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SINGAPORE : Enhancements will be made to the Supplementary Retirement Scheme (SRS) from October 1 to encourage Singaporeans to put aside more savings for their retirement.
This was first announced by Finance Minister Tharman Shanmugaratnam in his Budget 2008 speech.
The Ministry of Finance has released more details on Monday.
First, employers will be able to contribute directly to the SRS accounts of their employees, and get the full tax deduction on their contributions. This means employers can provide direct retirement benefits for employees, without needing to set up company pension funds.
The next change involves removing the age limit for members to make SRS contributions. Previously, members could only contribute until the statutory retirement age of 62.
Now, the 10-year withdrawal period will only begin when they make their first penalty-free withdrawal.
Finally, individuals without earned income in the previous year will now be allowed to contribute to the SRS in the current year.
For members who are aged 62 or above on October 1, there will be a one-off transitional concession for them to take advantage of the new rules.
Those who have already started making penalty-free withdrawals or closed their accounts can still contribute to the SRS - as long as they do it between 1 October 2008 and 31 December 2008.
Their money can be withdrawn any time after, but no more contributions can be made once the 10-year penalty-free withdrawal period starts.
Contributions to SRS will still be capped at S$11,475 annually for Singaporeans and Permanent Residents, and S$26,775 for foreigners.
Along with the growing awareness of the need to save up for retirement, the Finance Ministry expects the enhancements to attract more people to sign up for SRS accounts. - CNA/de
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