Transcript
Page 1: Supplementary Retirement Scheme (SRS) for Retirement

SRS for retirement

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Page 2: Supplementary Retirement Scheme (SRS) for Retirement

Agenda• Facts about SRS• Understanding SRS• Tax Relief Schemes (CPF (SA) vs.

SRS)• Retirement solution with SRS• Case Study

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Page 3: Supplementary Retirement Scheme (SRS) for Retirement

Facts about Supplementary

Retirement Scheme (SRS)

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Understanding SRSStraits Times, 1 Nov 2015

Source: http://www.straitstimes.com/business/invest/get-tax-relief-while-building-your-nest-egg

105,483

As of Dec 2014, there is a only a total of 105,483 SRS

members since 2001

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Understanding SRSStatistics

Source: http://www.straitstimes.com/business/invest/get-tax-relief-while-building-your-nest-egg

34%

34% of SRS funds are left idle in cash as of Dec 2014

worth $1.66 Billion

$5Billion

Total asset under SRS as of Dec 2014

65%

65% are below age of 55.31% are 36-45 years old34% are 45-55 years old

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Understanding SRSHow it works

Source: http://www.mof.gov.sg/MOF-For/Individuals/Supplementary-Retirement-Scheme-SRS

Voluntary contribution via cash

Tax relief scheme subject to annual cap

Personal Relief Personal Relief

Taxable Income

SRS contribution

Taxable Income

Contributions may be used to purchase various investment instruments.*

*SRS resource:http://www.mof.gov.sg/Portals/0/MOF%20For/Individuals/SRS/SRS%20Booklet_summarised.pdf

Premature withdrawal penalty at 5%

Without SRS With SRS

Premature withdrawal not applicable for1) death; 2) medical grounds; 3) bankruptcy; 4) the full withdrawal of the SRS balance by a

foreigner who has maintained his SRS account for at least 10 years from the date of his first contribution.

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Understanding SRSHow it works

Source: http://www.mof.gov.sg/Portals/0/MOF%20For/Individuals/SRS/SRS%20Booklet_summarised.pdfhttp://www.mof.gov.sg/Portals/0/MOF%20For/Individuals/SRS/SRS%20Booklet_summarised.pdf

Only 50% of withdrawal amount is taxable

Withdraw up to $40,000 per year if you want to remain tax free

first $20,000 of chargeable income is 0% from YA 2003

Flexible to withdraw any amount up to 10 years from age 62

If there is any balance at end of 10 year withdrawal period, 50% of amount will be subject to tax

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Understanding SRSHow it works

Source https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Special-tax-schemes/Supplementary-Retirement-Scheme--SRS-/SRS-contributions/

*Withdrawal can only be done:At or after reaching the statutory retirement age OR medical ground

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Understanding SRS

Source: http://www.straitstimes.com/business/invest/get-tax-relief-while-building-your-nest-egg

SRS contribution of Singaporean/SPR To increase to $15,300 for 2016 from $12,750

SRS contribution of Foreigner To increase to $35,700 for 2016 from $29,750

To calculate contribution amount

17 months X $85,000 (base salary)

Every $ contributed will be net off chargeable income for the year of assessment.

SRS account can only opened by local banks

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Tax Relief Schemes

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• CPF Special Account (SA) vs. SRS

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CPF Special Account (SA) vs. SRSTax Relief Schemes

Source: https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/cpf-withdrawals-at-55-years-oldhttp://business.asiaone.com/news/personal-finance/cpf-sa-vs-srs-which-better

SRS CPF (SA)

Withdrawal for 10 years starting @ age 62 Draw down from CPF Life @ age from 65 to 70

Tax relief up to $15,300* Tax relief up t o $7,000

0.05% interest rate 4% as floor interest*

Withdrawal due to medical or early withdrawal at a 5% penalty Withdrawal at age 55 up to $5,000*#

No capped on the amount in account Capped at $161,000* of FRS

Flexibility to invest Limited

Targeted for those with tax bracket of 7%Annual income of $80,000*

Voluntary contribution for self / spouse/parents

Deferment scheme, with withdrawal subject to prevailing tax rate

50% of annuity payout subject to tax

Withdrawal up to $40,000 per annum with 50% subject to tax (1st $20,000 income is at 0% from YA2003)

*As of year 2016# For members who turned 55 from 2013, you also have the option to withdraw up to 20% of your Retirement Account savings from 65 years old (includes the first $5,000 you could withdraw at 55).

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• Case Study

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How much will you save?

SRS Scheme

Mr. Yeo , SingaporeanAge 45, Annual Income $100,000

Chargeable Income YA 2016

Income Tax rate YA 2016

Gross Tax payable

First $80,000Next $40,000

-11.5%

$3,350$4,600

Source: https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Income-Tax-Rates/

Without SRS With SRS

Annual Income $100,000 $100,000

Personal Relief $10,000 $10,000

SRS N.A $15,300

Chargeable Income $90,000 $74,000

Tax Payable $4,500 $2,930*

Tax Saving $1,570

*Mr. Yeo has effective dropped his taxable income to 7% tax bracket


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