Not saving enough for retirement is now a common worry. You have earlier suggested that the government raise the cap on tax relief so that more can plan for their retirement (including buying insurance). Can you give more details on this proposal?
Reply:
The current rate of contribution to Centeral Provident Fund is probably adequate for most people earning up to $4,000 a month, if they do not take out too much of their savings to pay for their home.
For people who earn more than $4,000 a month, the contribution to CPF is capped at this salary ceiling. They are not allowed to contribute beyond this ceiling and enjoy any tax relief.
The government has introduced a Supplementary Retirement Scheme to allow people to make additional contributions for their retirement. The amount allowed to be contributed to SRS is quite low, at current levels. This makes the SRS not attractive.
I suggest that the contribution to SRS should be increased to 20% of annual income, less contribution to the CPF. This will allow the higher income earners to make supplemnentary savings for their retirement.
Tan Kin Lian
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