Can You Grow Your SRS Retirement Fund Without Being Taxed? Yes! [First Dibs 196]

The Savvy Way to Grow Your SRS Retirement Fund Tax-Free
In Singapore, we follow a tiered tax system. When you make more, you get taxed more.

If you’re wondering how Singapore’s tax system works and how it may help your financial path, we’ve got the answers. We delve into the complexities of income tax and GST in Singapore in our informative tutorial on the Supplementary Retirement Scheme (SRS), highlighting the benefits of our compact tax structure.

SRS is a voluntary scheme to incentivise saving for retirement on top of CPF contributions.

Key benefits include:

1. Tax relief on SRS contributions
2. Tax-free investment growth within the SRS account
3. Only 50% of withdrawals from age 62-72 are taxable income

To be eligible for an SRS account, one must be at least 18, not bankrupt, earn income in Singapore (as a citizen, PR, or foreigner), and be mentally sound to manage their own affairs.

Singaporeans and PRs can contribute up to $15,300 yearly to an SRS account opened at OCBC, DBS, or UOB. Foreigners can contribute up to $35,700. Contributions lower taxable income for that year.

Should You Top Up CPF or SRS?

Reggie uses the example of a median income earner “Xiaoming” making $42,000 annually to illustrate this common dilemma:

“Xiaoming makes $3,500 a month, so $42,000 a year. After the 20% CPF contribution, his taxable income is $33,600. He falls into the second tax bracket – 2% on the first $30,000 and 3.5% on the remaining $3,600.”

If Xiaoming tops up $15,000 to SRS, his taxable income drops from $60,000 to $45,000, reducing his income tax from $1,950 to around $900 – a savings of $1,050.

The tax relief is ultimately similar for CPF top-ups vs SRS contributions at lower income levels. However, SRS allows easier access to funds before retirement if needed, unlike CPF. His advice:

“For a lot of us, if we’re still uncertain about our future and want some optionality, then SRS will probably be a better option than CPF top-ups.”

To Invest SRS Funds or Not?

The answer is clear – you should invest your SRS funds rather than leaving them sitting idle:

“If you’re going to put your money in SRS and just put it in a bank earning 0.05% interest every year, that’s not very smart. We should probably utilize our money a bit more.”

He cites that as of 2020, 26% of total SRS funds were still left in cash earning minimal interest. All investment options available in Singapore can be used within the SRS scheme – stocks, REITs, ETFs, bonds, structured products and robo-advisors like sponsor MoneyOwl.

Reggie advises applying the same investment principles to an SRS portfolio as regular investments: diversify, invest for the long-term compounding, and keep costs low.

The Tax Treatment of SRS Withdrawals

Withdrawals from the SRS account are considered income for tax purposes. Here are the key points Reggie covers:

  • Before age 62 (the retirement age when you opened your SRS account):

    • 5% penalty on withdrawals
    • Remaining withdrawal amount is added to your taxable income for that year
  • From age 62 to 72:

    • 50% of withdrawals are taxable income
    • You have a 10-year withdrawal window period
  • After the 10-year window:

    • Any remaining lump sum withdrawn has 50% taxed as income

Reggie’s Modeling:

If you start contributing $5,000 per year to your SRS from age 30 and invest at a 5% return, you could accumulate over $550,000 by age 62. Withdrawing $50,000 annually from 62 to 72, you’d pay around $30,000 in taxes over that period based on current rates.

“You need to be strategic not just with your inputs, but also your withdrawals,” Reggie emphasises. He recommends consulting a financial advisor like MoneyOwl to optimally plan your SRS investments and withdrawals.

Tune in to the episode on Spotify or YouTube to hear more about Supplementary Retirement Scheme (SRS) and wealth-building techniques within Singapore’s tax laws; the voluntary program that encourages retirement savings while providing tax benefits. We also cover contribution limits, eligibility criteria, and the streamlined procedure of opening an SRS account through a bank like UOB, DBS, or OCBC. You can reduce your taxable income and potentially your income tax responsibilities by contributing to SRS. 


1. Examine benefits and drawbacks of adding up your CPF versus contributing to SRS
2. Withdrawal flexibility and tax implications
3. Investing your SRS cash for higher returns
4. Strategic planning to maximising tax efficiency, and we examine the 10-year withdrawal term, the taxable share of withdrawals, and the probable tax repercussions of lump sum withdrawals.

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