Er, what is SRS?
Where do you see this?
In investment articles and on the websites of local banks.
What does it mean?
Set up in 2001, the Supplementary Retirement Scheme (SRS) was created to complement the Central Provident Fund (CPF) by giving wage earners an incentive to save for retirement.
The scheme allows a Singaporean or permanent resident over 18 years old to put up to $12,750 a year into a special account that can be opened at DBS Bank, OCBC Bank or United Overseas Bank. Foreigners can put in a maximum of $29,750 yearly.
It is a voluntary programme where participants can contribute a varying amount to the scheme at their own discretion.
The contributions may be used to buy various investment instruments such as unit trusts and can be deposited with banks.
Why is it important?
By allowing you to save consistently for retirement, SRS gives you an additional nest egg on top of your CPF account.
At the same time, you stand to enjoy tax benefits for your SRS contributions.
The latter are eligible for tax relief, and only 50 per cent of the withdrawals from the SRS are taxable at retirement over a period of 10 years.
With lower or nominal income at retirement, you may end up paying little or no income tax.
So you want to use the term. Just say...
"My finanical adviser says I should sign up for the SRS and enjoy tax relief while being able to invest those funds."
Invest, The Sunday Times, December 1 2013, Pg 39