The Supplementary Retirement Scheme, commonly referred to as SRS, is not a foreign concept to many Singaporeans. It is a deferred tax scheme which helps you save for the future while reducing your tax expenses now.

If you are a mid to high-income earner, SRS is a great way to save tax in addition to CPF top-up tax relief, as SRS contributions are eligible for tax relief the following year. For example, if you contribute to your SRS account by 31 Dec 2025, you can get tax relief in the Year of Assessment 2026 (YA2025).

Here’s some quick math: if your taxable income is S$100,000 and you put $10,000 into your SRS account, you pay tax on $90,000, not $100,000. Note that a personal income tax relief cap of $80,000 applies to the total amount of all tax reliefs claimed for each year of assessment. This includes your SRS contribution.

But opening an SRS account is only step one; the real benefit comes from how you invest the money.

As of 2025, uninvested SRS cash earns only 0.05% p.a. That means if you leave funds idle, inflation will quietly eat into your retirement wealth. To maximise the tax benefits and long-term compounding potential, you should put your SRS funds to work.

This guide breaks down the different SRS-approved investment options, their pros and cons, and how to choose what’s suitable for your retirement goals.

At a Glance

SRS was introduced in 2001. It complements the CPF Retirement Sum scheme to help people working in Singapore build up their nest eggs and obtain some tax relief at the same time. You can read my article “All you need to know about SRS” for more details about the scheme.

Currently, the maximum yearly contribution to SRS is:

• $15,300 for Singaporeans and PR
• $35,700 for foreigners

To enjoy the tax savings, you need to open an SRS account with one of the local banks, i.e. DBS, UOB and OCBC.

You Don’t Have to Buy What the Bank Sells

Recently, one of my clients opened an SRS investment account at a local bank. Somehow, the relationship manager gave him the impression that he must use his SRS to buy one of the unit trusts from the bank to enjoy the tax savings, and he ended up paying a hefty sales charge for that!

The truth is that you don’t have to. There is a wide range of options that you can choose from. I will talk about it later.

Should You Invest Your SRS Funds?

Absolutely Yes!

Contributing to SRS but leaving the money uninvested is like buying a new car and leaving it in the garage. It looks nice on day one, but over time, it depreciates quietly and doesn’t take you anywhere.

And many Singaporeans are doing just that.

As of Dec 2024, there were 466,849 SRS accounts with a total balance of S$20.58 billion. Yet about 19% (≈ S$3.9 billion) was left sitting in cash, earning a mere 0.05% interest per year. At that rate, your retirement savings are losing value to inflation every day.

If you want your SRS to work for you, investing isn’t optional — it’s essential.

Why?

#1. Potentially much higher returns

Leaving money idle at 0.05% p.a. means your savings are barely growing. Even a fixed deposit or single-premium policy offers multiple times more. With a long investment horizon, investing through ETFs, unit trusts, bonds, shares, or REITs gives you a far better chance of growing your retirement nest egg meaningfully.

#2. Investment gains grow tax-deferred

All investment returns inside SRS, be it dividends, interest, or capital gains, are not taxed until withdrawal, and even then, only 50% of eligible withdrawals are taxable. This is a significant benefit many take for granted.

#3. You can withdraw investments in-kind (without selling)

If you’ve built a portfolio and prefer not to liquidate at retirement, you don’t have to. Since July 2015, SRS members can transfer investments out directly (e.g. to your CDP account) instead of selling them first — provided the withdrawal qualifies for the 50% tax concession:

• Upon reaching statutory retirement age (locked in at first contribution)
• On medical grounds
• For foreigners, after maintaining SRS for at least 10 years
• Upon death (withdrawn by estate/legal representative)

This flexibility means you can continue holding your investments even after retirement instead of being forced to sell during a bad market.

What Can You Invest Using Your SRS Funds?

You can’t use SRS to buy a property. But there is a wide range of financial products approved under the SRS scheme, including:

• Fixed Deposits
• Bonds (such as T-Bills,
  Singapore Savings Bonds)
• Single-Premium Retirement Plans
• Short-Term Endowment Plans
• Unit Trusts
• Index funds and ETFs
• Stocks and Shares
• Real Estate Investment Trusts (REITs)

Before I go deeper into this, you can download the SRS Cheat Sheet here for a concise guide.

