Supplementary Retirement Scheme (SRS) for Retirement

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SRS for retirement1

AgendaFacts about SRSUnderstanding SRSTax Relief Schemes (CPF (SA) vs. SRS)Retirement solution with SRSCase Study2

Facts about Supplementary Retirement Scheme (SRS)3

Understanding SRSStraits Times, 1 Nov 2015

4Source: http://www.straitstimes.com/business/invest/get-tax-relief-while-building-your-nest-egg

105,483As of Dec 2014, there is a only a total of 105,483 SRS members since 2001

Understanding SRSStatistics

5Source: 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

$5BillionTotal 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

Understanding SRSHow it works

6Source: http://www.mof.gov.sg/MOF-For/Individuals/Supplementary-Retirement-Scheme-SRSVoluntary contribution via cashTax relief scheme subject to annual capPersonal ReliefPersonal ReliefTaxable IncomeSRS contributionTaxable 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.pdfPremature withdrawal penalty at 5% Without SRSWith SRSPremature withdrawal not applicable fordeath; medical grounds; bankruptcy; 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.

Understanding SRSHow it works

7Source: 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.pdfOnly 50% of withdrawal amount is taxableWithdraw up to $40,000 per year if you want to remain tax freefirst $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

Understanding SRSHow it works

8Source 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

Understanding SRS

9Source: 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 $12,750SRS contribution of Foreigner To increase to $35,700for 2016 from $29,750To 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

Yr 2015 $5,000X 17 months = $12,750 Yr 2016 $6,000 x 17 months = $15,300Local/ SPR = 15% of base salary @ $85,000Foreigner = 35% of base salary @ $85,0009

Tax Relief Schemes10CPF Special Account (SA) vs. SRS

11CPF Special Account (SA) vs. SRSTax Relief SchemesSource: 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-betterSRSCPF (SA)Withdrawal for 10 years starting @ age 62Draw down from CPF Life @ age from 65 to 70 Tax relief up to $15,300*Tax relief up t o $7,0000.05% interest rate4% 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 accountCapped at $161,000* of FRSFlexibility to investLimited Targeted for those with tax bracket of 7%Annual income of $80,000*Voluntary contribution for self / spouse/parentsDeferment scheme, with withdrawal subject to prevailing tax rate50% of annuity payout subject to taxWithdrawal 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).

Case Study12

13How much will you save?SRS SchemeMr. Yeo , SingaporeanAge 45, Annual Income $100,000

Chargeable Income YA 2016Income Tax rate YA 2016Gross Tax payableFirst $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 SRSWith SRSAnnual Income$100,000$100,000Personal Relief$10,000$10,000SRSN.A$15,300Chargeable Income$90,000$74,000Tax 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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