, so do their employer's and their own CPF contributions, and if they stop working altogether, the contributions stop.
That partner's CPF balances then grow more slowly or not at all, except for the interest on what is already there. Their retirement savings fall behind the other partner's year after year. The gap does not show for decades, but it does show up eventually, when that partner reaches retirement with a much smaller CPF balance and a smaller monthly payout of their own. Lesson 5.3 of The Singapore personal finance system, How CPF turns into retirement income, explains how your balance becomes a payout. Check the current contribution rates on the CPF Board website.
So a partner who cuts hours today is paying for it twice: once in take-home pay now, and once in retirement income later.
A proportional split already adjusts for lower pay, because the partner earning less pays less. Using figures made up for the example, say Hui Min's take-home falls from S$4,000 to S$2,400 on a three-day week, Daniel's stays at S$6,000, and shared costs stay at S$3,000. Their combined pay is now S$8,400. Daniel's share is S$6,000 divided by S$8,400, about 71.4%, so he pays about S$2,143 and Hui Min about S$857. Daniel keeps about S$3,857 and Hui Min about S$1,543.
That is fairer than an equal split, but it still leaves Hui Min with much less of her own, and it does nothing about her CPF. Couples use a few further steps.
Some top up the lower earner's personal account each month, so that both have a similar amount to spend and save on their own.
Some put a fixed amount into the lower earner's own savings or investments, held in her name, so her net worth keeps growing even though her salary has fallen.
Some top up that partner's CPF. Under the CPF Retirement Sum Topping-Up scheme, you can make cash top-ups to a spouse's CPF retirement savings, and the giver may get tax relief if conditions are met. The conditions, the amounts and the limits are set by the CPF Board and IRAS and change from time to time, so check them on their websites. Lesson 4.3, Keep the non-earning partner's own savings growing, covers this in more detail.
Others adjust the split itself, for example by having the higher earner cover the whole of a new child-related cost such as infant care.
There is no correct formula. What matters is that both of you look at the unpaid work and agree how, or whether, your split recognises it.
Any split is set for a moment in time. It goes out of date when one partner moves to part-time work, takes unpaid leave, starts a business, loses a job or picks up caring for a parent. Write a simple rule into your arrangement: whenever either partner's paid hours change, you rerun the split and look again at the unpaid work.
Hui Min and Daniel do not have a baby yet, but they agree now on what would happen if one of them cut back, while neither of them is tired or resentful.
Look at your own household today. Who does the cooking, the cleaning, the caring for parents, the admin? Write it down for each of you, and think about how your split might take it into account.
Write down any unpaid work each partner does and one way your split could recognise it.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).