If You Are a Conservative Investor

#1. Fixed Deposit / Bonds

Investing can feel overwhelming for first-time investors — and that’s perfectly normal. You don’t need to jump into stocks or funds immediately. If you prefer to start slow, there are low-risk, capital-stable options you can consider using your SRS funds:

• Fixed/Time Deposits (returns vary with interest rate cycles)
• Singapore Treasury Bills (T-Bills)
• Singapore Savings Bonds (with effect from December 2018)
• Singapore Government Securities (SGS)
• Other corporate and government bonds

In the past, many investors overlooked these instruments because:

• Interest rates were extremely low, especially during the decade of cheap money.
• Trading volume was thin, making liquidity less ideal.
• Application processes were manual, inconvenient, and carried higher costs — banks had little incentive to promote them.

However, things have changed. Since 1 February 2019, investors can apply for SSB, SGS and T-Bills directly through online banking with any SRS operator (DBS/POSB, OCBC or UOB), making access much easier.

Among these instruments, Singapore Savings Bonds (SSB) stand out as a user-friendly, low-risk starting point. Returns are transparent, and if you hold an SGS/SSB to maturity, both your principal and interest are guaranteed.

In recent years, T-Bills also gained strong popularity, especially during the high-interest-rate cycle when yields surged. However, as yields have fallen significantly in 2025, their appeal has moderated — though they may still play a role for conservative investors or as part of a short-term allocation strategy.

#2. Insurance Products

Single-Premium Retirement Plans

Retirement income insurance provides guaranteed payouts during retirement, which traditionally fits well with the long-term nature of SRS. Read my earlier article about how the Retirement Income Plan works.

The article was written in 2017 when the projected return of an insurance product was around 3% to 4% per year.

However, in recent years, the annualised yields have fallen noticeably, and government bonds now offer higher guaranteed rates with greater flexibility. As a result, I no longer actively recommend using SRS to buy retirement insurance plans at this stage.

Still, for reference and completeness, here are retirement income plans that are currently SRS-eligible. I’ll update this list again if market yields recover.

Note that insurance plans are protected under the Policy Owner Protection scheme. If the insurer goes bust, up to $100,000 guaranteed benefits are protected.

The Ministry of Finance has set some conditions for an insurance plan to be eligible for SRS:

• Only single premium products are allowed (including recurrent single premium products, encompassing both annuity and non-annuity plans)
• Life cover (including total and permanent disability benefits) will be capped at 3 times the single premium
• Plans can allow for a contribution continuation feature/benefit upon disability.
• Other types of life insurance e.g. critical illness, health, and long-term care are excluded
• Trust nomination is not allowed for life insurance products purchased using SRS funds.

Single-Premium Annuity (Lifetime Payout)

If you prefer a lifetime payout instead of a fixed payout period, annuities are an option. However, the selection in Singapore is limited, and yields are currently unattractive compared to bonds.

For the same reasons mentioned above, I do not recommend annuities as an SRS investment for now, unless you prioritise certainty over returns.

Short Term Endowment Plans

Short-term endowments became popular during the prolonged low-interest-rate era. These are typically three-year savings plans with guaranteed maturity returns and are also covered under the Policy Owner Protection scheme, offering peace of mind.

While T-Bills may currently offer higher yields, remember that T-Bills are short-tenure (usually 6 months). A short-term endowment can act as a 3-year rate lock, providing stability if interest rates drop again — making it a potential alternative to government bonds for conservative investors.

Tax Considerations When Using SRS to Buy Insurance

It’s important to remember that SRS is a tax deferral scheme — not a tax-free scheme. This means withdrawals in retirement may still be taxable depending on how and when the payouts are received.

If you use SRS to purchase insurance, keep the following rules in mind:

• Insurance policies do not need to mature exactly at the retirement age.
• For life annuities, 50% of the annuity payout is taxable each year, for as long as payouts continue (provided it qualifies for the standard SRS concession conditions).
• You are given a 10-year withdrawal window after reaching statutory retirement age (or after first withdrawal, whichever is earlier).
• Once the SRS account is closed or deemed closed, you cannot surrender an annuity purchased using SRS funds.
• If your SRS account remains open, monthly annuity payouts must first flow into your SRS account before you withdraw them.
• If your SRS account is already closed, annuity payouts can be paid directly to your bank account.

