What are the tax benefits of the Supplementary Retirement Scheme (SRS) in Singapore?

The Supplementary Retirement Scheme (SRS) is a voluntary savings scheme that provides attractive tax benefits to help individuals save for retirement. It is particularly valuable for self-employed persons who may not benefit from employer CPF contributions.

Key tax benefits:

• Tax relief on contributions: Every dollar you contribute to SRS reduces your taxable income, dollar-for-dollar. This effectively gives you tax savings at your marginal tax rate.
• Tax-free investment growth: Investment returns earned within the SRS account (dividends, interest, capital gains) are not taxed while they remain in the account.
• 50% tax concession on withdrawals: When you withdraw at or after the statutory retirement age (currently 63), only 50% of the withdrawal amount is subject to income tax. Since withdrawals are spread over 10 years, the effective tax rate is very low.

Contribution limits (per calendar year):

• Singapore Citizens and PRs: Up to S$15,300 per year.
• Foreigners: Up to S$35,700 per year.

Example tax savings:

If your marginal tax rate is 15% and you contribute the full S$15,300, you save S$2,295 in income tax. Your SRS funds can be invested in approved instruments including stocks, bonds, unit trusts, fixed deposits, and insurance products.

Withdrawal rules:

• Penalty-free withdrawals: At or after the statutory retirement age of 63. Withdrawals must be completed within 10 years.
• Premature withdrawals: Subject to a 5% penalty on the withdrawn amount, and 100% of the withdrawal is taxable as income (no 50% concession).
• Exceptions: Withdrawals due to death, medical grounds, or bankruptcy are not penalized.

How to open an SRS account: Approach any of the three SRS operators: DBS/POSB, OCBC, or UOB. You can only hold one SRS account at a time.