SRS was introduced to encourage individuals to voluntarily set aside part of their income for their retirement. SRS members can contribute a varying amount to SRS account (subject to cap), and may be used to purchase various investment instruments.
- You can open an SRS account at participating SRS operators:
- Development Bank of Singapore (DBS) Ltd
- Overseas-Chinese Banking Corporation (OCBC) Ltd
- United Overseas Bank (UOB) Ltd
By contributing to SRS, you are able to enjoy income tax benefits, subjected to the personal income tax relief of $80,000 per year of assessment.
The contribution cap for Singaporean and SPR is $15,300 per annum.
My Taxable income for year 2021: $100,000
After contributing to my SRS account of $10,000 in 2021, my Taxable income will be $100,000 - $10,000 = $90,000
For Singaporeans and SPR, you can only withdraw from SRS savings without penalty before the statutory retirement age prevailing at the time of your first contribution. Only 50% of the SRS withdrawals will be taxable.
Note: There is a 10 year withdrawal period, and it will start from the date of first withdrawal.
While SRS members may withdraw SRS savings anytime, any early withdrawals will be 100% taxable, and will also include a 5% withdrawal penalty.
My Taxable income for year 2021: $40,000
I made a premature withdrawal from SRS of $10,000.
My Taxable income for year 2021 will therefore be: $40,000 + $10,000 = $50,000
On top of that, I will only receive $9,500 for my SRS withdrawal after the 5% penalty.
As the interest rate for SRS account is fixed at only 0.05%p.a, you may wish to invest your SRS monies. With a wide range of financial instruments available (ranging from life insurance to unit trust), consult with our partnered financial advisors to understand which available products will suit your needs best!