Singapore offers a voluntary retirement scheme open to Singapore taxpayers aiding them to save towards retirement. This includes expats that can utilise this option. This article will go over the basics of the Singapore Supplementary Retirement Scheme to aid a fundamental understanding of the scheme for expats.
How much can I contribute and the benefits?
An expat (non-PR holders) can contribute up to $35,700 a year while PR is allowed to contribute $15,300.
The benefits, of these plans, are that only 50% of the funds are taxed at withdrawal with taxation being taxed at the level on retirement that can normally be less if you are not working when withdrawing the funds and you can spread the withdrawal over 10 years.
Tax Saving options
This is a vital component of the SRS, like many other pension schemes around the world. It allows for a tax reduction and tax-free growth. I.E if you were earning $100,000 as an expat contributing your full SRS amount annually of $37,700 your income tax bracket would then become $62,300. Making the amount of income tax liability less.
Please see the link from PWC for more information on Singapore personal tax guide:
https://taxsummaries.pwc.com/singapore/individual/taxes-on-personal-income
What banks offer these schemes
The major Singapore banks offer these schemes DBS, UOB, POSB, and OCBC, and you can register with any of them. From this, you can then invest in a range of funds, ETFs, Stocks, and Bonds.
Withdrawals
50% of the amount withdrawn is taxable if withdrawn after the age of 62.
Withdrawal before 62 is possible, but you will pay a 5% penalty and 100% will be subject to tax.
The required minimum withdrawal from the SRS, there is none, but it must be withdrawn over 10 years.
For Non-residents, the tax rate will be 15% or the progressive residence tax rate (refer to the PWC link above) whichever is higher. However, for expats the 5% penalty does not apply.
Summary
Singapore has many expats and is becoming a destination of choice in the region with the downfall of Hong Kong and the lucrative compensation schemes that have been unveiled for top talent in Singapore in 2022. It would be wise for many expats to look deeper into this option and seek financial advice on what may be a feasible option(s) for yourself when working in Singapore.
If you have any questions about this subject, please email me at info@investmentsforexpats.com.
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