What is Supplementary Retirement Scheme (SRS)?

After reading about SRS account, my hubby and I opened our SRS account last year with UOB.


Background :
- SRS can help higher income earner save tax while saving for retirement.
- SRS is opened to Singaporeans, Permanent Residents and foreigners above 21 and not undischarged bankrupts and are not of unsound mind.
- Participation is entirely voluntary. Participants can contribute a varying amount to SRS (subject to a cap).
- If you earned employment income in preceding year, you are allowed to contribute to SRS.
- The contributions may be used to purchase various investment instruments.


How to Participate:
- You can open an SRS account with one of the 3 local banks.
- There are however, service charges on the account that you have to note.
- The maximum contribution rate for Singaporeans is S$12,750 and foreigners is S$29,750.
- Contribution must be made in cash.


What Can I invest my SRS Funds in:
- Single Premium insurance (including annuity & non-annuity plan)
- Life cover (including TPD benefits)
- Excluded are life insurance eg. critical illness, health and long term care.
- ETF funds.
- Purchase of properties is not allowed.


How to Withdraw SRS Funds:
- Withdrawal from SRS can be made anytime.

- However, if the withdrawal is made before a statutory retirement age prevailing at the time of your first contribution, 100% of the sum withdrawn will be subjected to tax. A 5% penalty for premature withdrawal will be imposed.

- 5% penalty will not apply if withdrawal arises under death, permanent incapacitation, bankruptcy and full withdrawal of SRS balance by foreigner who maintained his SRS for at least 10 years.

- All withdrawal must be made in cash, and withdrawal can be any amount.

- 50% of the withdrawal will be taxed at your marginal tax rate for the following types of withdrawal:

> withdrawal on or after statutory retirement age (prevailing at the time you first contribute to SRS).
> withdrawal on medical grounds
> withdrawal on death
> withdrawal by foreigner who maintained his SRS for at least 10 years from the date of his first contribution.

- Otherwise, 100% of the sum withdrawn will be taxed at your marginal tax rate in all other situations.

- Withdrawals are to be made 10 years from the statutory retirement age or 10 years from prevailing statutory retirement age, whichever is earlier.