The Supplementary Retirement Scheme (SRS) is part of the Government’s multi-pronged strategy to address the financial needs of a greying population. It is a voluntary scheme that complements the CPF. Participants can contribute a varying amount to SRS (subject to a cap) at their own discretion.
Who can open the SRS account?
- Singapore Citizen
- Singapore Permanent Resident
- The foreigner earned income locally in the current year and made contributions to the Supplementary Retirement Scheme (SRS)
- Over 18 years old
- Healthy, no history of mental disorders
- Those who are not bankrupt or have been discharged from bankruptcy
- Those who can handle their own affairs
How to open the SRS account？
In Singapore, citizens, PR or pass holders can open a Supplementary Retirement Scheme (SRS) account with any of the following operators: United Overseas Bank (UOB) Ltd, Development Bank of Singapore (DBS) Ltd), Overseas-Chinese Banking Corporation (OCBC) Ltd.
The minimum deposit is $1, but it is worth noting that only one SRS account is allowed per person.
The SRS account can only be withdrawn 100% at the statutory retirement age, and a 5% fee will be charged for withdrawal before the retirement age.
Why join SRS account?
The first major benefit of SRS is its tax reduction function, which is included in the personal income tax calculation of the current year for Singapore citizens. For Singapore permanent residents PR and foreigners, 22% should be used as withholding tax, and then calculated according to the personal income tax rate. The difference between the two will become the tax credit refund.
It is worth noting that Singaporeans or permanent residents can save up to $15,300 per year, and foreigners can save up to $35,700 per year. For foreigners who have an SRS account and have transferred funds for more than 10 years, they can enjoy a 50% tax exemption when filing.
Withdrawals from SRS accounts after retirement age are also not tax-free, but can enjoy a tax-free allowance of 50% of the amount.
Can I withdraw cash from my SRS account (anytime)?
There will be a 5% fee for withdrawals before reaching the legal retirement age. For example, if you withdraw 10,000, the fee is 500.
However, if withdrawing under exceptional circumstances such as death, medical reasons, bankruptcy, or foreigners who have maintained their SRS account for at least 10 years from the date of the first contribution, there will be no 5% fee for early withdrawals.
How can I invest my SRS funds?
If the SRS account does not purchase any products, the interest rate itself is 0.05%. However, it is worth noting that any returns on products purchased within an SRS account or using SRS are tax-free.
Many people will choose to invest the money in the SRS account, such as fixed deposits, insurance, stocks, bonds, ETFs, unit trusts, wealth management products, etc.