Tax Benefits of the Supplementary Retirement Scheme (SRS)

Michele Ferrario

Co-founder and CEO

The Supplementary Retirement Scheme, or SRS for short, is a tax relief and tax deferral plan that incentivises saving for your retirement. But before you open an SRS account, you should familiarise yourself with its benefits.

To figure out if you should have an SRS account in the first place, check out: Should You Have a Supplementary Retirement Scheme Account?

Simply put, here are the tax benefits you get with SRS:

  1. Contributions to your SRS account are tax deductible, subject to a cap on personal income tax relief of $80,000 SGD per tax year.
  2. Withdrawals at retirement (or when the withdrawal conditions are met) are given a 50% tax concession.

Decrease your taxable income with SRS

Singaporean and PRs can contribute up to $15,300 SGD per annum towards their SRS accounts. Futhermore, they can deduct this amount from their taxable income. To maximise the tax savings available through SRS, it's important to contribute the maximum of $15,300 SGD every year.

These contributions to SRS can decrease your tax bill by $1,700 to $3,300 each year, depending on your tax bracket. For example, if your income tax bracket is 15% to 22%, your $15,300 SGD contribution immediately saves you $2,300 to $3,300 SGD per annum. That adds up to substantial tax savings over time.

Tax Benefits for Singaporeans and PRs (assuming full SRS contribution)

Annual Gross Salary

$100,000

$150,000

$250,000

$350,000

Marginal Tax Rate

11.5%

15.0%

19.5%

22.0%

Tax Savings Per Annum

$1,760

$2,295

$2,984

$3,366

Tax Savings after 10 Years of SRS Contributions

$17,600

$22,950

$29,840

$33,660

Tax Savings after 20 Years of SRS Contributions

$35,200

$45,900

$59,680

$67,320

Tax Savings after 30 Years of SRS Contributions

$52,800

$68,850

$89,520

$100,980

(Assumes $15,300 SGD annual contribution for the full 10, 20 and 30 years length.)

Tax Benefits for Foreigners (assuming full SRS contribution)

Foreigners can contribute up to $35,700 per annum, as they don't have access to CPF. The tax savings here, assuming a full SRS contribution for 10 years, can amount to upwards of $7,000 SGD per annum, and almost $80,000 SGD over 10 years. Foreigners also get more flexibility on withdrawals: they can withdraw the lump sum after 10 years of opening an account without penalties, regardless of their age.

Annual Gross Salary

$100,000

$150,000

$250,000

$350,000

Marginal Tax Rate

11.5%

15.0%

19.5%

22.0%

Tax Savings Per Annum

$4,106

$5,335

$6,962

$7,854

Tax Savings after 10 Years of SRS Contributions

$41,055

$53,550

$69,615

$78,540

Withdrawals at retirement have a 50% tax concession

After the age of 62, you can withdraw your funds for up to 10 years, and only 50% of each withdrawal is taxable. So, if in a given year you withdraw $40,000 SGD, $20,000 SGD is subject to tax; and if you do not have any other personal income, this amount would be tax-free, as the first $20,000 SGD of personal income in Singapore isn't taxable.

Currently, personal income starts getting taxed at $20,000 SGD. This means that if you don't have any other taxable personal income, you can withdraw up to $40,000 SGD per year tax-free from your SRS account, for 10 years.

Therefore, the best strategy is to minimise any income tax during those 10 years is by spreading out the withdrawals if you don't have any other income. But if you have other income, simply withdraw less in the years when you receive less income. 

Is SRS for everyone? No, it’s not.

SRS tax benefits are particularly significant for individuals in higher tax brackets. On top of that, you'd have to be OK to leave your money in the scheme until retirement age or until you've met the conditions for withdrawal. Higher earners are therefore more likely to be confident of their liquidity situation and less likely to withdraw their funds early. 

SRS is one way to get the most out of your tax savings. Another way is to invest your funds. Here's where you can learn more about investing your SRS →


Get 6 months' free investing on your next SRS deposit

Just invest your SRS funds in the StashAway app, and then enter the voucher code: SGSRS2021. 

  • To enter the code on desktop, go to Settings > Enter Promotion Code
  • To enter the code on mobile app, go to More > Promotions > Enter Promotion Code

You'll need to apply your voucher before scheduling your SRS deposit. Then, we’ll activate your voucher 1 to 2 business days after we receive your SRS deposit.

Terms and conditions:

  • You can apply the voucher code only once.
  • To redeem your voucher, you'll need to apply your voucher and schedule your SRS deposit before 31 December 2021.
  • You’ll receive 6 months of free investing for the deposit amount used to activate the voucher.

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