Why you should set up your SRS account before 1st July 2022
The best time to set up an SRS account is before 1st July 2022 so that you can “lock in” the retirement age of 62. The statutory retirement age will be raised to 63 on the 1st July and ultimately to 65 by 2030.
What is an SRS account?
The Supplementary Retirement Scheme (SRS) is a voluntary scheme to encourage individuals to save for retirement, over and above their CPF savings. Contributions to SRS are eligible for tax relief. Investment returns are tax-free before withdrawal and only 50% of the withdrawals from SRS are taxable at retirement.
What are the pros and cons of SRS?
Contributions to SRS are eligible for tax relief
You are eligible for a tax relief of up to contribution cap of $15,300 per annum for Singaporeans and SPRs, and $35,700 for foreigners.
SRS Tax relief is automatically calculated
You do not need to make a claim in your Income Tax Return as it will be allowed automatically based on the information provided by the SRS operator. The SRS tax relief will be reflected in your Income, Deductions and Reliefs Statement when you e-File.
SRS supplements your retirement savings
Contributions to your SRS account adds to your retirement funds. Regularly contributing to your SRS helps you build up your retirement nest egg.
Investment returns are tax-free
Investment returns are accumulated tax-free and only 50% of the withdrawals from SRS are taxable at retirement (referred to as a “50% tax concession”).
Long term commitment (Con)
Contributions to SRS have long term commitment. You can withdraw SRS funds at any time. However, withdrawals made before the statutory retirement age prevailing at the time of your first contribution (e.g. age 62), 100% of the sum withdrawn will be subject to tax. A 5% penalty for premature withdrawal will also be imposed.
How to open an SRS account?
You need to use 1 of the 3 local banks to open an SRS account. It can be easily done online or through the banks’ internet banking app. You can do it now with the following links:
What can you do with the monies in your SRS account?
You can invest your SRS funds into many instruments. The available options are: Fixed deposits, Singapore Savings Bond (SSB), Unit Trust, Insurance, shares, robo-advisor among others.
Do contact us to find out more & optimise your SRS savings through long term investments to maximize returns for your retirement needs by clicking the button below.
Leon Lim (Indra Julie)
Leon is a Certified Financial Planner with over 15 years of experience in the finance industry. Leon is passionate about helping PMEBs (Professionals, Managers, Executives, and Business Owners) achieve their retirement goals and attain financial freedom.