The types of investments you can pick for the Supplementary Retirement Scheme (SRS) might grow soon, giving you more ways to save for when you retire. Three local banks - DBS, OCBC, and UOB - want to make rules for new companies that offer SRS products. This framework will make sure that these companies play fair and compete well.
Lots of different companies, like robo-advisers, fund houses and insurance firms, want to join the SRS with these new rules in place, according to what the banks told The Straits Times.
The banks know that everyone saves for retirement differently. They want to make sure that they offer options that fit everyone's needs.
We'll know more about the new products later. The banks plan to start following these rules in the second part of 2024, but first, Singapore's watchdog group needs to check and make sure they're good. People can share their thoughts on these rules until December 11, 5 pm.
The SRS is for Singaporeans, permanent residents, and some foreigners living here. It helps you save for retirement and saves you on taxes too. Every dollar you put into SRS can lower your taxes by the same amount.
For Singaporeans and residents, the most you can save on taxes is $15,300 a year, and for foreigners, it's $35,700 a year. By December 2022, there were 387,377 people saving with SRS, and together, they put in $16.3 billion in 2022. An increase of 34 percent in account holders from December 2021 and a 13.7 percent surge in contributions.
With SRS, you can invest your money in different ways, like stocks, unit trusts, bonds, REITs, ETFs, government securities like Treasury bills (T-bills), Singapore Savings Bonds, fixed deposits, and certain insurance products. In 2022, many people put their money in stocks, bonds, and insurance plans.
Besides the three banks, there are other places where you can put your SRS money, like online platforms and brokers. But some platforms, like Tiger Brokers and Moomoo, aren't allowed for SRS yet.
Some experts think it's a good idea to include American stocks, like Microsoft or Apple, in SRS choices. They say it's important to understand what you're investing in and be okay with the risks.
One expert, Hugh Chung from Endowus, thinks it's smart to put your money in different places to optimize portfolio risk and returns within the SRS product range. Right now, some money in SRS isn't doing much, so it could be better to invest it and make more money.
He also says younger people with SRS accounts could think about investing in riskier things, like stocks, to get more money back. And as they get older, they might want to switch to safer things, like bonds.
Withdrawals from SRS are taxed at a 50 percent rate, with a maximum withdrawal period of 10 years, after which the remaining balance must be withdrawn.
Mr. Alfred Chia, chief executive of financial advisory firm SingCapital, says SRS is a good way to save for retirement, especially when combined with other retirement plans, alongside monthly payouts from the national annuity scheme CPF Life. He thinks it can help make a strong base for when you retire.
See your own figures
The free calculators show what an SRS contribution does to your income tax, and what your retirement will cost.