Supplementary Retirement Scheme Singapore

Supplementary Retirement Scheme SingaporeWhat is supplementary retirement scheme?

Before opting for the supplementary retirement scheme Singapore it is essential to understand what this scheme is and the many reasons you need to opt for the same. The SRS (Supplementary Retirement Scheme) encourages individuals to save for the retirement years besides the CPF savings. You need to be aware that the contributions to this SRS can help in saving tax and the investment returns work out tax-free before the withdrawal. Even after retirement you find only 50% of the withdrawals are eligible for taxes.

Information on SRS (Supplementary Retirement Scheme):

Those in Singapore need to understand that besides the hectic lifestyle people lead; the cost of living here is extremely high. It is important to plan on saving for the post-retirement period. Depending only on the CPF scheme for providing you for your day-to-day living after retirement is definitely not enough. That is one reason you have most people opting for the supplementary retirement scheme Singapore.

This initiative of the SRS by the government is a strategy to ensure that those residing in Singapore can lead a comfortable life even after retirement. The contributions to the CPF are compulsory but opting for the SRS is voluntary.

Working of the SRS:

Contributions to the supplementary retirement scheme Singapore generate an interest of 0.05% per annum while the CPF accounts generate interest of 2.5% to almost 5% per annum and this interest is free of any risk. The main benefit of the SRS is the tax benefits this offers. These contributions to the SRS are eligible for tax relief dollar-to-dollar. For the citizens of Singapore and the permanent residents the cap for annual SRS contribution is set at $15,300 and for the foreigners this is set at $35,700 dollars.

Factors to be considered:

Before opting for the supplementary retirement scheme Singapore it is important to take specific factors into consideration.

  1. Benefit of Tax Savings:

You need to calculate the amount of tax you will be saving after retirement if you decide on the SRS. This can be calculated by determining the amount of income tax paid each year. Those with an income which is highly taxable need to opt for a contribution to the SRS.

  1. Investment of the SRS Contribution:

The contributions for the SRS which are unused earn an interest of only 0.05% and thus you need to plan on investing the SRS contributions in case you are looking for better returns, or else the savings tend to get eroded by the ever rising inflation. You have various choices where you can plan on investing these contributions; you have a choice between fixed deposits, bonds annuity plans and unit trusts. It is advisable to seek professional help for an apt investment for the supplementary retirement scheme Singapore.

With the apt investment you can look forward to tax savings and good returns.

  1. Early Withdrawal Penalty:

The negative of supplementary retirement scheme Singapore is if you need to withdraw any funds before the statutory age of retirement you are penalized, besides which, the amount which is withdrawn attracts taxes.

To make this supplementary retirement scheme Singapore be totally beneficial you need to plan on contributing a specific amount only if you are sure of not needing this anytime before the retirement age.

The 5% penalty for withdrawal does not apply for specific conditions, like a death, bankruptcy, medical conditions or if a foreigner who has managed to maintain the SRS account for a minimum of 10 years.

  1. 50% of a Withdrawal during retirement Taxed:

Any profits made on SRS investments are credited into the SRS account. These gains do not attract any tax but only till the time you withdraw. That means, at the age of 62, (retirement age) any amount withdrawn from the supplementary retirement scheme; Singapore gets tax exemption of 50%.

The members of SRS have a 10 year time to make the withdrawals from their SRS account after retirement. After 10 years, any amount balance in the SRS account is considered as a withdrawal in lump sum and 50% of the amount is taxed.

Details about Investments made from SRS contributions:

Though it is important to plan on the supplementary retirement scheme, Singapore, it is equally important to ensure you make the apt investments of the contributions so that you can benefit to the maximum. It is advisable to seek help from qualified financial advisors before you decide on any specific investment. Listed below are some of the possible investments that can be made by an individual from the contributions to the SRS.


It is possible to invest in stocks which are listed in the SGX (Singapore Exchange). There is no requirement of investing this via the bank which is handling the funds. Taking help of brokers’ works well.

Investing in stocks is apt for those who have taken the step of funneling the savings into stocks. This works out convenient as all you need to do is continue making the investments and saving taxes on the returns.

*ETF (Exchange Traded Funds):

ETF’s are fast gaining popularity as investments for the supplementary retirement scheme, Singapore contributions. There are replicas of broad index tracking country or regional indexes composition, stocks in a specific sector bonds, REIT’s commodities or any financial instruments.

