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Do you want to pay less income tax and save more for the future? If so, you should pay some attention to the Supplementary Retirement Scheme (a.k.a. SRS).

Unlike the popular CPF retirement scheme, many people have not even heard of SRS.

In this article, I will explain

  • What is SRS and what are the benefits of SRS contribution
  • How to make an SRS contribution
  • How to make an SRS withdrawal
  • How to invest your SRS balance

What is SRS?

The Supplementary Retirement Scheme (SRS) is part of the Singapore government’s multi-pronged strategy to address the financial needs of a greying population. It was established on 1st April 2001 to encourage individuals to save for their retirement by offering tax incentives.

SRS plays a complementary role in CPF savings, which are meant to provide for housing and medical needs and for basic living needs after retirement. Unlike the CPF scheme, participation in SRS is voluntary. SRS members can contribute a varying amount to SRS (subject to a cap) at their own discretion. The contributions may be used to purchase various investment instruments.

How much tax relief can you get for SRS Contribution?

The SRS scheme is designed to help you save for the future while reducing your tax expenses at the present time. SRS tax benefits are on top of your CPF top-up tax relief.

  1. Reduction on taxable income: every dollar deposited into your SRS account reduces your taxable income by a dollar, subject to a cap on personal income tax relief of $80,000 per year.
  2. Tax benefits on SRS funds: you can enjoy tax-free investment gains made through SRS funds (except Singapore dividends received), and pay tax on only 50% of the amount withdrawn upon retirement. You can stagger SRS withdrawal over 10 years to enjoy greater tax savings.

Note for foreigners, the yearly maximum SRS contributions are capped at $35,700. I will elaborate on this more later.

Assuming your annual income is S$85,000 this year and you have the following personal tax relief of S$31,500

  1. Earned Income Relief of S$1,000
  2. CPF Relief of S$17,000
  3. NSman Self Relief of S$5,000
  4. Qualifying Child Relief of S$4,000
  5. Parent Relief of S$4,500

You can potentially save 60% of the tax you were supposed to pay, which is $892.50 if you contribute $15,300 to your SRS account. The calculation is illustrated as below, based on YA 2021 tax rate:

An illustration of how SRS helps you save
Employment IncomeS$85,000
Less: Personal Reliefs

(Earned Income, CPF, Qualifying Child, Parent etc)

S$31,500
Without SRSWith SRS
SRS ContributionS$15,300
Total ReliefS$31,500S$46,800
Chargeable IncomeS$53,500S$38,200
Total taxS$1,495S$487
Potential tax savingsS$1,008
(67.4%)

Who are qualified for SRS contribution

Singapore Citizens, Singapore Permanent Residents (SPRs), and foreigners who derive any form of income can make SRS contributions in the current year. You must be:

  • At least 18 years of age;
  • Not an undischarged bankrupt;
  • Not mentally disordered; and
  • Capable of managing yourself and your affairs.

Your employer can also contribute voluntarily to your SRS account. However, the contribution will be taxed as an employment benefit.

What is the maximum amount of SRS Contribution?

You and your employer may contribute any amount to your SRS account up to the maximum SRS contribution. Contributions must be made in cash.

Yearly Maximum SRS Contribution by Singapore Citizens / SPRs

YearAbsolute Income Base*Yearly Maximum SRS Contribution
2011 to 2015$85,000
(17 months x $5,000)
$12,750
(15% of $85,000)
2016 onwards(17 months x $6,000) = $102,00015% of Absolute Income Base (15% x $102,000) = $15,300 

Yearly Maximum SRS Contribution by Foreigners

YearAbsolute Income Base*Yearly Maximum SRS Contribution
2011 onwards$85,000
(17 months x $5,000)
$29,750
(35% of $85,000)
2016 onwards(17 months x $6,000) = $102,00035% of Absolute Income base (35% x $102,000) = $35,700 

*The Absolute Income Base is calculated on 17 months of the CPF monthly salary ceiling.

Note if you are a foreigner, you are required by the SRS bank operator to complete the Declaration Form for SRS and declare your foreigner status. This allows the operator to calculate your maximum SRS contribution.

