During Budget 2008, the government announced a number of changes to the Supplementary Retirement Scheme (SRS) to make it more attractive. These changes take place from 1st October 2008.
If you are not aware what SRS is, it is basically a voluntary scheme started in 2001 to help people save on their income tax. Contributions to the SRS are eligible for tax relief and only 50% of the withdrawals from SRS are taxable at retirement.
For more information on the SRS, you can refer to the booklet below:
Anyway, the main changes to the SRS are as follows:
- Employers can now contribute to their employee’s SRS account.
- There is no longer a need for proof of earned income to be able to contribute to SRS.
- SRS members can contribute beyond the prevailing statutory retirement age, up to the point of their first penalty-free withdrawal. The SRS monies can be withdrawn over 10 years from the date of their first penalty-free withdrawal. Withdrawals will be penalty-free only if they take place after the statutory retirement age that was prevailing at the time of the first contribution.
A FAQ of the changes to the SRS can be found below:
FAQ on Budget 2008 SRS Changes
In addition, for members who are already 62 or above on 1st October 2008, MOF will provide a one-off transitional concession (until the end of this year) so that they can take advantage of the new rules.
If you fall into that category and have made penalty-free withdrawals and/or closed your account before 1 October 2008, but wish to continue to contribute to the SRS, you may do so as long as you make a new SRS contribution between 1 October 08 and 31 December 2008.
Thereafter, you can withdraw your SRS monies anytime, and your 10-year withdrawal period will begin when you make your first penalty-free withdrawal. However, once you start withdrawing, you will no longer be able to contribute again. If this sounds confusing, you can refer to this illustration: