Top-up of SRS Account
November rings the bell spelling end of the year soon.
For those of us with the regular habit of topping-up our Supplementary Retirement Scheme accounts (or intending to open a new account), please remember the deadline is by 31st December.
The Supplementary Retirement Scheme (SRS) is basically a voluntary savings cum deferred tax scheme, which provides dollar-for-dollar tax relief for the chargeable income subject to following year of tax assessment. The objective is to assist Singaporeans to save more on their own for retirement. One can withdraw the accumulated monies after the statutory retirement age (set at point of account opening, currently at age 62), where 50% of the monies will be taxed. Staggered withdrawal is allowed over 10 years to reduce tax.
However, beware that early withdrawal from SRS account results in 100% of monies withdrawn subject to tax and an additional penalty of 5% levied. In some circumstances (e.g. death, medical grounds, bankruptcy), the penalty is waived.
The current cap on SRS contribution is $11,475 per year. Further details @ MOF and MoneySense websites.
To enjoy tax relief and tax savings (depending on one’s tax income bracket) while squirreling away monies tucked for retirement versus the flexibility of exercising cash on hand, there is the opportunity cost trade-off. Not forgetting the lack of liquidity once monies are parked in the SRS account. But if the individual has decided to regularly save for retirement in a disciplined manner, the SRS option is not necessarily a bad one considering the availability of a wide range of investment options (e.g. stocks, funds, single premium insurance products).
