SRS Investment Options

In this article, let’s us re-cap what is SRS and the various SRS approved investment options.

What is SRS?

Supplementary Retirement Scheme (SRS) is part of the Singapore government’s multi-pronged strategy to address the financial needs of a greying population by helping people to save more for their old age.

In short, SRS is a Voluntary Tax Deferral Scheme by the government. Contributions to SRS are eligible for tax relief.

As a result, the tax saving through the SRS scheme can go into funding the retirement plan. In other words, It’s designed to encourage you to save more for your retirement.

For example, if your tax bracket is at 15% and you contribute S$15,300 to SRS, your Personal Income Tax is reduced by S$2,295 instantly for that year. And that S$15,300 will go into your retirement planning fund.

Now, let’s take a look at the key facts here.

1. SRS contribution is eligible for tax relief

Yearly limit on SRS contribution for tax relief is S$15,300 (Citizen & PR) / S$35,700 (Foreigner).
Subject to a maximum of S$80,000 for all tax reliefs claimed.

2. 50% tax concession at withdrawal after legal retirement age

This means that only 50% of the withdrawals are taxable after your legal retirement age (prevailing statutory retirement age at the time of first SRS contribution, currently age 62).
However, if withdrawal is made before reaching the legal retirement age, the withdrawal amount is taxable in full and subject to a 5% penalty.
Withdrawal includes SRS contribution and investment returns accumulated over the years.

3. 10-Year Withdrawal Period

You can spread out the withdrawal up to 10 years from the date of your first penalty-free withdrawal.
The remaining balance in the SRS account will be deemed to be withdrawn immediately after the end of the 10-year withdrawal period. 50% of such balance is subject to tax in the following year.
For investments in life annuities insurance policy, the 10-year withdrawal period does not apply. So long as you continue to receive your annuity streams in perpetuity, 50% of the annual stream will be subject to tax.

What are the SRS Investment Options?

According to the statistic published by MOF, 26% of the SRS monies sits in cash. That is to say, many may not be aware of how they can enhance the return of their SRS monies.

SRS accounts interest rate is only 0.05% p.a. across all 3 SRS Account operators: DBS, OCBS & UOB. Thus, the value of monies idling in the account will be eroded over the years by inflation if you don’t invest.

You may use your SRS monies to purchase or invest in a range of approved financial products below:

1. SRS Investment option Group 1: Guaranteed Return Only Products.

2. SRS Investment options Group 2: Guaranteed Return + Non-Guaranteed Return Products.

Single-Premium Endowment Insurance plan, Option 1: Wealth Accumulation Plan & Option 2: Retirement Income Plan

3. SRS Investment options Group 3: Non-Guaranteed Return Only Products.

Unit Trust
Shares, REITs & ETFs
Single-Premium Endowment Insurance Plan, Option 4: ILP

Fixed Deposit rates - Nov2021 by MoneySmart

Singapore Government Securities

Singapore Savings Bonds

Guide to buy Singapore Savings Bonds by dollarsAndSense

How to Build a Retirement Portfolio with SRS

Why use SRS to buy Retirement Policies

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5 things you need to know about SRS

for more information: Supplementary Retirement Scheme

This page Is published for general information only and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person. Refer to Important Info below.

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Important Information

The information contained in this website is provided to you for general information/circulation only and is not intended to nor will it create/induce the creation of any binding legal relations. The information or opinions provided do not constitute investment advice, a recommendation, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person or group of persons acting on this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise.

You should seek advice from a financial adviser regarding the suitability of the investment products mentioned, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to purchase the investment product. In the event that you choose not to obtain advice from a financial adviser, you should assess and consider whether the investment product is suitable for you before proceeding to invest.

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Date: 26Nov2021