Up to $200,000 investment into Singapore Savings Bond

From 1 Feb­ru­ary 2019, Singa­por­eans can invest up to $200,000 of their funds into Singa­pore Sav­ings Bond (SSB), up from the cur­rent lim­it of $100,000. Also, the Sup­ple­ment­ary Retire­ment Scheme (SRS) funds can also buy into the SSB from the same effect­ive date, great news to those (33% of SRS funds) who have been leav­ing their money in the sav­ings account, earn­ing the mea­gre sav­ings interest rate of around 0.1% p.a.

Recall that Singa­pore Sav­ings Bond is a 10-years sav­ings bond offered by the Gov­ern­ment. What makes this SSB stands out from the oth­er bonds is that you can ter­min­ate the bond any­time without pen­alty, and you earn the interest for the peri­od that you hold on to the bond. But do note that the trend is high­er interest rate is being offered for the first few years. If you hold on to the SSB for the full 10 years, the over­all interest rate is not as attract­ive com­pared to oth­er fin­an­cial products that locked you for 10 years.

Update on tax on Supplementary Retirement Scheme withdrawal

Cur­rently, an SRS mem­ber can with­draw up to $40,000 per year from his SRS account tax-free on or after reach­ing the pre­scribed retire­ment age, assum­ing that he has no oth­er tax­able income. Over the max­im­um with­draw­al peri­od of 10 years, he can with­draw up to $400,000 tax-free.
How­ever, if an SRS mem­ber passes away before com­plet­ing his SRS with­draw­als or made a full with­draw­al on the grounds of ter­min­al ill­ness, he would not be able to enjoy the full bene­fit from spread­ing out his SRS with­draw­als over a 10-year peri­od. Hence, from year of assess­ment 2016, a tax exemp­tion of up to $400,000 would be gran­ted for SRS funds deemed with­drawn upon an SRS member’s demise or a with­drawn in full on the grounds of ter­min­al ill­ness.

Next, from July 2015, SRS mem­bers will be able to apply to their SRS oper­at­ors to with­draw an SRS invest­ment by trans­fer­ring the invest­ment out of their SRS accounts (e.g. into their per­son­al Cent­ral Depos­it­ory (CDP) account), without hav­ing to liquid­ate their SRS invest­ments. This is only applic­able for the fol­low­ing types of with­draw­als, which qual­i­fy for the 50% tax con­ces­sion:

  1. with­draw­al on or after the stat­utory retire­ment age pre­vail­ing at the time of an SRS member’s first con­tri­bu­tion (cur­rently age 62);
  2. with­draw­al on med­ic­al grounds;
  3. with­draw­al in full by a for­eign­er who has main­tained his SRS account for at least 10 years from the date of his first con­tri­bu­tion; and
  4. actu­al with­draw­al made by an SRS mem­ber or his leg­al per­son­al rep­res­ent­at­ive (if he is deceased) from his SRS account, after the SRS invest­ment that is to be with­drawn had earli­er been deemed with­drawn upon death or after the expiry of the 10-year with­draw­al peri­od.

All oth­er with­draw­als from an SRS account, includ­ing pre­ma­ture with­draw­als, must be made in cash.