Supplementary Retirement Scheme

If you are working in Singapore, do you know that there is a voluntary saving scheme for retirement that will lower your taxes every year? This is known as the Supplementary Retirement Scheme (SRS).


Each year, a person can contribute up to $12750 to this account and all this amount will contribute to a tax relief for that year of tax assessment, assuming that you perform the contribution before 31 December of that year. This saving is substantial if you fall into a higher tax bracket.


To open this account, you will need to go to any of the local banks in Singapore, such as DBS, OCBC or UOB. The amount that you put into the SRS account can be invested into stocks or unit trust to generate even higher return than simply putting them in cash.


When the tax assessment comes from IRAS, this amount should be automatically included, as the banks would have already passed the relevant information to IRAS.


As this is a voluntary saving scheme for retirement, it has measures in place to encourage only withdrawal after the statutory retirement age. When you hit that age and start the first withdrawal from SRS, you are given 10 years for penalty free withdrawal. For any amount that you take out, only 50% of it is subjected to taxes. And most likely, you are not working at that time and this means that the tax amount from the actual withdrawal will be either very low, or even $0.


But in the event that you do need the money before the retirement age, you can still withdraw it. However, the full withdrawal amount will be subjected to tax for that assessment year of withdrawal. In addition, there will be a 5% penalty imposed on the withdrawal.


In conclusion, this is a scheme that you should consider if you fall into a higher tax bracket. And remember, to save the taxes for this year, do contribute to it before the end of 31 December. To make it a even better deal, some of the banks have already started promotion to sweeten the contribute, giving vouchers for each contribution made.

The Hidden Cost of Direct Currency Conversion

Recently, I made an online purchase from a company and this turns out to be start of a nightmare. When I received the credit card statement, I realise that the amount in the statement is different from the amount in the merchant's invoice. Thinking that the merchant charged me wrongly, I gave them a call and they verified that they only charged me the invoice amount.


After this, I proceed to call the bank to find out more about the charges. The bank then mentioned that this transaction is a Direct Currency Conversion (DCC) transaction, where the merchant convert a foreign currency to Singapore Dollars when performing the charging. Therefore, it will inured a 0.8% admin fees on top of the transaction cost.


My instant reaction was "What?!". The merchant did not mentioned anything about conversion to me. Furthermore, although it was a foreign company, it has local presence in Singapore. Nobody buying something on a website with Singapore Dollar pricing would imagine that the merchant needs to perform DCC. If this is the case, the website should state it clearly so that consumer can make an informed choice.


So be careful when you make an online purchase, and always check if the merchant is engaging DCC when they sell you in Singapore Dollars. If not, you will be paying an additional hidden cost of 0.8% of the transaction price for nothing.

Updated T&C for Blue Chip Investment Plan (BCIP)

I just got a letter from OCBC regarding the Blue Chip Investment Plan that I am on. It has updated some terms and conditions that govern this product with effects from 15 Sept 2014.

Most of them relate to cut-off dates which they will withdraw money from your account for the shares purchase and these does not affect me much.

What is interesting about the new conditions is the one that determine how much shares will be allocated with each purchase. From their website, I have extracted the condition.



"On completion of the execution of the aggregated Purchase Instructions, the actual number of shares/units of each Security allocated to each Customer is computed by dividing Net Investment Amount by the Average Purchase Price, rounded down to the nearest whole number.

For Cash settlement, OCBC Bank will credit the unutilised portion of the Gross Investment Amount after excluding the fees (i.e. the residual monies which was not utilised to purchase Securities) back to the Customer’s GIRO-linked account.

For SRS settlement, OCBC Bank will only debit an amount equivalent to the gross investment amount plus fees for the Securities actually purchased from the Customer’s SRS account."



As some of your may have know from my earlier post, I wrote about the hidden cost of investing in BCIP. With this new condition in place, it effectively remove the hidden cost and I am very happy with the way the product operates now.

Well done OCBC for listening to consumer feedback!

