Debated in Parliament on 28 Nov 2022.
Mr Yip Hon Weng asked the Deputy Prime Minister and Minister for Finance (a) whether the Ministry will review the Supplementary Retirement Scheme (SRS) for Singaporeans by raising the maximum contribution per annum to match that of foreigners; (b) why are foreigners allowed tax reliefs on their income when they contribute to the SRS; and (c) whether the withdrawal requirements and penalties will be amended for more equality between locals and foreigners.
The Supplementary Retirement Scheme (SRS) is a supplementary savings scheme for all who work in Singapore. It is separate from the CPF scheme which caters specifically to Singaporeans and Permanent Residents (PRs). SRS, therefore, provides an avenue for foreigners working in Singapore to plan and save for their retirement.
SRS does not have the same tax benefits as CPF. Singaporeans and PRs benefit from full income tax relief on compulsory employee CPF contributions, and CPF withdrawals are not subject to any income tax. In comparison, SRS is a tax deferral scheme where contributions to SRS benefit from income tax relief, but withdrawals will be subject to income tax. The amount of income tax paid will be dependent on the circumstances of the withdrawal, such as the timing and amount of SRS funds withdrawn, and the individual's income tax band.
The maximum SRS contribution for foreigners is currently set to be equal to the maximum SRS contribution for Singaporeans and PRs, together with their CPF contributions, which foreigners do not participate in.
Generally, Singaporeans, PRs and foreigners are subject to the same conditions for SRS withdrawals, including a penalty on early withdrawal of SRS savings prior to retirement. However, foreigners may be allowed to make a penalty-free one-time withdrawal after 10 years from the date of first contribution, subject to conditions, such as withdrawing the full amount. This concession recognises the non-permanent nature of residency for non-PR foreigners, while balancing against the scheme's objective of encouraging retirement savings.
PAPERCUTS