srs vs cpf

SRS Vs. CPF: A Comprehensive Guide to Investing For Retirement

A recent survey shows that 63% of the Singapore population treats retirement planning as their top financial goal, compared to a regional average of 49%. However, the study also shows that only 35% of the population has a concrete and ongoing retirement plan.

While Singapore people have a longer life expectancy of 83.5, according to SingStat, more are considering retiring earlier, like at 62. More workers in Singapore choose the two most popular retirement schemes: SRS (Supplementary Retirement Scheme) and CPF (Central Provident Fund)

Both retirement schemes offer capped, tax-deductible contributions to participants and a wide range of investment options. However, they differ in interest returns, restrictions from the CPF on specific investments, and withdrawal criteria. The SRS is a voluntary plan, while the CPF is mandatory for workers.

Below, you can see more in detail regarding their similarities and differences.

Roles and Stages of SRS and CPF in Your Life

No doubt, according to, both SRS and CPF play essential roles in Singapore workers’ retirement savings because of the benefits brought by tax relief and various investment options. 

Another advantage is that locals and expatriates can participate in these two investment schemes created by the government. Generally, a saver goes through several stages in joining the SRS and CPF schemes, though individuals may differ in their unique situations.

Start-up for investments

You have minimum financial commitments and plentiful options to start your investment plans in the start-up stage of your career.

SRS: In your early career stage, you may begin to create a habit by contributing additional money to an SRS account besides putting regular savings into an investment plan.

CPF: The investment scheme may be your first long-term plan for retirement, hospitalization, and housing. If you work as an employee, you must put aside a portion of your monthly salary and contribute to a CPF account with another contribution from your employer. 

The purposes of your CPF are to cater to your home purchase, medical and insurance needs, and retirement.

Changes in your life

In your career life, you start a family with your partner by buying a home for a new life adventure and consider having expanded insurance coverage to protect your family. Sometimes you may get sick and be hospitalized. You may need savings in your CPF and SRS to help you through.

SRS: You can withdraw your savings from your SRS account but are subject to a tax penalty under 55. You may have used up a large part of your savings due to expected or unexpected events and plan to use tax-deductible benefits to accumulate your wealth from your SRS account.

CPF: An advantage is that you can use the funds from a CPF account for the events above tax-free. You may use the funds in an ordinary CPF system to buy a house as a down payment or pay premiums for insurance coverage. 

A Medisave account can pay for your medical expenses, including inpatient and outpatient bills. Besides, you can use the funds to buy medical insurance without penalty.

Wealth accumulation

Wealth accumulation takes time and requires contributions. To encourage people to save, the government creates tax incentive plans such as SRS and CPF to make wealth grow faster.

SRS: You should take advantage of tax-deductible benefits and multiple investment options to invest in an SRS account and accumulate wealth. The gains brought by a tax-free investment grow more than an after-tax one.

CPF: Like its counterpart, a CPF investment also provides tax benefits for paying a down payment for a home, buying an insurance plan, and paying medical bills, besides tax-free investments. 

SRS and CPF provide high interest return of 4.01% and 4% for 2023.

Pre-Retirement Planning

At your career peak, your financial burden on your home and children’s education becomes less, and the savings accumulate more. You should consider how to redeploy your investments to preserve their value and increase liquidity a few years before retirement.

SRS: You should review your investment strategies for your SRS accounts by gradually changing your risky assets to ones with lower risks, like bonds or money market funds. 

However, you should keep a certain percentage of risky investments to keep growing your portfolio for retirement. A detailed financial analysis conducted by a financial advisor is all you need to rebalance your asset mix.

CPF: Like an SRS account, you should reduce risky assets to deposits and whole-of-life insurance plans to preserve your fund value. You may face unexpected changes in the market and suffer losses if all your funds invest in high-risk assets before retirement.


Retirement is when you enjoy the fruits of your investments over the course of your career. Drawdowns of your assets from your SRS and CPF accounts require careful planning, as tax and investment losses may affect how and when you take out your SRS and CPF monies.

SRS: The government offers withdrawal options to maximize your tax benefits, like a 10-year withdrawal period. You pay no tax on amounts withdrawn for 10 years at or after the statutory retirement age.

CPF: At 55, you can withdraw your savings from your RA account in the CPF system. The CPF Board converts all your CPF savings from the Ordinary, Special, and Medisave accounts into one, – Retirement Account (RA).  If you wait until 65, the CPF Board offers a CPF life payout option so you can receive retirement savings for life.


SRS vs. CPF Review

The CPF Board requires participants to put aside initial CPF monies of S$20,000, at least in an ordinary account, to earn a fixed interest return set by the board. Then the member has the choice of investing the rest in others.

