After our previous post, we received many questions about SRS. Here’s the top 5 FAQs about the Supplementary Retirement Scheme.
What is SRS?
The Supplementary Retirement Scheme (SRS) is savings scheme introduced by the Singapore Government. It is part of the solution for meeting the financial needs of Singapore’s aging population by helping Singapore Citizens, Singapore Permanent Residents, and Foreigners who derive any form of income, to save more for old age.
It is currently operated by 3 banks in Singapore
- DBS
- OCBC
- UOB
Unlike CPF, contributions to SRS is voluntary. You may contribute any amount, subject to cap. You SRS contributions can be used to purchase investments like stocks, bonds, unit trusts, and selected insurance products for a potentially higher return.
Why should you contribute to SRS?
SRS contributors will enjoy tax deferment. Each dollar you contribute to SRS will reduce your taxable income by a dollar.
In addition, if you choose to withdraw from your accumulated SRS saving after statutory retirement age (current age 62), your withdrawal amount will also enjoy 50% tax concession.
Investment gains will also accumulate tax-free in SRS, with the exception of Singapore dividends paid before 1 January 2008.
Who can participate in SRS?
- All Singaporeans, Permanent Residents (PRs) and foreigners
- At least 18 years old
- Not an undischarged bankrupt
What investment instruments can you purchase using your SRS funds?
You can invest in a wide range of financial assets including
- Fixed Deposits
- Shares listed on SGX
- Bonds
- Unit Trusts
- Insurance
You may also invest in products offered by other financial institutions other than your SRS Operator. We’d recommend you check with one of our professional Financial Planners before you make an investment.
When can you make a withdrawal from your SRS account?
You can withdraw any amount from your SRS account anytime.
However, if you withdraw before statutory retirement age (currently age 62), 100% of the sum withdrawn will be subject to tax; and a 5% premature withdrawal penalty on the sum withdrawn will be imposed, unless withdrawal is made under the following exceptional circumstances
- Death
- Medical grounds
- Bankruptcy
- Full withdrawal of the SRS balance by a foreigner who has maintained his SRS account for at least 10 years from the date of his first contribution
The best time to withdraw from SRS is after statutory retirement age (currently age 62). From your first withdrawal made after reaching the statutory retirement age, you will have up to 10 years to withdraw the full amount. You may withdraw as many times as you wish without any penalty; and 50% of these withdrawals will be tax-exempt.
If you think you are paying too much tax to IRAS, you should consider contributing to Supplementary Retirement Scheme today.
