An Introduction to the Singapore Savings Bond

Singapore Savings Bond (SSB)

Every Singapore Savings Bond comes with a 10-year term and offers scheduled interest payouts every 6 months. It is a financial product which is flexible in nature. Since there is no lock-in period, you can choose your investment period according to your preference. Your returns will be higher when you keep the bonds for a longer duration (the maximum you can retain it for is 10 years). You can also choose to quit the investment in advance without paying any penalty.

What makes SSBs one of the safest financial products you can invest in? Both your interest payments as well as your principal investment will be backed by the Singapore government. Also, note the international credit rating agencies have rated the Singapore government as “AAA”.

Let’s Understand

What Exactly is a Singapore Savings Bond

  • Singapore Savings Bonds are a particular kind of securities that are issued by the Singapore government. It is a long-term investment and can go up to 10 years.
  • Singapore Savings Bonds are completely backed by The Monetary Authority of Singapore (MAS).
  • You can choose to retrieve your complete investment amount at any given point of time without incurring any capital losses.
  • Funds that are raised from the issuance of bonds will be put in the Government Securities Fund (GSF).
  • You can use the funds in GSF only for investment purposes and also for the payment of Singapore Government Securities coupons and principal.
  • SSB is issued for 10 years and the coupons are issued semi-annually.

Why Should You Invest in a Singapore Savings Bond?

  • You can start investing in SSBs even with a small amount such as S$500.
  • An SSB is a reliable investment option, especially when you’re about to retire or when you’re a retiree already. Through SSBs you not only get to save for your future, but you’ll also earn interest on your savings which will help you during your retired life.
  • With SSBs, the interest you earn will step up every year. Your earning potential will depend on how long you hold these bonds.
  • You can branch out the risk involved in your investment portfolio by setting aside a portion to your Singapore Savings Bond.

How Can You Buy Them?

Let’s consider you’re buying a savings bond for the first time, take a look at all the information you’ll need and what are the various steps that are involved in purchasing a savings bond below:

To apply for a savings bond you’ll need:

  • A bank account with DBS/POSB, OCBC or UOB. Visit any of the three local banks’ branches in Singapore to open a bank account.
  • In case you do not have a bank account with any of these banks already, you need to open a bank account first.
  • An independent Central Depository (CDP) Securities account that is linked to your bank account via DCS (direct crediting service).
  • For savings bonds, the Central Depositary will be the custodian. Your applications, redemptions, and interest payments will be processed by the Central Depositary. In case you do not have a CDP Securities account already, you’ll have to open one. For more information, you can visit CDP’s official webpage.

Apply via online banking or ATM

  • You can apply through the following channels:
    • POSB/DBS ATMs/internet banking
    • UOB ATMs/internet banking
    • OCBC ATMs/internet banking/mobile application
    • OCBC's mobile application
  • Keep your Central Depositary account number handy when you’re applying for a savings bond.
  • During the processing of your application, an amount will be debited from the concerned bank account that is linked either to your internet banking account or to your ATM card.
  • You cannot apply for a savings bond by visiting any of the bank branches directly.
  • There is a specific period during which you can apply for a savings bond. It is between 6:00 p.m. on the first working day and 9:00 p.m. on the fourth last working day of every month.
  • You’ll be charged a transaction fee of S$2 by the bank for every single application. This fee is non-refundable.

What happens after you submit your application?

  • A new savings bond will be assigned to you by The Monetary Authority of Singapore on the 3rd last working day of the month. The day on which savings bonds are issued is known as “Allotment Day”. You can find the result of your application through the announcements page post 3:00 p.m. on the day of allotment.
  • In case the total amount from all applications exceed the total amount issuance size in a specific month, you might not receive the entire amount you applied for. Excess amount will be refunded to your account by the end of the second last working day of the month.
  • A savings bond will be issued to you on the first working day of the succeeding month. You’ll receive a notification from the Central Depositary through an email. This email will notify you on the savings bond (amount) that is allocated to you. Also, you can monitor your holdings via an online platform through the Central Depositary internet service or by contacting CDP’s hotline.

Your interest will be paid

  • You’ll get your 1st interest payment post 6 months of your bond issuance date.
  • Interest will be credited to the concerned bank account that is linked with your CDP account.
  • You’ll get interest every 6 months after that, on every first working day of the month.
  • The interest paid to you will be recorded on your CDP statement.

Important Details You Would Like to Know About SSB

Features of Singapore Savings Bond (SSB)
  • SSBs are issued by the Singapore government. The term for an SSB is 10 years.
  • You are eligible to invest in an SSB if you at least 18 years old.
  • When the bonds are issued to you, the interest rates for the complete term of 10 years will be locked in and fixed for every issue.
  • The interest rates will be determined depending on the average of the interest rates set by Singapore Government Securities (SGS) a month prior, and might get adjusted to sustain the step-up feature in case market conditions do not permit it.
  • After the bonds are issued, interest will be paid every 6 months.
  • You can invest a minimum of S$500 (per bond) and a maximum of S$100,000 (in total). Your investment amount has to be in multiples of S$500.
  • New SSBs are issued on a monthly basis.
  • You can make a redemption in whichever month you prefer prior to the maturity of your bond.
  • You’ll not be charged any penalty for quitting the investment in advance.
  • The interest you’ve accrued on the amount you’ve redeemed will be paid.
  • Your redemption amount has to be in multiples of S$500.
  • The interest you earn on your savings bonds is exempted from tax.
  • You will not be able to transfer the ownership of your bonds to another party. A transfer will be possible only under a few specific circumstances like in the event of your death.
  • You cannot use your bonds for trading purposes on SGX such as shares or conventional bonds.
  • SSBs cannot be purchased or sold to a third party. Bonds cannot be submitted as a collateral too.

