Revised view of SRS account

Just expressing my view and not advocating to start SRS. I change my view on SRS after I read this blogger post and I view it from as ‘retirement fund’ perspective. Everyone income level is not same as well as commitment and plan for future, therefore it may not suit him/her. Pls do find out more. Can Google and there are a lot of views from ppl (negative and positive).

This blogger mentioned we can ‘mitigate the so called penalty by slowing taking out’. So, theoretically, if we had $200K or less in our SRS accounts by the time we retire, withdrawals could be non-taxable. Withdrawing the funds in ten equal portions over a period of ten years would lower the income tax payable if we had more than $200K in our SRS accounts by the time we retire.
http://singaporeanstocksinvestor.blogspot.sg/2011/01/srs-brief-analysis.html

Our first $20K income is not taxable, therefore if you spread out over 10yrs (Maximum years you can spread), you may not pay any tax for the fund you withdraw from SRS. (SRS scheme states if you withdraw your savings upon retirement, only 50% of the savings withdrawn will be subject to tax. You may also spread your withdrawals over a period of up to 10 years to meet your financial needs. Spreading out your withdrawals will generally result in greater tax savings) http://www.iras.gov.sg/irasHome/page04.aspx?id=282

•  Eligibility -> Seem like as long as you pay Income Tax you can apply SRS...

http://www.ecitizen.gov.sg/Topics/Pages/Tax-free-investments-with-the-SRS-scheme.aspx

Step 1: Check your eligibility

Both you and your employer are allowed to make SRS contributions in the current year if:

1)  You earn any form of income, e.g. employment income (including directors’ fees), trade income and rental income in Singapore;

2)  You are at least 18 years of age;

3)  You are not an undischarged bankrupt; and

4)  You do not suffer from a mental disorder that makes you incapable of managing yourself or your affairs.

      OR

You are considered a tax resident for a particular Year of Assessment (YA) if you are:

1)  a Singapore citizen; or 

2)  a Singapore Permanent Resident (SPR) and have established your permanent home in Singapore; or 

3)  a foreigner who has stayed in Singapore for 183 days or more in the year preceding the Year of Assessment; or

4) a foreigner who is not a director of a company and has worked in Singapore for 183 days or more in the year preceding the Year of Assessment.

Some points to note
1.  Always check with authority/banks as I may not always have the fact right... Policy always changes too e.g. official retirement is 62yr old but Govt talking pushing to 65 yr old but I understand the official retirement age is ‘locked’ once you open the account. i.e. if you open the account today, the official retirement age for your SRS is 62yr old even if next day Govt say official retirement age is 65yr old.

2.  There is some admin cost/fee and transaction cost to using SRS as  investment... Quote from OCBC bank “The Account Holder shall only use the funds held in the SRS Account to make Investments, and to meet related or ancillary costs, expenses and charges (including, but are not limited to, brokerage, commissions, fees, stamp duty and contra losses) service and bank charges, transaction fees, and other charges as OCBC may impose from time to time, in relation to his SRS Account (hereinafter referred to as “the OCBC Expenses”) for transactions related to these Investments”.

3.  When can I make a withdrawal from my SRS account?
Anytime. However if you make a withdrawal before the statutory retirement age prevailing at the time of your first contribution, 100% of the sum withdrawn will be subject to tax. A 5% penalty for premature withdrawal will also be imposed.

Add on another blogger stating advantages of SRS...
http://thesingaporemarket.blogspot.sg/2014/11/the-supplementary-retirement-scheme-srs.html