If you become a Singapore Citizen or Singapore Permanent Resident during the year, please update the SRS bank operator as your maximum contribution amount will have to be recalculated even if you have already made contributions for that year. The SRS bank operator will re-compute your SRS contribution cap for the year on a pro-rata basis.

Penalties may be imposed for excess contributions if a wrongful declaration has been made to the SRS bank operator. For example, if, at the time of contribution, you are already a Singapore Permanent Resident, you cannot declare that you are a foreigner.

How to Make SRS Contribution

You can contribute at any time, and as often as you like, subject to the maximum SRS contribution for the year. All contributions must be made by 31 Dec of the year or as your SRS operator requires, to be eligible for tax relief.

You can continue to make SRS contributions as long as you have not made any withdrawals from your SRS account:

  1. At or after reaching the statutory retirement age that was applicable when you made your first SRS contribution;
  2. On medical grounds.

How to open an SRS Account

SRS Accounts are managed by three SRS operators. To begin making contributions, you must first open an SRS account with one of them. The three SRS operators are the 3 local banks:

  • DBS
  • OCBC
  • UOB

You can only have one SRS account at any point in time. However, you can transfer your account between different SRS operators. It is an offense to open SRS accounts with more than one operator and there are penalties for doing so.

How to make an SRS withdrawal

Perhaps the main reason stopping people from contributing to SRS is that they are afraid that the money is locked up like CPF.

The truth is that you can withdraw funds from your SRS account anytime. Withdrawals can be made:

  • in cash
  • in the form of investments (effective 1 Jul 2015). 

The catch is that if you withdraw your SRS before the statutory retirement age (currently at 62), there will be a 5% penalty. In addition, when you withdraw money or investment from your SRS Account, the withdrawal is subject to tax.

The taxable amount of the withdrawal will be added to your other taxable income (e.g. employment, rental) and taxed based on the prevailing tax rate. The time of withdrawal and circumstances determine the taxable amount of the withdrawal.

Scenario 1: Contribution made before withdrawal in the same year

Ms Jasmine, 40 years old, first made a contribution of $10,000 and then made a withdrawal of $8,000 in the same year. SRS relief will not be granted on the amount of $8,000 she contributed and withdrawn, and there will not be any tax and penalty on the amount withdrawn.

If Ms Jasmine made a withdrawal of $15,000 instead of $8,000, there will be no tax relief allowed on the $10,000 contributed, as the amount withdrawn exceeds the amount contributed in the year. The remaining amount of $5,000 ($15,000 – $10,000) will be subject to tax and a 5% penalty.

Scenario 2: Withdrawal made before contribution in the same year

Ms Jasmine, 40 years old, first made a withdrawal of $15,000 and then made a contribution of $10,000 in the same year. The withdrawal of $15,000 will be brought to tax in full and a 5% penalty will be imposed. Subsequently, the SRS contribution made after will be allowed SRS tax relief.

There are a total of 7 Types of Withdrawals

  1. Withdrawal After Retirement – 50% of the amount withdrawn is taxable.
  2. Early Withdrawal (Before Retirement) – 100% of the sum withdrawn will be taxed.
  3. Withdrawal in the Form of Annuities – 50% of the annual stream is subject to tax when the SRS account is closed or deemed closed. SRS account is deemed closed at the end of the 10 th year withdrawal period.
  4. Withdrawal Upon Death – 50% of the ‘deemed withdrawal’ amount is subject to tax.
  5. Withdrawal on Medical Grounds – 50% of the amount withdrawn is subject to tax.
  6. Withdrawal in Event of Bankruptcy – 100% of the amount withdrawn is subject to tax.
  7. Withdrawal of Lump Sum by a Foreigner (10-year parking period) – 50% of the amount fully withdrawn is subject to tax. The penalty for early withdrawal does not apply.

How to get the best deal?

Before you start saving under the SRS scheme, you should do a simple cost-benefit analysis to review the potential tax benefits as well as earnings from investing your SRS funds. This should be weighed against the opportunity cost of tying down your funds until retirement age.

There is a chance that if SRS savings are withdrawn in their entirety on retirement, you will end up paying more income tax on the withdrawals than what was gained in tax savings. However, this may be mitigated by staggering withdrawals over a period of 10 years.

