Singapore Government Press Release
Media Relations Division, Ministry of Information, Communications and the Arts,
MITA Building, 140 Hill Street, 2nd Storey, Singapore 179369
Tel: 6837-9666
MINISTRY OF FINANCE PRESS RELEASE
CHANGES TO THE SUPPLEMENTARY RETIREMENT SCHEME (SRS) CONTRIBUTION CAPS FROM 1 JAN 2004
The SRS contribution caps will be adjusted from 1 Jan 2004 to reflect the changes in CPF contribution caps.
The SRS is a voluntary retirement scheme that allows Singaporeans and PRs to supplement their CPF savings for old age, and foreigners working in Singapore to set aside long term savings. The SRS offers attractive tax benefits. Contributions to SRS are tax-exempt, investment returns are accumulated tax-free (with the exception of Singapore dividends), and only 50% of the withdrawals at retirement are taxable. As the caps on contributions to SRS are pegged to the CPF scheme, changes in the CPF contribution caps will have an impact on the SRS caps.
The CPF Ordinary Wage (OW) monthly ceiling will be lowered from $6,000 to $5,500 (on 1 Jan 2004), to $5,000 (on 1 Jan 2005) and to $4,500 (on 1 Jan 2006). To reflect this change from 1 Jan 2004, the SRS contribution caps for income from employment will be as shown in the following table (The current caps can be found in Annex A).
Table: New SRS Contribution Caps from 1 Jan 2004
|
Singaporeans/PRs |
Foreigners |
|
|
Contribution rate |
15% |
35% |
|
Maximum OW |
$66,000 |
|
|
Maximum SRS contribution cap for OW |
15% x $66,000 = $9,900 |
35% x 66,000 = $23,100 |
|
Singaporeans/PRs |
Foreigners |
|
|
Maximum Additional Wage (AW) |
Actual AW if OW < $66,000 and (OW +AW) < $93,500 $93,500 less OW if OW < $66,000 and (OW+AW) > $93,500 $27,500 or actual AW, whichever is lower, if OW is > $66,000 |
|
|
Maximum SRS contribution cap for AW |
15% of AW as determined above |
35% of AW as determined above |
For the self-employed, the existing $72,000 per annum cap on self-employed income that was used in calculating the SRS contribution cap will be reduced to $66,000 (i.e. $5,500 x 12) with effect from 1 Jan 2004. Therefore the revised maximum SRS contribution caps for self-employed individuals are $9,900 (i.e. 15% x $66,000) for Singaporeans/PRs and $23,100 (i.e. 35% x $66,000) for foreigners.
In tandem with future changes to the CPF OW ceilings, the above SRS contribution caps will be adjusted again on 1 Jan 2005 and 1 Jan 2006.
Examples to illustrate how to calculate the new SRS caps can be found in Annex B.
No change to SRS contribution rate
The SRS contribution rate for Singaporeans and PRs is 15%, while that for foreigners is 35% (i.e. SRS contribution rate for locals + employee CPF contribution rate). The reduction of the CPF contribution rate from 36% to 33% will not affect the SRS contribution rates.
For media queries, please e-mail your questions to Mr Chua Loo Lin, Manager (Public Affairs), Ministry of Finance at
chua_loo_lin@mof.gov.sg or contact him at DID: 63327407.--o0o--
Annex A
Current SRS Contribution Caps
|
Singaporeans/PRs |
Foreigners |
|
|
Contribution rate |
15% |
35% |
|
Maximum OW |
$72,000 per annum or OW, whichever is lower |
|
|
Maximum SRS contribution cap for OW |
15% x $72,000 = $10,800 |
35% x $72,000=$25,200 |
|
Maximum AW |
Actual AW if OW < $72,000 and (OW +AW) < $100,000 $100,000 less OW if OW < $72,000 and (OW+AW) > $100,000 40% of OW or actual AW, whichever is lower, if OW is > $72,000 |
|
|
Maximum SRS contribution cap for AW |
15% of AW as determined above |
35% of AW as determined above |
Annex B
Examples to illustrate calculation of SRS cap
Example 1
Where an employee who is a Singaporean and treated as a tax resident
earns $20,000 per month (i.e. OW=$240,000) and
receives 6 months’ bonus (i.e. AW=$120,000)
His SRS OW contribution cap
= 15% x $66,000 (since OW > $66,000)
= $9,900
His SRS AW contribution cap
= 15% x $27,500 (since OW > $66,000)
= $4,125
Hence SRS contribution cap
= $9,900 + $4,125
= $14,025
Example 2
Where the individual who is a Singaporean and treated as a tax resident
earns $4,000 per month (i.e. OW = $48,000)
receives 6 months bonus (i.e. AW = $24,000) as an employee; and
derives an annual self-employed income of $15,000
Employment income:
His SRS OW contribution cap
= 15% x $48,000 (since OW < $66,000)
= $7,200
His SRS AW contribution cap
= 15% x actual AW of $24,000
(since total OW + AW < $93,500)
= $3,600
Self-employed income:
His SRS self-employed income contribution cap
= 15% x actual self-employed income of $15,000
(since actual self-employed income is less than $66,000 – OW)
= $2,250
Hence SRS contribution cap
= $7,200 + $3,600 + $2,250
= $13,050
Example 3
Where the individual who is a foreigner and is treated as a tax resident
earns $5,500 per month (i.e. OW = $66,000)
receives 8 months bonus (i.e. AW = $44,000); and
derives an annual consultancy fee of $15,000 (i.e. vocation/trade income)
Employment income:
His SRS OW contribution cap
= 35% x $66,000 (since OW = $66,000 cap)
=$23,100
His SRS AW contribution cap
= 35% x [$93,500 - $66,000] (since total OW +AW > $93,500)
= $9,625
Self-employed income
His SRS self-employed income contribution cap
= 35% x 0 (since OW +AW > $93,500)
= $0
Hence SRS contribution cap
= $23,100 + $9,625
= $ 32,725