Govt will allow use of SRS cash to buy S’pore Savings Bonds

SINGAPORE — The Government will allow Supplementary Retirement Scheme (SRS) monies to be used to buy Singapore Savings Bonds, said Deputy Prime Minister Tharman Shanmugaratnam on Monday (Feb 5).

In a written parliamentary reply to Member of Parliament (West Coast) Patrick Tay, Mr Tharman, who is the Minister in charge of the Monetary Authority of Singapore (MAS), said the central bank is making changes to the IT system to allow for it, and will make an announcement when ready.

As of Feb 1, more than 55,000 individuals hold over S$1.8 billion of Singapore Savings Bonds, said Mr Tharman. The bonds were first issued in Oct 2015 to provide Singaporeans with a safe and flexible way to invest for the long-term, and an alternative to holding cash in savings accounts.

Last March, Mr Tay had asked the same question and MAS board member Ong Ye Kung had replied that the Government was open to the idea of allowing Singaporeans to use money in their SRS accounts to buy the bonds.

There is a cost involved in making the SRS channel available for purchase of the bonds, and the Government has to assess if it can benefit a “sufficiently broad segment of people”, Mr Ong had said.

He added that money in the SRS – a voluntary scheme that offers tax benefits and encourages people to save more for old age - can already be invested in Singapore Government Securities, which offer the same returns as the savings bonds if held to maturity.

This month’s issue of the bonds was over-subscribed for the first time ever, due to reasons such as the “relatively high short-term interest rates for this particular issue”, said the MAS last week.

The current investment limit is S$50,000 per individual for each issue of the bonds, and the overall limit is S$100,000.

Mr Tharman said on Monday: “Given the objectives of Singapore Savings Bonds, we intend to allow the use of SRS monies for the purchase of these bonds. It will enhance the range of low-cost products available on the SRS platform. However, the allocation mechanism for (the bonds) will continue to ensure that small savers amongst the public get preference in the event of over-subscription.”