Don’t underinvest SRS

The worst thing you can do is to contribute to your SRS account and leave the money there to be eroded by inflation. Money in the SRS account has the same pathetic 0.05% interest rate as a cash saving account, yet over one-third of SRS savings is left idling. This is far higher than the 22% recorded six years ago when interest rates were much higher.

According to SRS Statistics, there are 116,466 SRS accounts with a total contribution of 5.97 billion Singapore dollars. Yet there is still $1.91 billion left in the SRS account as cash.

What are SRS Investment Options?

There are many approved schemes under SRS: from bonds to endowment insurance plans; from unit trusts to stocks and ETFs. And you don’t have to invest with the bank that opens the SRS account for you. In fact, you are better off with an SRS Investment Administrator.

To help you with this, I have written a complete guide to SRS investment options.

If you find this article useful, join our Telegram Group and subscribe to our mailing list below for more discussion.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

  • Hi Ivan,

    Thanks for penning this insightful article! Would you know what happens if a Singaporean were to migrate before the age of 62 and have to withdraw the full SRS sum?

    • Hi, Jo

      To my understanding, as long as you are a Singaporean, you need to follow the statutory retirement age. It doesn’t matter where you reside.

      So if you want to withdraw the full SRS sum before age 62, you need to pay the 5% penalty.

      You may want to check with IRAS to confirm this.

  • Hi, I know the total limit is $35,700. My employer offers a match.

    So can i contribute $30,000 myself and my employer does their required match, lets say for example $30,000 contribution, so at year end my SRS balance is $60,000. Is the total limit for both employer and employee $35,700 or is that only for me? (i.e. like I myself can do up to 35,700 and get the tax savings, and the employer can do their 20-30k contribution as well?)

    OR would it take me over the 35,700 total combined, if i put in the required amount to get their full match. Is there a penalty for doing that or will I just lose any tax savings if I do that?

      • Hi Ivan, I recently tried to apply to open an SRS account with OCBC. Was informed the next day that my application was rejected, with no reason given. Any idea what could be the possible reason(s)? I’ve heard of credit card applications being rejected due to low credit score, but not for SRS account opening. Help!

        Heard that it’s pretty straightforward to open an account, and didn’t think that it would be rejected. I’m tick all the boxes for eligibility (Singaporean, at least 18 years old, not an undischarged bankrupt).

  • I am a S Pass holder, If I open SRS a/c now and contribute for 5 years, after 5 years if go back to my home country, can I withdraw my amount? or after 10 years can I withdraw my amount? in case after 10 years should be working here or should be stay in singapore? and what will be the tax for that?

    • Hi, Siva

      If you withdraw in 5 years, 100% of the amount will be subject to tax and a 5% penalty. If you withdraw after 10 years, 50% of the amount is subject to tax and there is no penalty. You need to remain as a foreigner for the entire period.

      You don’t have to stay here. The tax is based on the prevailing tax then.

  • Hi Ivan,

    I was wondering what would be the tax on stocks aft the 10th years of withdrawal. If I am still holding on to 10000 shares of dbs purchased using srs, how would it be taxed?

    I read that investments can be transferred out to cdp. How would these be taxed? Would they use the value of the share at the point of purchase or at the point of transfer?

    Thanks,
    Manoj

  • Buy Bond through POEMS platform using SRS money (SRS account from DBS bank). The bond I brought is not shown the CDP account. Where to view this Bond I brought? It is not shown in my DBS account or POEMS account either. Please advise!!
    Thanks
    Vee

  • Hi, Ivan,
    As a foreigner, in the last 2 years, I was contributing $35,700 a year to SRS to reduce my income tax. In Aug. 2018, I became a PR. As a new PR, for the 1st year, my CPF contribution is limited to $300/month from me, and $240/month from my employer.
    Is my SRS still capped at $15,300/year?
    In this case, my total income tax relief for 2018 is only $300/month * 5 months + $15,300 = $16,800?

    Thanks,
    Victor

    • Hi, Victor,

      Once you becomes a Singapore PR, your SRS contribution is capped at $15,300. I am not sure if IRAS allows you to pro-rate it, you may call their hotline to check.

