Guide to Supplementary Retirement Scheme (SRS): Part 1

The SRS scheme has existed since 2001 but I don't see enough people making full use of the scheme (at least among my peers). I hope this series of guides will inspire many to begin their SRS journey!

Basics

The SRS complements the CPF, and helps Singaporeans to save more for their old age. Each Singaporean can contribute a maximum of S$15,300 a year into a SRS account. Unlike the CPF, contributions to SRS are voluntary.

SRS helps Singaporeans to save more for retirement by providing attractive tax benefits. Contributions to SRS are eligible for tax relief, and investment returns are accumulated tax-free.

Using a simplistic example, if you earn a gross annual salary of S$120000, and you contribute S$15300 into your SRS account, and if there's no other tax relief, you will only pay tax on S$104700. That's money saved immediately.

The Catch

Contributions to SRS are tax free, but there is a penalty if one withdraws the money before the statutory retirement age.

Before the statutory age, any withdrawals are subjected to the prevailing income tax, and incur a 5% penalty.

Opening a SRS Account

You can open an account with any one of the local banks, DBS, OCBC or UOB. There is an opening promotion for DBS now, so you can consider opening the account with DBS.

Opening an account is simple, you can do it online and the process is fuss-free.

Fees

There are no monthly maintenance fees for SRS accounts. If you use SRS funds to invest, there will be applicable brokerage fees etc. Check with the bank to find out their detailed fee schedule.

Conclusion

I've covered the absolute basics of SRS in this post. In my next post, I will cover the considerations for contributing to SRS!

Other Stories