What investment instruments can I purchase using my SRS funds?

You may invest in a wide range of financial assets, including those offered by financial institutions (product providers) other than your SRS Operator. Your product providers will be able to provide information on the products that they are offering for SRS. However, direct property investments are not allowed. As for life insurance products, the following conditions shall apply:

• Only single premium products are allowed (including recurrent single premium products, encompassing both annuity and non-annuity plans).

• Life cover (including total and permanent disability benefits) will be capped at 3 times the single premium.

• Plans can allow for a contribution continuation feature/benefit upon disability.

• Other types of life insurance e.g. critical illness, health and long-term care are excluded.

You should note that investment choices are made on a caveat emptor basis.

When can I sell the investments bought using my SRS funds?

Anytime.

Does the use of SRS funds for investment constitute a withdrawal from the account?

No.

Must all proceeds from the sale of my SRS investment instruments be returned to my SRS account?

Yes.

Is there a guaranteed rate of return on the investments I make with my SRS funds?

No.

Is there any interest paid on the balance in the SRS account, and if yes, what is the interest rate?

The interest rate on funds in SRS accounts are set by the market. Each SRS operator decides on the interest, if any that it pays on funds in the SRS account. You may wish to approach the SRS operators for further information as they would be better placed to advise you.

What happens if the SRS operator or the financial institution where I make my SRS investments goes bankrupt? Can I still get back my money since it is meant for my retirement?

Savings and investment products, including SRS, placed with financial institutions are not guaranteed against losses in the event of the financial institution’s bankruptcy. When placing their monies with any financial institution, investors should assess and monitor for themselves the financial soundness of that institution.

What investment products can I purchase within SRS? Is there a list of approved SRS investment products?

The Government has few restrictions on SRS investments with the exception of direct property investments and certain insurance products. You should be able to make a wide variety of investments, including share, insurance, bond, unit trust and fixed deposit. We currently do not maintain a list of financial institutions offering products under SRS (this is a commercial decision). We suggest that you seek advice from the SRS operators and the financial institutions which you are interested in purchasing products from.

Why is it that I cannot use my SRS funds to purchase the investment product I want? The range of investment products in SRS is limited.

While the Government prescribes few restrictions on the range of possible SRS investments (other than those on certain insurance products and property investments), SRS operators and other financial institutions generally decide the SRS products that they wish to offer based on commercial considerations.

Are ETFs (Exchange Traded Funds) which are traded in Singapore Stock Exchange eligible SRS investments?

The Government does not have any restriction on the use of SRS money for the purchase of Exchange Traded Funds (ETFs) listed on the Singapore Stock Exchange.You may wish to make some enquiries with your SRS operator on the possibility of using your SRS funds to purchase ETFs.

Are dividends received from unit trusts purchased with SRS funds taxable?

One-tier exempt dividends and distributions from unit trusts purchased with SRS funds and deposited into the SRS account are not taxed when they are credited into the SRS account. However, tax will be imposed on the amount subsequently withdrawn from the SRS account.

Can I use the SRS funds to exercise the stock options issued by my company?

The Government does not restrict the exercise of stock options within SRS, provided that the following conditions are met:

The conditions listed above are also applicable for most other investments.

However, the SRS operators may not facilitate the exercise of stock options with SRS monies. This is a commercial decision. We advise that you approach your SRS operator for more information.

Can I surrender my annuity policy after my SRS account is deemed closed at age 72, i.e. 10 years from the date of the prevailing retirement age?

An SRS member is not allowed to surrender the policy after the SRS account has been closed or deemed closed.

Must the investment mature when one reaches the prescribed retirement age, i.e. currently at age 62, or can it mature anytime within the 10-year withdrawal period starting from age 62? E.g. can an investor purchase a single-premium endowment plan maturing at age 62, another maturing at age 63, and so on until age 71?

The investment may mature anytime within the 10-year withdrawal period. An investor may purchase a single-premium endowment plan maturing at age 62, another maturing at age 63, etc.

Can a customer purchase a single premium endowment policy that matures at age 65 under SRS? What happens to the cash proceeds upon maturity?

An SRS account holder may purchase a single premium endowment policy that matures when he/she reaches the age of 65. The cash proceeds upon the maturity of any investment (including a single premium endowment policy) would generally have to be returned to the SRS account.

How long will it take before I can utilize my money in the SRS account for investment after I have contributed it to my SRS account?

You should generally be able to utilise your SRS monies for investment once your SRS operator has confirmed the receipt of the monies (for example after it has cleared your cheque) and credited the monies to your SRS account. You may wish to check with your SRS operator on the actual time lag between making a contribution and being able to make an SRS investment.

Can I do a direct purchase of equities on the Singapore Stock Exchange or any other exchange in the world?

The Government does not prohibit a person from purchasing shares listed in Singapore or any other countries. However, while an SRS operator would facilitate the purchase of a share listed in Singapore, it might not offer the option of purchasing (with SRS monies) a share listed in a foreign exchange. We advise that you consult your SRS operator, if you wish to purchase a share listed on a foreign exchange.

If I make an SRS contribution and use the full sum to buy unit trusts over the years, am I allowed to start withdrawing from my SRS account without selling any of the unit trusts? Is it mandatory for me to sell my unit trusts and the sales proceeds put back to the SRS account before I can withdraw them?

As only cash withdrawals are allowed under SRS, the unit trusts have to be sold and the proceeds returned to your SRS account before you may make your SRS withdrawal at the age of 62.

If I buy an annuity using my SRS funds, will the monthly annuity payouts be paid into my SRS account after I have reached 62 years of age, or can they be paid into my bank account directly? Will I be taxed only on 50% of the total annuity payouts for each year for 10 years (that is, until I am 72 years old)? If I live longer than that, will my monthly annuity payouts be no longer taxable under the SRS scheme?

If your SRS account is still open after you have reached 62 years old, your monthly annuity payouts must be returned to the SRS account before you withdraw them. If your SRS account is closed after you have reached 62 years old, your monthly annuity payouts may be paid into your bank account direct. After reaching the prevailing statutory retirement age at the point of first SRS contribution, an SRS member is taxed on only 50% of the total annuity payouts each year, perpetually.