      • Thanks, Ivan,
        DBS helped me to calculate prorated base on the number of days in the year that I am a foreigner and the ones that I am a PR.
        Although the biggest hit is in the 2nd year where on one hand my CPF contribution remains small, on the other I am completely subject to the $15,300 cap of a PR.

        Victor

  • Hi Ivan,
    As the first $20k of income is non taxable, assuming an annual income stream of $40k from SRS withdrawal (for first 10years after retirement), and $20k from lifetime annuity (also starting from retirement), will one need to pay income tax during the first 10years?

    • Hi, WP

      It is likely that the proceed from your lifetime annuity will be credited to your SRS instead of paying you directly as cash. So your annuity income may be subject to tax. Having said that, this is NOT a tax advice, please call IRAS to confirm.

    • Hi, Terence

      According to IRAS website, “The amount (except for life annuities) in the SRS account will be deemed to be withdrawn immediately after the end of the 10-year withdrawal period”. So my understanding is that you will be taxed for the balance on the 10th year.

      • Hi Ivan, thanks for the reply.

        Assuming I have $100k cash inside the SRS a/c after the 10 years withdrawal period, IRAS will tax me based on 50% of the amount. That works out to be $1250. Can I pay off this $1250 from the $100k? Also, does IRAS tax me on the same year when I withdraw the last tax-concession withdrawal or the next year?

        Does that mean that after IRAS tax the remaining amount after then 10th year, I can withdraw the remaining amount at any time in any amount thereafter tax-free since IRAS already taxed me?

        • Hi, Terence,

          It is not very clear at this moment as SRS is relatively new instrument. But normally you cannot use your balance to “offset” tax obligations.

          According to IRAS, “The Withdrawals from SRS accounts are subject to tax in the YA following the year of withdrawal”.

  • Hi,

    Can SRS be included in fixed month salary?
    For example, if my monthly income is 11000 and comlany provides 18% srs.

    So 11000+1980(18% srs – although this amount will not be mentioned in salary slip) and I won’t get it monthly in my saving account but will be added monthly to srs account.

    As per MOM, Will my fixed monthly salary be 1298 or 11000?

    • Hi, Avi

      This depends on how your company sets up the tax structure for this SRS contribution. SRS can be used as a form of pension, but you should check with your company’s HR for details.

  • If I withdraw at age 55, how much I need to pay for the tax? Lets say I withdraw 20K and at that year I dont have income.

    • Hi, Constan

      If you are withdrawing before statutory retirement age (currently at 62), you will be subject to 5% penalty. Your tax is based on the prevailing tax rate at the year of assessment.

  • Hi, Given that tax-payable is based on half of annual withdrawal amount, which can be significantly different from the initial tax savings you get when contributing to the SRS account, will you perversely end up paying more tax overall in the situation that your SRS investments have appreciated in capital multiple-fold over the 30+ years that the account was active, putting you into a much higher tax bracket even if you spread out your withdrawals over 10 years? In such a situation, wouldn’t it be better to have paid the taxes initially and invest the after-tax money and let it appreciate from there? Does the SRS scheme protects against such a scenario of “overpaying tax eventually”? Thank you.

    • Hi, Peter

      SRS is a tax deferment scheme, not a tax reduction scheme. So it doesn’t mean that the money saved in the SRS account can always benefit from a lower tax. As you rightfully pointed out, there is a possibility that you may eventually a pay higher tax.

      Having said that, how much tax you will pay depends on the tax regime on the year of the withdrawal. Even the 10 years withdrawal period may be amended in the future. So it is really an unknown.

  • If I start withdrawal after my retirement and less than 31,500 per annual, do I still have to pay 50% tax? Is compulsory to withdraw all your money within 10 years after your 1st withdrawal?

    Thanks,

    • Hi, Alvin

      1. How much tax you need to pay really depends on the prevailing tax regime at the point of withdrawal.

      2. Under the current scheme, you need to withdraw all your money within 10 years after your 1st withdrawal.

  • What would be more worthwhile for retirement – top up my SA to aim for ERS or put the same amount in an SRS account to invest and hope for better returns?

