The Supplementary Retirement Scheme (SRS) in Singapore serves as an optional way to set money aside for retirement, offering the added perk of tax deferment. It’s designed with a particular focus on boosting retirement savings, but it’s important to acknowledge that it’s not one-size-fits-all. For some, the SRS might not align well with their financial goals or situation. Let’s delve into a few reasons why this might be the case.
1. Low Interest Rates
A primary concern with the SRS is the minimal interest it accrues. If you park your funds in an SRS account, you’re looking at an annual interest rate of just about 0.05%. This rate pales in comparison to current inflation rates, essentially implying that your money could lose value as the years roll by. For those keen on seeing their retirement savings grow significantly, banking solely on SRS interest isn’t likely to meet their expectations.
There is, however, a silver lining: individuals hoping for better returns have the option to invest their SRS contributions.
