Plans by Singapore banks to broaden product providers, offerings under SRS framework shelved
Competition watchdog ends review of proposed framework after DBS, OCBC and UOB withdraw joint application
THE Competition and Consumer Commission of Singapore (CCCS) has halted its review of a proposed Supplementary Retirement Scheme (SRS) framework following the withdrawal of a joint application by DBS, OCBC, and UOB to implement changes.
The proposed framework, announced in November 2023, sought to streamline the onboarding and management of SRS product providers and their offerings, potentially expanding the range of products available to help individuals grow their retirement savings.
If implemented, the framework was expected to increase competition by allowing more financial institutions to offer SRS products, broadening the options for investors to grow their retirement funds.
However, with the banks’ withdrawal of the application, CCCS said on Thursday (Dec 26) that there would be no changes to current SRS operations, ensuring no impact on existing account holders.
“We would like to assure our customers that we are committed to continue providing the SRS service to support their retirement needs,” the trio of banks said in a joint statement.
“They can continue to invest in a wide range of products using their SRS funds including bonds, Singapore Government Securities, fixed deposits, unit trusts, stocks and single premium insurance.”
The decision concludes CCCS’ evaluation, which had included seeking public feedback between November last year and early January 2024 on whether the joint implementation might affect market competition or consumer choice.
What is the SRS?
The SRS, which complements Singapore’s broader Central Provident Fund scheme, is a voluntary savings programme designed to encourage retirement savings, offering tax benefits for contributions. It began in 2001 and is operated by the private sector.
Participants may choose to open an account with any one of the applicants (DBS, OCBC and UOB) and use their contributions to the SRS to purchase various investment instruments. Annual contributions to the SRS are capped at S$15,300 for Singapore citizens and permanent residents, and at S$35,700 for foreigners.
SRS contributions are eligible for personal income tax relief of up to S$80,000 per year of assessment, while investment returns from the scheme are accumulated tax-free. Only 50 per cent of withdrawals from SRS are taxable at retirement.
What were some of the proposed changes?
Key provisions of the proposed SRS framework included:
- Eligibility criteria for the onboarding of SRS product providers (PPs) and products which are based on the criteria set out in the Income Tax (Supplementary Retirement Scheme) Regulations 2003 and on the principles of risk, complexity and transparency;
- Initial and annual third-party audit reports to be provided by all new and existing SRS PPs to determine their eligibility, and to verify ongoing compliance with the proposed SRS framework;
- Mechanisms to enforce the proposed SRS framework, including to manage situations where SRS PPs or products do not comply with the proposed framework; and
- An initial application fee payable by SRS PPs, which would be limited to covering the costs of administering the proposed SRS framework.
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