Wednesday, 19 Jun 2019

Is the CPF Supplementary Retirement Scheme (SRS) Worth Using?

The Supplementary Retirement Scheme of CPF is a retirement savings programme. The voluntary scheme enables citizens to save for their post-retirement days, a time when neither age nor income tends to be in favour of an individual. There is tax relief on the savings you park with the Supplementary Retirement Scheme, you could use the savings or the shored up funds for investments and withdrawals post the age of retirement are taxed but only half of it. In other words, half of your withdrawals would be free of tax. The remaining would be taxed but of course subject to deductibles if you have any on the basis of your income and expenses at the time. Let us explore the facts about CPF Supplementary Retirement Scheme to ascertain if it is worthwhile.

  • The voluntary scheme caps the maximum sum of money you can save every year. Right now it is $15,300 for Singaporeans and permanent residents. The amount is $35,700 for noncitizens or foreigners.


  • There are two major benefits of the savings scheme. You get to save money for your retirement and you get to save on tax. This is much like getting tax relief for some other deductibles, whether partial or whole. You can use the funds saved with Supplementary Retirement Scheme to invest in stocks, various types of funds, unit trusts and insurance. The returns would be parked in the same scheme. There is no tax on these returns till you withdraw. If you withdraw after you retire then only half of the sum you take out will be taxed.


  • The accumulation of the funds, the gains from the investments and any appreciation of the increasing savings will not be taxed from now till the time you withdraw. The taxable income would only come to the fray when you withdraw and you should ideally wait till you are sixty two, which is the retirement age, before cashing out.


  • When you do retire, you may not have any other source of income. You may not have any business, you may be truly retired and hence unemployed and you may not have any rental income. The deductible right now is twenty thousand dollars per year. People earning less than that pay no tax. Hence, if you were to withdraw the same amount per year from your Supplementary Retirement Scheme account, then you would not pay any tax at all, not even the tax on the half of that amount as would have been the case if you had an income over twenty thousand. Withdrawing forty thousand means twenty thousand is tax free. The other twenty thousand is your annual income that is lower than the taxable income.


  • The only issue with Supplementary Retirement Scheme is the fact that entire withdrawals will be taxed if you do not wait till your retirement to cash out. There is also a penalty to discourage people from withdrawing until retirement. This is a voluntary scheme so no one can stop you from withdrawing but if you do then you would stand to lose some of the benefits of the program.

About the Author

Morris Edwards is a content writer at, he writes different topics like Guide to the Singapore Tax System, 6 steps to maximize corporate tax benefits for Singapore companies and all topics related to Singapore Business and Economy. If you want to Register a Singapore Company visit our website for more info.

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