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Supplementary Retirement Scheme (SRS)

Personal Finance

The Supplementary Retirement Scheme (SRS) was established on 1st April 2001 to encourage individuals to save more by means of voluntary contributions for housing, medical needs and for basic living needs after the retirement by offering tax benefits.

All Singaporeans, Singapore Permanent Residents (PRs) and foreigners who are at least 21 years old, not undischarged bankrupts and not of unsound mind are eligible to open an SRS account. You can contribute by opening an SRS account with any appointed SRS operator.

Besides the obvious benefit of having more savings to draw on when you retire,, you will enjoy tax relief on contributions to SRS. Investment gains will accumulate tax-free in SRS with the exception of Singapore dividends from which tax is deductible by the payer company and are taxable.

Your SRS contribution cap is subject to a capping. For 2007, the absolute income base is $76,500 per annum (17 time the prevailing CPF monthly salary ceiling of $4,500). The SRS contribution cap for a Singaporean or a Singapore Permanent Residents (PRs) is $11,475 (15% x 17 x $4,500). And the SRS contribution cap for foreigner is $26,775 (35% x 17 x $4,500).

Tax will be payable only when you withdraw your savings from SRS. If you withdraw your savings upon retirement (age 62), only 50% of the savings withdrawn will be subjected to tax. You may also spread your withdrawals over a period of up to 10 years (or more if the statutory retirement age increases) to meet your financial needs.

Early withdrawal is allowed, but a penalty at the rate of 5% on the amount withdrawn will be imposed. However, “penalty-free” for early withdrawals will be permitted upon death, or on ground of physical or mental incapacitation from every continuing in any employment or in the case of bankruptcy.

You may invest in a wide range of financial assets, including those offered by financial institutions (product providers) other than your SRS operator, includes fixed deposits, insurance products and unit trusts. However, direct property investments are not allowed. As for life insurance products, only single premium products are allowed (including recurrent single premium products, encompassing both annuity and non-annuity plans), life cover (including total and permanent disability benefits) will be capped at 3 times the single premium, plans can allow for a contribution continuation feature/benefit upon disability. Critical illness, health and long-term care are excluded from this scheme. All proceeds from the realisation of SRS investments must be returned to SRS account.

For more information, you may refer to your SRS operator or contact the following:

Ministry of Finance – http://www.mof.gov.sg

IRAS website – http://www.iras.gov.sg

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