NRIs often have many questions about their retirement:
- How much money is enough for retirement?
- Which are the best retirement options?
- How can one reduce tax liability on investments and returns spread across countries?
- Where will the money stretch the furthest?
We compare the various investment options available in the US, Singapore, and India here. The aim is to help NRIs get a sense of the key features of these options, potential returns, and the tax and effort required to bring the money home.
Retirement Accounts
| US – 401(k)/IRA | Singapore – CPF/SRS | India – NPS | |
| Returns potential | Market-linked returns, Compounding effect possible.
Average annual return is 5% to 8%. Can go higher depending on asset allocation. |
Stable returns, @ 2.5% p.a. on CPF Option available to transfer to Special Account to earn greater interest rate.
Interest of 0.05% p.a. on SRS. Money in SRS can be invested in other instruments to get better returns. |
Market-linked returns.
Wide range of returns based on type of account. Government regulated. |
| Ease of investing | Easy.
Open an account through employer, bank or brokerage while employed in the US. One cannot invest in 401(k) once you leave the USA. Can continue to invest in IRA. |
Easy.
Citizens and PRs can open a Central Provident fund (CPF) account with a local bank and a brokerage. Can use a human or robo-advisor while employed in Singapore. Employee pass holders can invest in Supplementary Retirement Scheme (SRS) Contributions stop once you leave. |
Easiest. Can open through bank, NPS, etc.
Can keep contributing. |
| Ease of withdrawal | Restricted pre-retirement age, penalties apply, more complex for non-resident foreigners. | CPF – Restricted until retirement age, part lump sum, part payouts.
SRS – Withdrawals are subject to tax and penalty is charged based on certain conditions. |
Comparatively flexible, though NPS has partial lock-in. |
| Bringing it to India | Most friction-heavy, cross-border tax treaties, TDS, complex reporting. | Withdrawal in CPF allowed post age of 55. If giving up citizenship/PR, early withdrawal is allowed.
50% of withdrawals (post statutory retirement age) are taxable for SRS accounts. Other rules apply depending on early withdrawal and residency status. Tax in India depends on residency status. |
N/A |
| Residency / citizenship | US citizens/Green card holders taxed on worldwide income for life. Adherence to US tax filing required. | CPF and SRS benefits and terms change as per citizenship and residency status. | Contributions are deductible for tax purposes, and there is tax liability on the annuity received. |
Fixed Income (FDs, bonds, treasury instruments)
| US | Singapore | India | |
| Returns potential | Moderate.
The 1-year treasury rate is around 4% p.a. |
Modest but stable,
Returns from Singapore Savings Bonds hover around 2% p.a. |
NRE FDs often offer higher nominal rates. Currently the rate hovers between 6% and 7.50% depending on amount and tenure. |
| Ease of investing | Easy for residents, more restricted account options for non-residents. | Easy and open to a wide range of investors including non-residents. | Easy, NRE and NRO deposits are specifically for NRIs.
Can invest in most debt instruments such as Government Securities, PSU bonds, and corporate bonds. |
| Ease of withdrawal | Generally liquid, though some instruments have maturity penalties. | Liquid, redeemable early, with some instruments having a penalty.
Singapore Savings Bonds (SSB) allow investors to extract their funds anytime, with a waiting period of one month. |
Liquid, though premature withdrawal usually attracts some penalty. |
| Ease of bringing to India | Withholding tax applies to non-resident interest income before it even moves. Interest and capital gains if any, must be reported on the US tax return | Easier as there is less friction.
There could be premature withdrawal penalties. Tax in India depends on residency status. |
N/A |
| Residency / citizenship | Interest income taxed differently once no longer a US resident. | Interest income tax treatment doesn’t hinge much on residency, one of Singapore’s advantages. | Interest earned on NRE FDs are tax-exempt in India.
Interest earned on NRO FDs are taxable in Inda. Interest and capital gains on bonds are taxable in India. |
A retirement portfolio should not be judged solely by returns. For NRIs, an effective retirement strategy balances growth potential, tax efficiency, liquidity, and the ease of accessing funds wherever retirement takes place.
Stock market investments (mutual funds, ETFs, direct stocks)
| US | Singapore | India | |
| Returns potential | Strong long-run equity returns, broad market access. | Strong, and helped by no capital gains tax at all. | Strong, though NRI-specific routes narrow the options slightly. |
| Ease of investing | With a valid SSN or ITIN and a brokerage account, investing is straightforward. | Citizens, permanent residents, and people with work visas can invest in the market. | Requires NRO or PIS-linked accounts.
More paperwork than a resident investor has to complete. |
| Ease of withdrawal | Straightforward to liquidate. Tax treatment is complex. | Straightforward, no capital gains tax simplifies this significantly. | Straightforward, though TDS is deducted at source before funds. |
| Ease of bringing to India | Easy to sell and transfer money to an Indian bank account. Capital gains to be paid depends on residency/citizenship/visa status.
Rules regarding repatriation and tax liability in India. |
Minimal friction. Rules regarding repatriation and tax liability in India must be followed. | N/A |
| Residency / citizenship | Capital gains would be taxed depending on whether you sell before or after the residency change.
People whose work visa has expired need to certify foreign status, tax status, etc.
|
Tax treatment does not change much with residency which is an advantage.
Can continue to invest if SingPass, bank access, and broker access are available. |
While the account type has to change depending on residency, an individual can continue to invest following tax rules as per residency. NRIs should take RNOR into consideration to reduce tax liability. |
While we compare three countries here, we can work with you if you are based in a different country. We can also work through specific amounts, investment tenure, and other variables to map out potential corpus growth and gains. Connect with us so that we can help you in your retirement journey and bring more clarity to your retirement.
Credit: This post is written by Vidya – she is an NRI.
