supplementary retirement scheme (srs) for/individuals/srs/srs... · 3 this handbook explains: •...

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SupplementaryRetirement

Scheme (SRS)

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Contents03 What is SRS?

05 Why should I join SRS?

08 How can I contribute to my SRS account?

10 How can I invest my SRS funds?

12 How do I withdraw funds from my SRS account?

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This handbook explains:• howSRSworksandwhocanparticipate• thebenefitsofSRS• whenandhowyoucanmakecontributionstoSRS• howyoucaninvestyourSRSfunds• whenandhowyoucanmakewithdrawalsfromSRS

The Supplementary Retirement Scheme (SRS) 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. Itisoperatedbythreebanks:DBSBank(DBS)Ltd,Overseas-ChineseBankingCorporation(OCBC)LtdandUnitedOverseasBank(UOB)Ltd.

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The SupplementaryRetirement Scheme (SRS)is a savings scheme that

complements your Central Provident Fund (CPF) savings for retirement.

Participation in SRS is voluntary.You can contribute any amount

to your SRS account, subject to a cap. These contributions can be invested

to boost your retirement savings.

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WHAT IS

SRS?

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WHY SHOULD

I JOIN

SRS? The Benefits Savemoreforyourretirementandpaylesstax.

• Enjoy taxdefermentonyourSRScontributions.Each dollar of SRS contribution will reduce your taxable incomebyadollar.

• 50% of your accumulated SRS savings will not be taxed (i.e.a50% taxconcession)whenyouwithdraw afterreachingthestatutoryretirementage(thisrefersto thestatutoryretirementageprevailingatthetimeofyour firstcontribution).YoumayspreadyourSRSwithdrawals over10years.

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Mr Tan is 40 years old and has an annual assessable income of $100,000.Hecontributes$10,000tohisSRSaccounteveryyearfromthe age of 40. The $10,000 he contributes to the SRS account willbe tax-exempt for that year (i.e. only $90,000 of his incomewill besubjectedtotaxforthatyear).

If Mr Tan invests his SRS monies and achieves a rate of return of 4% annually, he would have saved more than

$350,000whenhereaches62yearsold.

Example

In total, Mr Tanwould have enjoyed taxsavingsofabout

$25,000 by saving in SRS over22years.

When Mr Tan retires at age62,hecanenjoya50%taxconcessionforhis SRS withdrawals over a ten-year period.He can withdraw $40,000 from his SRSaccount annually without tax (comparedto $20,000 without thetaxconcession).

SRS

$40,000*Withdrawupto

50% tax concession over a ten-year withdrawal period

$12,750 yearly contribution

to SRS account with 4% returns per year

40 years old$100,000annualincome

savingsof

$480,000

62 years old retiree with no income

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Who can join• AllSingaporeans,PermanentResidents(PRs)andforeigners• Atleast18yearsold• Notanundischargedbankrupt

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HOW CAN

I CONTRIBUTETO MY SRSACCOUNT?

$12,750Singaporeans and PRs

$29,750Foreigners

Annual Contribution Cap (as of 2013)ThemaximumamountyoucancontributeintoyourSRSaccountinanyyearisasfollows:

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YoumaycontributeanyamounttoyourSRSaccountasmanytimesasyouwishwithintheyear.However, thetotalamountcontributedshouldnotexceedtheannualSRScontributioncap.

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Tax relief on contributions (For tax residents only)TheamountoftaxreliefyouenjoyonyourSRScontributionsisgrantedautomatically by the InlandRevenueAuthority of Singapore (IRAS)basedontheinformationprovidedbyyourSRSoperator.Youdonotneedtomakeaclaiminyourannualincometaxreturn.

Taxreliefwillbegrantedintheyearfollowingtheyearofcontribution,i.e.ifyoumadeanSRScontributioninyear2014,thetaxreliefwillbegiveninYearofAssessment(YA)2015.

YoucancontributetoyourSRSaccountuptoanyage, if youhavenotbenefitted from the50% taxconcessiononanywithdrawal.

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• Inawiderangeoffinancialassetsincluding:

• Shares (e.g. those listed on the Singapore Exchange) • bonds • unit trusts • fixed deposits • insurance

• Youarefreetoinvestinproductsofferedby otherfinancialinstitutions(productproviders) otherthanyourSRSoperator.

Pleaseinvestwithcare.

HOW CAN

I INVEST MY SRS FUNDS?

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The following restrictions on investments apply:

• Directpropertyinvestmentsarenotallowed.• Forlifeinsuranceproducts: o Only single premium products are allowed (includes recurrent singlepremiumproducts, encompassing both annuity and non-annuity plans). o Life cover (including total and permanent disability benefits)will be capped at 3 times thesinglepremium. o Trust nomination is not allowed for life insurance products purchased using SRS funds.

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AM I ALLOWED TO

WITHDRAWFUNDS FROM MY SRS ACCOUNT?

Withdrawal at or after statutory retirement ageFromyourfirstwithdrawalmadeafterreachingthestatutoryretirementage,youwillhaveupto10yearstowithdrawthefullamount:

• youmaywithdrawasmanytimesasyouwishwithoutanypenalty;and• 50%ofthesewithdrawalswillbetax-exempt.

The statutory retirement age as at 2014 since the inception of SRS is 62 years old.

YoumaywithdrawanyamountofcashfromyourSRSaccount.

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Closure of the ten-year withdrawal windowAt the end of the ten-year withdrawal period, if there isstillmoney or investment remaining in yourSRSaccount,

50% ofsuchbalancewillbesubjecttoincometax.

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Withdrawal before the statutory retirement ageYou can withdraw funds from yourSRSaccountatanytime,but:

100% ofthesumwithdrawnwillbesubjecttotax;anda 5%prematurewithdrawalpenaltyonthesumwithdrawnwillbeimposed,unlesswithdrawalismadeunderthefollowingexceptionalcircumstances:

• death• medicalgrounds• bankruptcy• fullwithdrawaloftheSRSbalancebyaforeignerwhohas maintained his SRS account for at least 10 years from the dateofhisfirstcontribution

You can continue to contribute to yourSRSaccount if youmadeawithdrawal before the statutory retirement age.However, no furthercontributionswillbeallowedonceyoumakeawithdrawal fromyourSRSaccount:(i) afteryoureachthestatutoryretirementage;or(ii) onmedicalgrounds.

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For more information or to open an SRS account, please contact one of the approved SRS operators.

SRS Operator Contact Details

DBS Tel: 1800 111 1111 http://www.dbs.com.sg/personal/investments/ supplementary-retirement-scheme/default.page

OCBC Tel: 1800 363 3333 http://www.ocbc.com/personal-banking/Investments/ supplementary-retirement-scheme.html

UOB Tel: 1800 538 8011 http://www.uob.com.sg/personal/investments/ financial/uob_srs_account.html

Administrator Contact Details

Inland Revenue Email: taxqueries@iras.gov.sg

Tel: 1800 356 8300 (MondaystoFridays,8amto5pm)

Facsimile: (65) 6351 3636 http://www.iras.gov.sg/irashome/page04.aspx?id=138

Authority ofSingapore

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Ministry of Finance100HighStreet#06-03 The TreasurySingapore179434