5 Quick Questions (with answers) About the Supplementary Retirement Scheme
Year–end is just around the corner. This is also the time when most of you will start pondering if you should make voluntary contribution to your CPF account to reduce the tax payable for this Financial Year.
Well there is also another option available that you may want to explore and that is the Supplementary Retirement Scheme or SRS in short.
1. What is SRS?
It is part of the government’s strategy to address the financial needs of an ageing population through helping Singaporeans to save more for their old age.
It is operated by three banks: DBS Bank Ltd, OCBC Bank Ltd and UOB LTD.
It is voluntary scheme and contribution is subjected to a cap of $12,750 in 2015 rising to $15,300 in 2016 for Singapore Citizens and Permanent Residents.
2. What are the benefits of contributing to SRS?
SRS offers attractive tax benefits. Contributions to SRS are eligible for tax relief, 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”).
3. How much interest does my funds in SRS earn?
Typically, the same as your usual savings deposits accounts.
4. What can I do with SRS?
With SRS being a yearly contribution, some people may leverage on this to go into the market annually. After all, there is a potential for averaging out the potential volatility risk in the market by investing regularly.
b. Long term Endowments
There are plans offered by insurance providers where you can use SRS funds to fund your endowments. At the end of 62, you have a maturing plan that contributes to your bag of retirement funds.
5. Should I or should I not contribute to SRS?
Well this is a question to be answered for the individual. It is best discussed with your GEN Planner.
Article by Pamela Chong
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