OCBC 365 Credit Card

OCBC has launched a new credit card, named OCBC 365 credit card. It is a rebate card that aims to capture the "everyday spending" market by giving different rebate tiers to different spending categories. Below is a summary of the different spending tiers and their cash back rebates.


Cash back categories

• 6% for weekend local dining
• 3% for weekday local dining and overseas dining
• 3% for online shopping
• up to 18.3% for Caltex petrol
• 5% for all other petrol
• 3% for supermarket
• 3% for recurring telcos bill
• 0.3% for all other spending

As seen from the list, it is aiming the spending for daily essentials by providing more cash back for activities such as dining, petrol, groceries and bills. In a way, it seems to be competing for the same market segment as the POSB Everyday Card.


There are some conditions on the cashback though,

1. Minimum monthly spending of $600 for the card
2. Cash rebate is capped at $80 per month.

Those who are interested can find out more from the link below
http://www.ocbc.com.sg/personal-banking/cards/365card.html

OCBC FRANK Credit Card earns 6% rebate with NETS FlashPay and Online Shopping

NETS FlashPay is the contactless stored value payment solution by NETS. Do you know that you can earn 6% rebate by using NETS and doing online shopping?


Online Shopping

All transactions marked by VISA as originating from an online merchant will qualify for 6% rebate if you pay by this credit card. This is a huge list and even bill payments from Telcos are eligible. To be entitled for this 6% rebate, there are some terms and conditions that we will be covering shortly.


NETS

OCBC FRANK credit card comes embedded with NETS FlashPay. The 6% rebate is given when you use the Auto Top Up (ATU) feature of NETS FlashPay.

When you flash the card on the reader of MRT, LRT, public buses, ERP or EPS Cepas2 carpark and there is insufficient value for payment, ATU will be triggered. $50 will be charged to your credit card and the same amount will be credited to your NETS FlashPay in the credit card. With this stored amount, you can then buy any goods and services from shops that will accept NETS FlashPay. Earning 6% rebate at top up will essentially means that you are also earning 6% when using NETS FlashPay for purchases. However, there are some conditions that you will need to take note to earn the 6% rebate.


Qualifying conditions for 6% rebate

You will need to fulfil some conditions before being eligible for the 6% rebate.

1. To qualify for 6% rebate, you will need to spend at least $500 per month on the credit card.
2. The cap of rebate is $60 per month for all ATU and online transactions that are charged to the card.
3. Once a top up using the ATU is successfully, you can only do another ATU after 3 calendar days.

Conclusion

I figured that this card will be interesting for those who shop online often, or those who often buy stuff that cost less than $50 using NETS FlashPay. It is a bonus if you also often pay ERP or take public transport. Honestly, 6% rebate is quite a lot and it easily beats the rewards program of most credit cards. So depending on your spending pattern, this may yet be another good card to have in your wallet.

UOB bank is offering a 1.08% p.a. for Fixed Deposit

This news may be coming a little late, as the promotion is ending on 31 May. Nevertheless, I want to highlight that UOB is offering a 1.08% p.a. interest for a 13 month fixed deposit for Singapore Dollars. To qualify for this, you will need to bring in fresh funds of more than S$20,000.  Those who are interested can find out more at UOB branches or at their website.

Standard Chartered having a promotional rate of 1.5% p.a. for Fixed Deposit

Standard Chartered bank is having its Fixed Deposit promotion again to attract fresh funds.
This time round, it is give 1.5 % p.a. of interest for a 3-month SGD Time deposit. There as some terms and conditions as usual,

1. The maximum deposit that qualify for this promotion is S$50,000
2. It must be fresh fund and they have a new definition for this. From their website, it is stated that "Fresh funds refer to funds not originating from any existing account with the Bank and funds that are not withdrawn and re-deposited within the last 30 days".

But nevertheless, this is still a good time deposit promotion and those with excess cash and who are looking for short term deposit will certainly find this attractive.


Do check it out!