Benefits SRS (Supplementary Retirement Scheme) accounts CPF accounts (over S$20,000)
Purpose To help individuals save more for retirement while enjoying certain tax benefits. To provide financial security and support for individuals in retirement, housing, healthcare, and education.
Interest returns offered  0.5% per annum 4.5% per annum
Investment options
  • Bonds: e.g., Singapore Savings Bonds or corporate bonds
  • Fixed deposits
  • ETFs (Exchange-traded Funds)
  • Insurance plans
  • REITs (Real Estate Investment Trusts)
  • RSS (Regular Shares Savings)
  • SGS (Singapore Government Securities)
  • Stocks
  • Unit trusts
  • Robo-Advisors
  • Endowment plans
  • Annuities
  • Cash management accounts
  • Investments of one’s choice Unit trusts (OA, SA, excluding high-risk UTs)
  • Invest-linked insurance products (OA, SA, excluding high-risk ILPs)
  • Annuities (OA, SA)
  • Endowment policies (OA, SA)
  • Singapore Government Bonds (OA, SA)
  • Treasury bills (OA, SA)
  • ETFs (OA, SA, excluding high-risk ETFs)
  • Fund management accounts (OA, SA)
  • Fixed deposits (OA, SA)
  • Additionally:
    Up to 35% of investible savings on shares, property funds, and corporate bonds (OA only)
    Up to 10% of investible savings on gold ETFs and other gold products (OA only)
Tax deductible benefits Yes Yes
Tax relief caps
  • S$15,300 for permanent residents and citizens
  • S$35,700 for foreign taxpayers
  • S$8,000 for a member
  • S$8,000 for the family
Withdrawal requirements
  • Statutory retirement age: 63 or the statutory retirement age upon the first top-up
  • 5% penalty on SRS monies withdrawn before the statutory retirement age
  • Age 65
  • At age 55, S$5,000 if ineligible for the Basic Retirement Sum (BRS) or the Full Retirement Sum (FRS), with or without property pledge
  • Free withdrawals if eligible for the BRS and FRS
  • Singapore permanent residents and citizens
  • Foreign workers
  • 3 banks offer the service:
Singapore permanent residents and citizens


SRS Explained – Voluntary Scheme For Retirement Beyond CPF Contributions

What is SRS?

The Supplementary Retirement Scheme (SRS), administered by IRAS (Inland Revenue Authority of Singapore), motivates workers to save for retirement besides the CPF system. SRS, a voluntary scheme, encourages investments through tax incentives. An SRS member can use the tax savings to enhance the return on his savings.

Read Also: Is SRS Right for You? Here’s What You Need to Know

How it works

SRS is a long-term investment scheme sponsored by the government that offers tax savings to local and foreign workers to save for retirement. 

The features include:

  • The SRS contributions are deductible from your taxable income. Participants can use tax savings to invest in SRS accounts. However, The SRS deduction applies to the personal income tax relief cap of S$80,000.
  • Investment returns are accumulative and tax-free.
  • An annual SRS contribution cap is S$15,300 for a local worker and S$35,700 for a foreign worker, including employers’ contributions.
  • All SRS contributions are part of a worker’s compensation.
  • You have two choices for withdrawing SRS funds: cash and qualified investments approved by IRAS.
  • All withdrawals are subject to tax at the prevailing tax rates.
  • You can also start the penalty-free SRS withdrawals over 10 years offered by the IRAS at the statutory retirement age of 63.
  • A 50% tax concession is available for withdrawals upon retirement. A participant pays taxes on only 50% of withdrawal amounts.

Pros and cons


  • Use of tax savings to increase investments in the portfolio, and returns are tax-free.
  • You may reduce your taxes payable overall if you fall below a lower tax threshold due to deductions from SRS contributions.
  • Various investment options.
  • Local and foreign workers are eligible.


  • Low account interest rate.
  • Restrictions on withdrawals or penalties for early drawdowns, such as retirement age or income tax.
  • Approved investment options.
  • Tax benefits are subject to contribution and personal income tax relief caps.

Why invest in SRS

SRS is a voluntary savings system offering tax advantages to participants. Participants can use the tax savings to enhance portfolio value, and the long-term benefits are significant due to compounding factors. 

Though the investment options are narrower than other investment accounts offer, the SRS covers popular and mainstream prospects. Besides, you may reduce the tax base due to the deductions. Therefore, you should include an SRS in your investment strategy.

What to invest in SRS

Unlike CPF investments, investors face fewer restrictions on selecting investing tools. SRS investors have fewer constraints concerning investment amounts on specific asset types. However, you should review your risk tolerance for appropriate assets with a financial advisor.

CPF Explained – Mandatory Savings for Financial Security 

What is CPF?

The CPF scheme is a mandatory savings scheme for the working population in Singapore. A Worker and their employer (if employed) contribute a certain percentage of their monthly income to a CPF account. 

A CPF account consists of three accounts: an ordinary account for retirement, housing, and insurance purposes, a special account for investing for retirement, and a Medisave account for hospitalization and purchasing approved medical insurance. At 55, all three accounts combine into a Retirement account.

The CPF Board transforms the three accounts into a Retirement account for distributing CPF monies to retired workers.

Read More: Things You Need to Know about Using CPF

How it works

The CPF scheme is a local worker-participating scheme offering tax benefits to savers for retirement purposes. As the law requires, a worker deducts his CPF contributions from taxable income and invests in a CPF account for retirement. 

