Wednesday, December 12, 2007

SRS - Supplementary Retirement Scheme

What is it?
The Supplementary Retirement Scheme (SRS) was established on 1st April 2001 to encourage individuals to save for their retirement by offering tax incentives.

Who is eligible?
* Singaporeans, Singapore PRs and foreigners 21 years and above
* Not a bankrupt or of unsound mind
* Has an earned income in the preceding year
* Passive incomes such as interest, dividend or rental are not eligible

What are the Benefits?
* Your contribution to the SRS will be granted Tax Relief against your Income for that year of assessment.
* Only 50% of your SRS savings taxable when withdrawn on retirement.
* Withdrawals may be staggered over 10 years to avoid the minimum ceiling for tax.

What are the minus points?
* Full amount taxed if withdrawn before the statutory retirement age.
* Further penalty at 5% will be imposed.

How much can you contribute in 2007?
$11,475 for Singaporeans and SPRs
$26,775 for Foreigners

Where can I start my SRS account?
* Open up an account with our 3 local banks. DBS, UOB and OCBC
* Internal Transfer your funds or write a cheque to your own name and SRS account

Is there any charges for opening or maintaining an account?
* Currently "No"

What can I do with the SRS monies?
* You can keep in the account, invest it or get an endowment plan from a Local Insurance Company.
In my next posting, I'll write about how you will get a guaranteed profit from your SRS in your investments.

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