How Supplementary Retirement Scheme works

SINGAPORE'S Supplementary Retirement Scheme (SRS) is what is known as a tax-deferred savings plan. These plans are common in countries like the US and Canada. Essentially, participants are enticed to put money in them by the carrot of tax deferment.

Substantial savings will result if their tax rates in the future are lower than their tax rates currently. This is plausible, because when people retire decades later, they are earning less, or are not earning anything at all.

The SRS is even more attractive than that, which we will explain later.