Features of a CPF include:

  • Once you register with the CPF, you contribute to three types of accounts: ordinary, special, and Medisave.
  • You can pay for your home by withdrawing from your ordinary account without penalty and tax-free.
  • The Medisave account helps pay for medical expenses, including hospitalization and outpatient treatment.
  • The Special Account funds your retirement by investing in financial products, for example, unit trusts, ETFs, investment-linked insurance schemes, and stocks.
  • At 55, all your accounts will converge into a single account: the Retirement account. The Retirement account pays out retirement funds once you request drawdowns from it.
  • A CPF Life is available to participants at the age of 65. The CPF Life is a government-guaranteed annuity scheme that alleviates a CPF member’s concerns about using up retirement resources at retirement. By joining CPF Life, a member gets a guarantee of whole-life income.
  • A wide choice of investment options (some subject to restrictions, such as gold, stocks, and corporate bonds)

Pros and cons


  • You can use the funds in your CPF accounts to pay for medical and housing expenses without penalty.
  • The CPF Life option allows a retiree to get guaranteed lifetime income from the government without worrying about exhausting financial resources.
  • A broad series of investment options are available to grow your assets.
  • You can participate in other government-offered housing schemes like Silver Housing Bonus or Lease Buyback Scheme to increase your CPF funds in your account.


  • Restrictions on the contribution limit, currently at S$37,740 annually.
  • Restrictions on investment amounts regarding certain assets like gold, stocks, and corporate bonds. Participants are not allowed to invest more than a specified amount of their savings in the assets, as mentioned earlier.
  • Participants can only invest in assets of their own choice before putting aside specified amounts of CPF monies required by the scheme. The amounts set aside to begin earning fixed interest are S$20,000 for the Ordinary account and S$40,000 for the Special Account.

Why invest in CPF

The CPF is a compulsory retirement scheme for all permanent residents and citizens of Singapore. However, you can treat it as part of your investment strategies for retirement. 

Though the scheme has a few constraints concerning investment amounts in some assets, it has a wide range of investment options and offers a good platform for long-term savings. Besides, the tax benefits of tax savings are not replaceable by private schemes.

What to invest in CPF

Like SRS, CPF offers multiple investment products to members, including unit trusts, ETFs, stocks, and Singapore Government Securities. However, you must review carefully, as OA and SA forbid over-investing in some assets like gold and stocks.


How to Get Started Investing with SRS and CPF

The steps are the same when starting to invest with SRS and CPF. Below are the procedures you are to follow:

  • Open SRS/CPF accounts: The fast track to an SRS account is opening an online one with one of the three operating banks: DBS, OCBC, or UOB. Yet, you must go to branches of the three banks for a CPF account before investing.
  • Linking up accounts: The next step is a link-up of your trading account with your SRS/CPF accounts, allowing registrations with your investments.
  • Choose your investments: Multiple options are available, like Insurance policies, stocks, unit trusts, ETFs, and bonds. However, you should select investments that fit your risk level. Talking to your financial advisor is the best option before investing.
  • Start investing: Once you finish selecting your investment candidates, you can start investing. You can also invest through online SRS/CPF accounts or local branches nearby.


Is it better to top-up SRS or CPF?

Yes, first, you should maximize the tax savings quota if you fall below the annual contribution limit for members. The tax savings increase your portfolio value. Second, you set aside the required SRS/CPF funds in accounts before investing the remaining. Top-ups are the best choice if you have a surplus for long-term savings.

Are SRS and CPFIS the same?

No, the SRS (Supplementary Retirement Scheme) is a voluntary scheme administered by the IRAS (Inland Revenue Authority Services). The SRS is open to local and foreign workers. 

On the other hand, the CPFIS (Central Provident Fund Investment Scheme) is a mandatory retirement scheme for Singapore permanent residents and citizens to save for retirement, housing, insurance, and medical needs. The CPF Board administers the scheme.

Is it worth putting money into SRS?

Yes, you can maximize the tax benefits on your taxable income. As the allowed SRS/CPF contributions are tax-deductible, you have a portion of your taxes saved to invest in your future benefits. 

Besides, you may lower your taxable base and pay less tax because the deductible SRS/CPF contributions reduce your taxable income.

Can I transfer funds from CPF to SRS?

No, CPF and SRS are two separate schemes with different rules concerning tax and withdrawal. The SRS complements the CPF and motivates participants to save for retirement.

Final Thought

SRS and CPF are the most popular retirement schemes in Singapore. Both schemes’ participants can use tax savings to enhance their portfolios. 

While CPF has investment restrictions on specific asset types, SRS provides investors with more choices. You should plan for withdrawals before retirement to avoid unnecessary penalties.

3 Key takeaways:

  • Both SRS and CPF, tax-advantaged retirement plans, provide a broad range of investment options.
  • The SRS allows participants to invest in a wide range of assets without any limitations. At the same time, the CPF limits investment amounts on certain types of assets like gold, shares, and corporate bonds.
  • SRS and CPF provide different rules on withdrawals at retirement.

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