Why You Should Top Up $1 Into Your Supplementary Retirement Scheme (SRS) Account
Been thinking ’bout retirement? Nope?
Worry not, because I (unfortunately) fall in the same camp. But as insurance ads often remind us, it’s never too late to start.
Enter: the Supplementary Retirement Scheme (SRS), which was introduced in 2001 to supplement your CPF retirement savings.
While it works on a voluntary basis, topping up your SRS essentially means you’re guaranteed your withdrawal amount at the current statutory retirement age of 62 – no matter if this is adjusted to, say, 65 years old several years down the road.
On that, here’s everything to know about SRS, and where it stands against the CPF Special Account (SA).
We’ve so far laid out the pros and cons of SRS, but how does it fare against planting your money in CPF SA – or a savings account?
| SRS vs. CPF vs. Cash | Supplementary Retirement Scheme (SRS) | CPF Special Account (CPF SA) | Cash (Savings Account) |
|---|---|---|---|
| Interest Rate | 0.05% p.a. Note: returns can be higher depending on what you choose to invest in | 4% p.a. | 0.05 to 1+% p.a. (realistic) |
| Yearly Contribution Cap For Tax Relief | $15,300 (Personal) | $16,000 ($8,000 Personal + $8,000 Family) | No |
| Tax Deductible? | Yes | Yes | No |
| Withdrawal Conditions | At 62 years old (retirement age) Note: if withdraw before, subject to 5% penalty | At 65 years old (default) At 55 years old ($5,000 if you have not met Full Retirement Sum FRS or Basic Reitrement Sum BRS with pledging of property. If you have met either one you can withdraw any amount above the sums) | Anytime |
| How To Start | Open with DBS, OCBC, or UOB | Automatically enrolled for Citizens or PR | Open with any bank |
As you can see, it really comes down to what you’re looking for in retirement (I know, what an annoyingly PC statement – but whatchu want?).
It doesn’t take much effort to supplement your CPF savings, though.
Here’s how starting your SRS with as little as a dollar could set you up for an earlier withdrawal.
Setting Up Your SRS Account
It’s an easy three-step process to kickstart your account:
- Login to your iBanking account
- Under Apply, click on Supplementary Retirement Scheme (SRS)
- Transfer a dollar to your newly set-up SRS account.
You’re all set!
Want more? We’ve covered the merits of an SRS account in this guide.
Would you set up an SRS account, or do you reckon your CPF SA savings would be sufficient for retirement? Tell us on our Facebook page!
