Supplementary Retirement Scheme Plans

1. What is an SRS account?

The Supplementary Retirement Scheme ("SRS") is a voluntary scheme that complements the CPF Scheme in Singapore. You contribute any amount to your SRS (subject to a cap which is currently at $15,300 per year). This contribution can be excluded from your taxable income for the year. In addition, when you withdraw the funds on or after your retirement age, you will also be able to avoid paying taxes on this amount. We explain this below in Q3.

Interestingly, your SRS account is managed by the banks, not CPF. So you will need to set up an SRS account with your bank. If you need help setting us your SRS account, please do WhatsApp us at 91515963.

Important things to note about the SRS:

• If left uninvested, your SRS funds only earn a return of 0.05% p.a.
• You need to make your SRS contribution by 31 December of each year for that amount to be excluded in your taxable income. Each bank will have their own cut off time to process your contribution. So don't assume that you can do it a the end of the day! This is 2022's deadlines for each bank.

2. When can I start withdrawing from my SRS account without penalty?
 
You can make withdrawals after the statutory retirement age based on when your first SRS contribution was made. This is currently age 63 and will increase over time. If you wish to lock in an earlier retirement age, do set up your SRS account and put in at least $1.

3. What does the 50% tax concession mean?

After your retirement age, you can start withdrawing from your SRS account for a period of 10 years. Only 50% of the funds withdrawn are subject to income tax. As income up to $20,000 attract no income tax in Singapore, you can withdraw up to $40,000 SRS funds ($20,000 x 2) per year without having to pay any tax. This means that you can withdraw up to $400,000 tax-free over 10 years!

4. What can I invest in to increase my returns on my SRS account?

As the SRS funds will be in the SRS account for a long time, you can consider taking on assets that give a better return in the long-term. You would want to at least beat inflation! Generally, "guaranteed products" such as fixed deposits will give a very low returns that do not even cover inflation. Consider insurance plans such as Gro Saver Flex Pro, Gro Retire Flex Pro and MyLifeIncome II to get a mix of guaranteed returns and bonuses. These plans may offer capital guarantees as well, so you can be confident that your capital is not eroded over time.

You can also consider risker investments that may give even higher returns like SRS-approved unit trusts. Check out our offering of such unit trusts here.

5. How is Gro Saver Flex Pro, Gro Retire Flex Pro and Flexi Life Income different to stock, exchange-traded funds (ETFs) and real estate investment trusts (REITs)?

Gro Saver Flex Pro and Flexi Life Income are insurance products and offer some level of guarantees. Flexi Life Income provides a capital guarantee from the time the Yearly Income payout starts or earlier, depending on the duration of your premium payment period. This is unlike stocks, ETFs and REITs where your capital can be wiped out by market movements. On top of the guaranteed returns, Gro Saver Flex Pro and Flexi Life Income provide additional non-guaranteed returns.

6. Is there any penalty for withdrawing funds from my SRS account before my retirement age?

You have the flexibility to make withdrawals from your SRS account at any time. However, if you make withdrawals before reaching the statutory retirement age, there will be a 5% penalty imposed, and the entire amount withdrawn will be subject to taxation. The only instances where pre-retirement withdrawals are exempt from penalties are in specific circumstances such as illness, bankruptcy, or death.

7. What is the eligibility criteria for the Supplementary Retirement Scheme?

Any resident in Singapore (Singaporean, Permanenet Resident and Foreigner) is eligible to contribute to the SRS. 

For Singapore citizens and permanent residents (PRs), the annual contribution limit is S$15,300 and for foreigners working in Singapore, the annual contribution limit is S$35,700.

8. How can I find out more about my Retirement Solutions?

Check out our video here that explains how we can help you to target a comfortable level of retirement income. Then get a quote to see what are the possible plans for your age.  

** Gro Saver Flex Pro and Flexi Life Income are not classified as a life annuity. So the 50% tax concession after 10 years will not apply. However, if your withdrawals (and other income) continue to be below the lowest income tax bracket, you will enjoy withdrawals tax free.

¹ The returns include non-guaranteed benefits and are based on the illustration rate of 4.25% p.a.. The returns may included all promotions. The returns will ultimately depend on your own age/gender/product premium and benefit term profile. The rates shown above are meant to be illustrative. Please request for a quote by filling in the online form for your personal quotation. Return figure includes promotion or commission rebates.

[partial937ab6f2-a527-4385-b8fa-27d91ba47dfd]

InsureDIY is a Broker licensed by the Monetary Authority of Singapore and is an Exempt Financial Adviser. This advertisement has not been reviewed by the Monetary Authority of Singapore.