Tuesday, September 9, 2008

SRS Statistics

Introducing SRS (Supplementary Retirement Scheme)
The SRS is a voluntary scheme to complement the CPF to provide for housing, medical and basic living needs after retirement. Participants can contribute up to $11,475/yr into their SRS at their own discretion. The contributions may be used to purchase various investment instruments.

The scheme is operated by the private sector and was effective since 1st April 2001. The SRS also offers attractive tax benefits. Contributions to SRS are eligible for tax relief where only 50% of the withdrawals from SRS are taxable at retirement. Investment returns are also accumulated tax-free(with the exception of Singapore dividends from which tax is deducted or deductible by the payer company under section 44 of the Income Tax Act).

Growth of SRS
- In Dec'01, there was 11,890 accounts with $157 million in it.
- As of Dec'07, there are 41,334 SRS accounts with $1.44billion.
- Average new accounts per year over 6 years is only about 4,900.

* Seems to me that there are very few people utilising this scheme. Its probably due to lack of understanding of its benefits. The cohort of advisers in Singapore are probably not actively recommending SRS to their clients too.

Of these $1.44billion, these are how the monies are invested.
22% ==> Cash
16% ==> Unit Trust
34% ==> Insurance
6% ==> Fixed Deposit
12% ==> Shares
9% ==> Others

* Looks like most people prefer the lower risk approach with 62% in insurance, cash and fixed deposits. SRS are schemes for long term accumulation, account holders should be better off taking slightly more risk.

Profile of SRS account holders are as follows:
21-35 yrs old ==> 12%
36-45 yrs old ==> 35%
46-55 yrs old ==> 35%
56-61 yrs old ==> 15%
>61 yrs old ==> 3%

* 70% are between 36 to 55. This group is obviously the higher income earners and paying more tax. Hence attracted them into the scheme.

Nationality of SRS account holders
Singaporeans ==> 86%
Singapore PR ==> 12%
Foreigners ==> 2%

* Statistic extracted from Ministry of Finance website...


Anonymous said...

Thanks for the info. Can you share how can we start an SRS account?

Anonymous said...

Adrain, you are misleading the readers that SRS is a tax saving scheme. It is not. It is a retirement supplemenatary scheme.. The tax deferment is thrown in as incentive
to save for retirement. You have not
revealed the downsides and the pitfalls of SRS.. For those who jump in blindly without understanding it can get backfired.

Khiat Han Hwee Adrian said...

I will not say its a tax savings scheme. To me, its more of a tax deferment scheme. On withdrawal after 62 yrs old, they are still taxable but only half of it are.

Its nevertheless a good complement to the CPF Scheme for ones retirement though there are dis-incentives if withdrawn before 62 yrs old.

Anonymous said...

Adrain, i remember ntuc agents sell as tax saving . i am usre you eheard them , right?

Khiat Han Hwee Adrian said...

No. I din see how NTUC Income agents recommend SRS to their clients. In fact, I seldom see advisers telling clients anything about SRS.

Anonymous said...

The SRS is another attempt by our govt to reward the rich at the expense of the poor. Only the rich benefit from this scheme as they save alot of money that otherwise will have to go into paying tax. So the rich can get richer. Just like the abolishment of estate duty, it is benefiting only the very rich.

Anonymous said...

Lucky, there is a cap now, otherwise the rich would exploit the SRS .
The poor are always losers and the insurance agents make them poorer because of their greed by selling the poor products wtih high commission.

Khiat Han Hwee Adrian said...

When more rich people comes to Singapore, then they will spend more money in our Country.

Anonymous said...

When more rich foreigners come to Singapore, more poor Singaporeans will be queueing up to clean their toilets. The Singaporean men will be their chauffeurs and the Singaporean women will be their amahs. How is it different from the time when we are under colonial rule?
Difference is: Our men drives the Ang Mohs around and our women wash the Ang Mohs clothes and toilets.
Now our men drives the ______ around and our women wash the _________ clothes and toilets.

More good years and Swiss standard of living!!! Hurrah. KNN