How are the Bonds Allocated When There is an Oversubscription?

In case the total applications are more than the total issuance size, bonds will be assigned based on a format which is known as “Quantity Ceiling”. Let’s understand the meaning of “Quantity Ceiling”

You’ll receive savings bond worth a minimum of S$500. In multiples of S$500, this amount will increase for you till a point wherein you’ve either received the entire amount you had applied for or till all the bonds that are available have been assigned, whichever scenario occurs first.

In case the number of people who have applied for the savings bond is so huge that assigning S$500 per person will exceed the amount of available bonds, the savings bonds will then be assigned on a random basis among the applicants wherein each one will receive bonds worth S$500.

Hence, there are chances that you might not receive the complete amount you actually applied for. Chances are more that an application with a smaller value might get allotted in full.

Quick illustration for you to understand this format better

Let’s assume the Singapore government has decided to allocate Savings Bonds worth S$10,000.

  • Investor 1 applies for bonds worth S$4,500
  • Investor 2 applies for bonds worth S$2,000
  • Investor 3 applies for bonds worth S$7,000
  • Investor 4 applies for bonds worth S$5,500
  • In total, the 4 investors apply for Savings Bonds worth S$19,000 in total.

So now, let’s see how the bonds that are available will be allocated:

  • Between round 1 and 4, applications will be submitted in denominations of S$500 in an ascending pattern.
  • Post round 4, savings bond worth S$8,000 would have been allocated.
  • Investor 2’s application would have been allocated with the complete amount he/she applied for. Hence, in total there are still savings bond worth S$2,000 that are left to be allotted.
  • During round 5, savings bond worth S$1,500 gets allotted.
  • So now, savings bond worth S500 is left and is not enough for allocating all applications during round 6. Hence one of the investors amongst Investor 1, Investor 3, or Investor 4 will get a random allotment of the Savings Bonds worth S$500 that is remaining. Let’s assume Investor 4 gets it.
Investor Applied for Round 1 Round 2 Round 3 Round 4 Round 5 Round 6 Amount received
1 S$4,500 S$500 S$500 S$500 S$500 S$500   S$2,500
2 S$2,000 S$500 S$500 S$500 S$500     S$2,000
3 S$7,000 S$500 S$500 S$500 S$500 S$500   S$2,500
4 S$5,500 S$500 S$500 S$500 S$500 S$500 S$500 (Random) S$3,000

So finally, here is what each investor gets:

In this scenario, S$2,500 is the cutoff amount. You need to look for this important number when the Monetary Authority of Singapore declares the result of an application for each savings bond.

When your application is either equal to or less than the cutoff amount, you’ll get the entire amount you applied for.

When your application is more than the cutoff amount, you’ll get one of the two amounts. It will either be the cutoff amount or S$500 extra than the cutoff amount.

Other Questions You Might Have

Q. Can I apply for a Singapore savings bond if I’m a foreigner?

A. Yes, you can apply for an SSB even if you’re a foreigner.

Q. Can I cash savings bonds at any bank?

A. You can cash the bonds at select banks i.e. DBS/POSB, OCBC and UOB.

Q. Can savings bonds be cashed early?

A. Yes, you can redeem your SSB at any given point of time before the maturity date.

Q. How long would it take for savings bonds to mature?

A. You need to wait for 10 years for it to mature.

Q. Can I redeem my savings bond early?

A. Yes, can redeem your bond any time before the maturity date. You’ll not be liable to pay any penalty for quitting your investment in advance.

Q. How can I redeem?

A. You need to follow the steps given below:

  • Give in a request for redemption via the internet banking portals of banks DBS/POSB, UOB or OCBC or via their ATMs.
  • It is possible to redeem more than 1 bond in a month.
  • Your redemption amount needs to be in multiples of S$500.
  • For every redemption request you make, you need to pay a transaction fee of S$2.
  • You can neither cancel or amend a redemption request once you submit it.
  • The redemption period will commence at 6:00 p.m. on the 1st working day of every month and ends at 9:00 p.m. on the 4th last working day of the month.
  • Your redemption request will be paid within the end of the second working day of the successive month.

Q. What will happen when my bond matures?

A. Every savings bond will have a 10-year term. After this period, both your principal as well as your last interest payment will get credited automatically to your Direct Crediting Service (DCS) bank account. In this scenario, you are not liable to pay any transaction fee and no action is required from your end.

Q. Will I earn any interest through my savings bonds?

A. With a savings bond, you’ll earn interest every 6 months. When you opt for bond redemption during a scheduled interest payment, you’ll get both your redemption amount as well as your scheduled interest together. If you opt for bond redemption prior to receiving the scheduled interest, you’ll get an amount on a prorated basis which is called as the accrued interest (interest you’ve earned but has not yet been paid to you).

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