联合早报：公众对SRS投资需求预计12月份激增

As we enter 2024, a surge in public interest in Supplementary Provident Fund Retirement Scheme (SRS) investments is expected.

Yee Shen Hao, Financial Services Manager at PhillipCapital, sheds light on the rising demand for SRS investments and further explains how long-term investors perceive it as an investment opportunity, when market conditions are volatile.

Lianhe Zaobao 联合早报 article in Chinese featuring Yee Shen Hao was originally posted on:

https://www.zaobao.com.sg/…/singa…/story20231227-1458462

English translation:

As the end of the year approaches, public demand for investment in the Supplementary Retirement Scheme (SRS) is expected to increase.

Hugh Chung, the Chief Investment Advisory Officer of Endowus, revealed in an interview with Lianhe Zaobao that more than one-third of the platform’s local customers use SRS funds to invest. He expects the savings into SRS accounts to surge in December because investors tend to save money at the end of the year in order to receive tax deductions. For example, in December last year, the number of customers investing with SRS doubled from November.

Yee Shen Hao, a Senior Wealth Manager at PhillipCapital, observed that when the market is performing well, the demand for SRS investment often rises in the fourth quarter. However, if the market is volatile, long-term investors will regard this as an investment opportunity and increase their demand for SRS deposits and investments during this period of time.

About 20% of Yee’s clients use SRS funds for investments with the majority of the investments being long-term investments with a term of more than 15 years. They have a high risk appetite and generally invest in a diversified global index fund portfolio.

SRS is a voluntary retirement savings scheme launched by the Ministry of Finance in 2001. It uses tax deductions to encourage people to deposit their cash savings into this account for investment. In order to reduce their taxes during tax filing season in the following year, individuals must deposit money into their SRS account before December 31.

Individuals who are over 18 years old and are not bankrupt can open their SRS accounts at three local banks. Singaporean citizens can deposit up to S$15,300 into their SRS account each year, while foreigners can deposit up to S$35,700 into their SRS account each year. This amount will be directly offset against an individual’s chargeable income, thereby reducing the amount of income tax the individual has to pay.

According to data released on the Ministry of Finance’s website, as of the end of 2022, more than 380,000 people had opened SRS accounts which is a 34% increase from the previous year. Overall funds increased by 13.7% to S$16.3 billion. Out of which, 21% of the funds, or S$3.4 billion, are stored in the form of cash. Although this ratio has been declining year by year, it still means that the public is not taking full advantage of their SRS funds to earn higher interest rates.

Yee Shen Hao reminded: “Even in the current high interest rate environment, uninvested SRS funds can only obtain an interest rate of 0.05%.” This is far lower than most bank fixed deposits and promotional savings account interest rates.

Products currently investable by funds in SRS include Bonds, Singapore Savings Bonds, Singapore Government Bonds, Treasury Bills, Fixed Deposits, Unit Trusts, Singapore-listed Stocks and Single Premium Insurance. Online investment platforms popular with young people such as Tiger Brokers and MooMoo currently cannot be invested with funds in SRS accounts. Investors can only invest in Unit Trusts with overseas exposure and SGX-listed funds.

SRS may have more products available in the future

Moving forward, SRS expects to have more products available for investment. Three local banks have recently appealed to the Competition and Consumer Commission of Singapore to make a decision on whether the proposed Supplementary Retirement Scheme Framework infringe Section 34 of the Competition Act 2004.

The proposed framework includes qualification conditions for SRS product, as well as guiding principles for SRS product suppliers to ensure fair competition in this market.

In response to inquiries from Lianhe Zaobao, the three banks said that some product providers, such as robo-investment advisors, fund companies, investment management companies and insurance companies, have already applied to be product suppliers for SRS investments, allowing customers to use SRS funds to invest in their products.

According to the proposed framework of the three banks, product suppliers that want to join must meet the requirements set out by SRS. Firstly, since SRS funds are retirement funds, the risk level of SRS products must be relatively low. Secondly, the product must be simple and easy to understand. Pricing and other terms of the product must be made transparent to customers.

The framework is currently under review by the Competition and Consumer Commission of Singapore and is expected to come into force in the second half of next year.

There are currently four investment management institutions under the SRS scheme, including iFAST Financial Pte Ltd, Phillip Securities, UOB Kay Hian, and GROW with Singlife (formerly known as Navigator Investment).