On the Central Provident Fund (CPF) website and in investment articles.
What does it mean?
Set up in 2001, the Supplementary Retirement Scheme (SRS) was created to complement the CPF by giving wage earners an incentive to save for retirement.
It is a voluntary programme where participants can contribute a varying amount to the scheme at their own discretion.
Annual contributions are subject to a cap of $11,475 for Singaporeans and permanent residents and $26,775 for foreigners.
The contributions may be used to buy various investment instruments such as unit trusts and can be deposited with banks.
Why is it important?
Besides providing you with the discipline to save consistently for retirement, SRS gives 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, investment returns are accumulated tax-free (with the exception of Singapore dividends), and only 50 per cent of the withdrawals from SRS are taxable at retirement.
Withdrawals can be made over 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 financial adviser says I should sign up for the SRS and enjoy tax relief.'