If You Want a Higher Return

Using SRS for insurance or bonds is safe, but it comes with limitations:

• You must buy single-premium products → higher upfront capital required
• Payout structure is fixed once purchased → little flexibility
• Returns are generally lower compared to market investments

These conservative options tend to suit individuals who are near retirement and already have a large SRS balance. If you’re still early in your career or just started contributing, you will likely benefit more from investing for growth.

SRS investing is a broad topic — I’ll touch on the essentials below. Feel free to leave questions in the comments if you’d like a deep-dive article.

#1. Unit Trusts for SRS

When you open an SRS account, bank representatives may show you a few “approved funds”, but those are usually just funds their bank distributes. In reality, Singapore offers over 1,000 SRS-eligible unit trusts.

Many investors misunderstand unit trusts, so I recommend reading my earlier guide on “how to dig below the sales pitch and choose the right unit trust”.

As a start, you need to know what funds are available. Here is how you can check them out:

1. Go to fundsupermart fund selector
2. Under “Payment Method”, select “SRS”
3. Click “Generate Funds Table”

You will get the whole list of SRS-eligible funds.

#2. Index Funds and ETFs for SRS

If you prefer a passive, low-cost, long-term strategy, ETFs and index funds are excellent options. Below are some popular choices:

Some smart beta funds from Dimensional Fund Advisors are also approved under the SRS scheme, but you have to go through a Dimensional-trained adviser.

If you’d like to learn more about DFA strategies, contact me using this form.

#3. Stocks and REITs for SRS

You can also invest directly in SGX-listed stocks and REITs using SRS.

To do so, you need to contact your stockbroker to update your SRS Investment Bank account details. After the linkage has been established, you will need to select the option “SRS” under “trade type” to conduct an SRS stocks trade. Please note that “Contra Trading” is not available for SRS trades.

Although direct stock investing is allowed, I generally do not recommend it for most investors using SRS. Here’s why:

Individual stocks and REITs are subject to corporate actions, and it can get quite complicated when you are not investing with cash. For example, if a company issues rights, you need to top up to prevent your shares from being diluted, but you may not have enough SRS balance, or you may not be able to top up if you have maximised the yearly limit of SRS contribution.

Nevertheless, if you really want to invest in shares, there are some options available.

Some brokers will handle the corporate actions (though not in a perfect way) for you, but you need to be wary of the fees, which are generally not friendly for small investment accounts.

The good news is that in recent years, popular brokers such as Moomoo and Tiger Brokers have entered Singapore and offer powerful platforms and competitive fees. You can check them out.

But to be frank, stock picking is easy to start, but hard to win consistently. For most people, unit trusts or ETFs offer better diversification and less complexity when investing through SRS.

Tax Considerations When Using SRS to Invest

As mentioned earlier, SRS is a tax-deferred, not tax-free, structure.

• When you sell investments purchased using SRS, the proceeds return to your SRS account, not to your bank.
• Tax is only applied when you withdraw from the SRS account, and only 50% of withdrawals are taxable during your 10-year retirement withdrawal window.
• After the 10-year window, the remaining balance is deemed withdrawn, with 50% taxed accordingly.

How about dividends?

Good news — dividends from Singapore shares and unit trusts are tax-exempt under the one-tier system. Dividends paid into your SRS account are not taxed until withdrawal, and only 50% of the withdrawal is taxable at that point.

Your Next Step to Grow Your SRS

We’ve covered a lot today — from fixed income products to ETFs, unit trusts, insurance, tax rules and more. It may seem like a lot to digest, but the worst thing you can do with your SRS is to leave it idle, earning 0.05% a year. Your future self will thank you for taking the next step.

If you want a quick summary, you can download my SRS Cheat Sheet for a concise overview. And if you prefer guidance tailored to your needs, feel free to reach out — I’ve helped many clients build diversified portfolios using SRS-eligible instruments to grow their retirement wealth confidently and strategically.

Simply fill up the form below for a no-obligation discovery meeting.

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