Supplementary Retirement Scheme (SRS)

The Supplementary Retirement Scheme (SRS) was established on 1st April 2001, to complement our Central Provident Fund (CPF) savings. While our CPF savings are often used for housing, education and medical payments, SRS is a tax-incentivised, voluntary form of savings strictly meant for retirement.

SRS is open to all Singaporeans, Singapore Permanent Residents (SPRs) and foreigners, who are at least 18 years of age, and not undischarged bankrupts or of unsound mind.

You can choose to stop the SRS contribution or make withdrawal from the SRS Account anytime. However, the intention of SRS is for long term savings and penalty is in place to discourage premature withdrawal from your SRS account. If you withdraw from your SRS account before the prevailing statutory retirement age, 100% of the withdrawal amount is taxable and there will be a penalty of 5%. However, if you withdraw from your SRS account on or after the prevailing statutory retirement age, only 50% of the amount drawn will be subject to tax. You may also spread your withdrawals over a period of up to 10 years, to meet your financial needs. Spreading out your withdrawals will generally result in greater tax savings.

An SRS account must first be opened with an approved bank. Every dollar that is voluntarily contributed in cash will result in the same amount of tax relief.

Yearly Maximum SRS Contribution by Singapore Citizens / SPRs

Year Absolute Income Base* Yearly Maximum SRS Contribution
2018 (17 months x $6,000) = $102,000 15% of Absolute Income Base                   (15% x $102,000) = $15,300 

Yearly Maximum SRS Contribution by Foreigners

Year Absolute Income Base* Yearly Maximum SRS Contribution
2018 (17 months x $6,000) = $102,000 35% of Absolute Income base                 (35% x $102,000) = $35,700 

*The Absolute Income Base is calculated on 17 months of the CPF monthly salary ceiling.

The amount must be contributed before December 31st for the Year of Assessment, in order to qualify for relief.

TAX BENEFIT ILLUSTRATION

Here’s a tax illustration of a Singaporean male, single, age 32, earning $5,000 a month and received 3 months bonus. He completed reservist training in the Year of Assessment 2018 and qualifies for the NS Man tax relief. In Scenario 1, he does not contribute to SRS.

In Scenario 2, it shows that he contributed $10,000 to his SRS account before 31st December 2018.

srs.png

The income tax payable reduced by 41.92% from the contribution into his SRS account.

By submitting this form, you agree that Avallis Financial may collect, use and disclose your personal data, as provided in this entry form, for the following purposes in accordance with the Personal Data Protection Act 2012, the Privacy Statement and the Data Protection Policy  of Avallis Financial.

Author: Kim Heng

I am currently expanding my team of financial advisers who may or may not have any financial background. Looking for opportunity to work with corporations or any institutions to provide financial literacy to your staff.

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