Feature Articles: Retirement - OCBC Wealth Management

Put your SRS funds to harder work

Cumulative statistics on the Supplementary Retirement Scheme (SRS) launched here in 2001 shows that at the end of last year, of $736 million held in SRS accounts, more than a quarter is lying idle in cash balances, earning very low returns.

Unfortunately, savings in the SRS account accrue interest at only about 0.125 per cent per annum on average. Take into account a yearly inflation rate of about 2 per cent per annum on average, and you find that one would actually be losing purchasing power, just leaving funds sitting idle in an SRS account.

As SRS savings are meant for retirement, they present an ideal situation for investing with a long time horizon.

Looking at the age profile of all 27,770 Account holders, the figures reflect an almost symmetric bell curve, with about half of all account holders falling into the 21 to 45 age groups. The majority of these individuals still have a good 20 years or more before retirement, and could stand to benefit from investing in Unit Trusts, Insurance-related policies and Shares. However if you plan to purchase these or other investment-related products with your SRS funds, be sure to check first if SRS savings can be used to fund the purchase.

*Cumulative SRS statistics as at Dec 2004
Source: Ministry of Finance

Source: Ministry of Finance

With the plethora of financial options and investment opportunities existing on the market, finding a financial instrument that suits your individual risk appetite and time horizon should be high on your priority list if you have not already done so.

Planning for retirement, though often forgotten or shelved for later, is a life long process. It is always better to start sooner than later, and later rather than never.

If you need help with retirement planning, you may wish to consider OCBC Wealth Management's advanced financial planning tool, WealthMap™. You can seek help from OCBC Bank's Personal Financial Consultants located at any of its branches.

Please also remember to make your SRS contributions for this year before the year-end. The contribution cap for Singaporeans and Permanent residents is currently $12,750

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