      • Is there any minimum number of years for a foreigner to withdraw fully with 50% taxation? I am a foreigner, if I open a SRS account today, and withdraw fully due to below reasons, what’re the implications?
        1. leaving the country, say after 2 years
        2. buying a house

        • Hi, Sam

          In this case, you will be subject to the penalty. To avoid the penalty, you must have maintained the SRS account for at least ten years from the date of the first contribution and have been a non-Singaporean for a continuous period of ten years before the date of withdrawal.

  • Hi Ivan,

    Thank you so much for the great info.

    May I know what process and who should I approach if I would like to do 100% withdrawal before retirement?

    Thanks in advance.

  • Hi

    Appreciate your advice here.

    Assuming the balance in the SRS account is $500,000 on our retirement age.
    We choose to withdraw $40,000 per year for 9 years. And in the last year, we buy an annuity using the balance which pays out less than $40,000 per year.
    We would continue to enjoy zero tax expense assuming we do not have other taxable income. is there any catch?

    Thanks.

    • Hi, Collin

      If you look at Rule #3 of the 7 types of withdrawal: it says “Withdrawal in the Form of Annuities – 50% of the annual stream is subject to tax when the SRS account is closed or deemed closed. SRS account is deemed closed at the end of the 10th year withdrawal period.”

  • hi,

    i have been working in s’pore since 1997, 1st as employment pass holder, then PEP and now i am a PR (dec ’15) – i am now earning CPF as i am a PR but i have over the previous years had a SRS account where i have approx sgd 175k parked. I am married to a singaporean and have no kids and we own the property we live in (freehold condo / D10).

    1. can i transfer SRS to CPF account ?
    2. how to invest the SRS to make sure it doesn’t ‘dissapear’ into ‘inflation’ etc.
    3. can i just withdraw completely and invest as i like ?

    perfect scenario would be to transfer to my CPF account so i can use to put against my mortgage
    in my view.

    thanks in advance for your help / reply.

    best regards.

  • Hi Ivan,

    Not sure if you did eventually publish an article on the investment options for SRS. I’m on the fence and would like to know how the funds in SRS can be used for what investment products.

    Thanks,
    D

  • Want to understand the process of withdrawing from SRS. Is there a form that I need to fill or can it be done online ? For a foreigner who is no longer living in Singapore, how can he/she withdraw from SRS without physically visiting Singapore (or without physically visiting the branch where he/she originally opened the SRS account) ?

  • Hello there,
    Assuming I am aged 42 years and my family, came to work in Singapore on 20 November 2015. I expect to work in Singapore for 9 years and then return to UK my home country
    • Salary per month $18,000; Bonus 3 months per year
    • I am married to Joy (UK citizen) who is aged 40 years and she is not working in Singapore but she is a partner with her sister for a florist shop in London earning S$25,000 per year.
    • I have 3 children (not Singaporeans) ages 8, 12 and 15 years and all are schooling
    • My parents are staying in the UK

    I have got a few questions for you and appreciate if you can reply ASAP 🙂
    1) How much in total should I contribute for SRS?
    2) When should I contribute to SRS and when should I NOT contribute to SRS?
    3) When should I start to withdraw from SRS?
    4) How much I should withdraw each year?

    Also, do you have any recommendations if I expect to obtain Singapore Permanent resident (SPR) status on 1 August 2020 for myself and my family.

    • Hi, Candy

      In this case, you can go to any of the OCBC bank branches. They should be able to provide the “SRS Account Transfer form” &
      “SRS Account Application form” to you

  • What about contributing $7,000 (max) to our CPF retirement fund ? Over at CPF, you can earn 4% interest and get $7k tax deduction.

    Jayne.

    • Hi, Jayne

      You are right. That is another good way of doing it.

      You can make cash top-ups under the CPF Retirement Sum Topping-Up Scheme to your Special Account (for recipients below age 55) or Retirement Account (for recipients age 55 and above).

      You can earn higher interest and get up to $7K tax relief. You can also make top-ups for your spouse or siblings, but the spouse or siblings must not have an annual income exceeding $4,000 in the year preceding the year of top-up.

  • SRS is a great way to reduce taxes for anyone earning over $5k in Singapore. I have been using SRS every since my pay hits $5k, and the taxes that I saved is enormous.

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