Singapore has two ETF’s which track the Straits Times index of the country, the Nikko AM Singapore STI ETF and SPDR STI ETF. You also find bond ETF’s The Bond fund by ABF comprises the bonds which are issued by the government of Singapore and entities linked to the Singapore government. The Nikko AM SGD investment Corporate bond ETF comprises the corporate bonds which are issued by the grade issuers of investment. You have a choice of multiple ETF’s which are listed on the Singapore Exchange (SGX).


The real estate investment trusts (REIT’S) is similar to the investment in stocks. This can also be apt for the investments made by the contributions to the supplementary retirement scheme Singapore. You can use the brokerage firms you had dealing with as these are similar to stocks.

REIT’s pay out distributions is high. These distributions are channeled back into the accounts of the SRS.


The supplementary retire scheme, Singapore contributions can also be invested in bonds listed in the SGX.

*Singapore Savings Bonds:

Investing in SSB’s (Singapore savings Bonds) has only started recently. This change was announced by the MAS (Monetary Authority of Singapore), stating that the funds of the SRS can be invested in the SSB.

*Regular share saving (RSS):

A plan for regular share savings helps in investing in bonds, stocks, REIT’s and ETF which are listed in the SGX. The investment can be only of $100 every month. This works well for those who have no inclination of monitoring the portfolio or have knowledge which is limited.

There are four brokerages in Singapore offering the RSS for investing supplementary retirement scheme, Singapore funds. These are the Monthly Investment Plan by Maybank, OCBC Investment Plan, Philip Share Builders Plan and POSB .Each of these plans has their own set of specifications on the type of shares you can invest in and the brokerage charges you need to pay.


Most of the Robo-advisory firms tend to use algorithms which are complex in order to offer the investors of retail access to portfolio management services professionally.

*Insurance Products-Annuity:

You have the freedom to invest the supplementary retirement scheme, Singapore funds into annuity and insurance.  There are specific restrictions on the products of the Life Insurance which can be bought. You can plan on investing only on single-premium products and recurrent premium products which are also single. Illness, health and products for long-term care are not acceptable.

Before planning on this investment you need to check out with the agent or the insurer.

*Fixed Deposits:

In case you are not willing to opt for any type of risk and want to play it absolutely safe you have the option of fixed deposits. This ensures there is no risk involved and you get returns on the funds of the supplementary retirement scheme, Singapore.

Eligibility for SRS:

You can opt for the supplementary retirement scheme, Singapore (SRS) if you

*are a Permanent Resident of Singapore (PR) or a Singaporean

*are not un-discharged bankrupt and are of 18 years of age

*have no SRS account pending application with any specific bank

*have no SRS account with a bank.

Contributing for the SRS account:

You can contribute to a supplementary retirement scheme, Singapore via any bank or even a branch. There is no requirement of making any claim on your tax return as this is done automatically with the information provided by the IRAS.

Withdrawal before 62 Years:

You are allowed to withdraw from the SRS account even before the retirement age of 62 years but you will be subjected to a penalty of almost 5%. If you intend withdrawing the entire amount you need to be aware that this is subjected to tax for that specific year.

Checking the SRS account:

To get the required detailed information of your SRS (supplementary retirement scheme, Singapore) account you need to log in to iBanking. You have information on the maximum amount of contribution besides the total contribution made, the cash balance and the balance limit of contribution.

Starting to invest with SRS:

Before opting to invest with the supplementary retirement scheme, Singapore funds you need to make sure what you want to invest in. This can get easier if you seek the help of financial advisor who is well experienced in investments of the SRS funds and is well qualified.  It is essential to get a clear understanding of the risks involved with the investments and the returns. You also need to be knowledgeable about the passive and active investing, simple ratios of finance and also diversification.

Ensure you consider the fees of the investment of the different firms/banks. There is a different set of transaction fees and brokerage with the different banks or brokerage firms.

Though it is advisable not to let the funds of the supplementary retirement scheme, Singapore funds be stagnant, it is equally important to plan on investing an amount which does not cause any discomfort in your day to day living. You need to ensure you rope in emergencies. Thus, this step of investing the funds of the SRS should be taken with care and caution. Ensure you strike a perfect balance.

SRS (supplementary retirement scheme, Singapore) works well for those in the higher income bracket. Those who are earning only $30,000 per annum need to know that this SRS does not make much of a difference and you only add to the discomfort of low income. For any advice you need to consult a financial advisor at the earliest.

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