Karen Tang, CFP®: Certified Financial Planner in Singapore

6 Mistakes to Avoid with Your SRS Contributions

6 Mistakes to Avoid with Your SRS Contributions

It’s once again “SRS (rush) season”. The last day to contribute to the Supplementary Retirement Scheme is 31st December 2023. 

The Supplementary Retirement Scheme (SRS) complements the Central Provident Fund (CPF) system by allowing account holders to reduce their current income tax. Unlike CPF, SRS is a voluntary scheme. 

You have full control of the amount you contribute, subject to a cap. Singaporeans and Singapore PRs are eligible to contribute up to $15,300 a year. For foreigners, the limit is kept at $35,700 a year.

SRS can be a powerful tool to boost retirement savings but you also need to be aware of the potential pitfalls that can derail your retirement plan.

Here are 6 mistakes that you should avoid:

  1. Contributing more than you can afford:

    Remember, SRS contributions are locked away until the statutory retirement age (currently age 63). This can leave you with insufficient cash flow (i.e. liquidity) to fund your present living expenses. Calculate your retirement needs and budget realistically before deciding on your SRS contribution amount. Better still, work with your financial advisor to determine this. 

  2. Ignoring investment options:

    Do you know that the interest rate of your SRS account is 0.05% p.a.? If you don’t invest, your idle SRS money is losing its value against inflation. The scheme allows you to invest your contributions for potential growth. Explore various investment options like SRS-approved unit trusts, Exchange-Traded Funds (ETFs), and bonds, but keep in mind to invest according to your risk tolerance and investment goals. 

  3. Neglecting diversification:

    Avoid making hasty or ill-informed investment decisions within the SRS account, leading to suboptimal returns or even losses. A cardinal rule of successful investing is to ensure adequate diversification in your investment portfolio. Concentrating your SRS investments in a single asset class or sector exposes you to higher risk. Diversify your portfolio across different asset classes like equities, bonds, to mitigate risk and ensure a more stable retirement income. 

  1. Not reviewing SRS account periodically:

    Stay on top of your investments by reviewing, rebalancing, assessing investment performance, adjusting strategies, and ensuring contributions align with your retirement goals. As financial circumstances change, reassess your retirement plan and adjust contributions or investments accordingly.

  2. Withdrawing prematurely:

    Early withdrawals before the statutory retirement age of 63 incur a 5% penalty on the withdrawn amount. This can significantly reduce your retirement savings. Only withdraw when absolutely necessary or strategically plan your withdrawals using the 10-year grace period for tax benefits. Review the SRS rules regularly and consult with your financial advisor.

  3. Underestimating tax implications:

    While SRS contributions offer tax relief, be mindful of the tax implications upon withdrawal. To maximise the benefits of the scheme, you have to plan strategically. The tax treatment depends on your withdrawal age and method (lump sum or spread over 10 years). Consider the current and expected tax rates in the future, other sources of income, and keep in view the bigger picture of your retirement plan. When in doubt, consult with a financial advisor.


1. Seek professional guidance because navigating SRS can be complex. Your financial advisor will be able to develop a personalised SRS strategy specific to your financial situation and retirement goals.

2. A better way to beat the rush is to plan ahead and make contributions early in the year to maximise the time for potential investment growth and compound interest. Setting up automatic contributions can help ensure regular deposits.

Remember, planning and prudent decision-making are key to a financially secure future.

To have better clarity on your SRS strategy, feel free to reach out to me for a chat over coffee.

To your financial success! Happy Holidays!

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