Your Views on SRS

[TheAlphaLion]

Manulife’s fully SRS qualified life annuity is currently called “Manulife RetireReady Plus II.” But only when you pay for it as a single premium (with SRS account funds), start payouts after your qualified withdrawal age, and choose lifetime payouts. This is currently the only way to stretch the effective SRS qualified withdrawal window beyond 10 years.

If the returns on such annuities are lower than expected returns from stocks (Manulife's brochure provides two examples of 4.75% and 3.25% annual returns, all are non-guaranteed), then for SRS stock investors it would be better to just accept the small tax amounts above the tax-free $40k/year.

After all, the incremental withdrawal amounts from $40-60k/yr is only subject to 1% tax (income tax rate 2%, only 50% of SRS is taxed at withdrawal), $60-80k/yr is only 1.75% tax, etc. This is a one-time tax as compared to annuities which effectively are taxing you every year for admin/management fees.

 

[BBCWatcher]

If the returns on such annuities are lower than expected returns from stocks (Manulife's brochure provides two examples of 4.75% and 3.25% annual returns, all are non-guaranteed), then for SRS stock investors it would be better to just accept the small tax amounts above the tax-free $40k/year.

After all, the incremental withdrawal amounts from $40-60k/yr is only subject to 1% tax (income tax rate 2%, only 50% of SRS is taxed at withdrawal), $60-80k/yr is only 1.75% tax, etc. This is a one-time tax as compared to annuities which effectively are taxing you every year for admin/management fees.

Yes, agreed, but there are some typically well-to-do individuals who have huge SRS accounts, collect directors' fees until death (and even a bit beyond), and have taxable royalties and/or rental income, as examples. Plus they want more longevity insurance than CPF LIFE alone can offer. So if these stars align, and sometimes they do, then in part Manulife might have an interesting offer.

 

[sunbox]

Is Unit trust investing using SRS money recommended? Or it is better to invest SRS money in endowment plans with guaranteed returns?

 

[reddevil0728]

Is Unit trust investing using SRS money recommended? Or it is better to invest SRS money in endowment plans with guaranteed returns?

Depends on your risk appetite I guess?