Singapore Supplementary Retirement Scheme (SRS)
Are you new to Singapore and haven’t heard of the Supplementary Retirement Scheme (SRS)? Don’t miss out on the income tax benefits of the SRS!
What is the Supplementary Retirement Scheme (SRS)?
The Singapore government introduced the Supplementary Retirement Scheme to encourage taxpayers to save for a voluntary supplementary pension. One of the benefits is the reduction of taxable income by paying a flexible annual amount into their SRS account.
Opening the SRS account reduces income tax. As this account can be used to invest in savings plans, stocks, funds, bonds, etc., it is also attractive for expats.
Who can participate?
- You are over 18
- You have not declared bankruptcy as of this date
- You do not suffer from any mental disorders and
- You are physically and mentally capable of managing yourself and your own affairs.
What is the annual contribution limit?
Income tax contributions are tax-reduced up to a certain amount each year, with the maximum contribution cap set at S$15,300 for Singaporeans and permanent residents. Foreign nationals, whether resident or not, can make an annual contribution of up to S$35,700.
Why does SRS work as an income tax relief?
Singapore uses a progressive tax system, meaning that SRS account holders can reduce their taxable income.
Example 1: Mr Singh (Employment Pass / Spass holder) with taxable income of S$200,000 and he contributed S$35,700 into his SRS Account. His annual income tax is reduced from S$21,150 to S$14,724
Example 2: Mdm Lee (PR/Singaporean) have a taxable income of S$400,000 and she contributed S$15,300 into her SRS account. Her annual income tax is reduced from S$62,150 to S$58,784
For a complete overview of income tax rates and withholding tax rates in Singapore, please read here.
Who is SRS best suited to?
Taxpayers who:
- Earn an annual taxable income of over S$80,000
- Want funds deposited into the SRS account to remain dormant for a longer period (>10 years)
- Want to save for an additional pension
What happens to my money when I reach retirement age?
- One-off payment of savings from your SRS account
- Regular (e.g. monthly / annual) payment
Exception:
Foreigners, with or without a residence permit, receive a one-off payment, 10 years after the first payment
What is taxed when the pension is paid out from the SRS account?
- After reaching retirement age, only 50% of the amount paid out is taxed
- The same applies to payments to foreigners
What tax rates apply to the payment?
Two types of tax:
- Progressive income tax or
- Withholding tax
For more information, simply drop me a message
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek unbiased financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Published By:
Fendy Susanto
Fendy hails from a family who value entrepreneurship, where he understands that ones’ finance is ones’ responsibility. He follow suit after leaving his decade-long career in construction industry, becoming a Financial Advisor, an Entrepreneur and a Content Creator.
Prior to joining this career, Fendy had lost his Mom and Dad to Cancer and Heart Attack, respectively. Having a first hand experience on how devastating that was financially and emotionally, his main goal is to “Leave no Life Unprotected”
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