This is under the CPF Retirement Sum Topping Up (RSTU) scheme.
Under the scheme, we can top up the CPF Retirement Account of our parent with cash or using our own CPF savings.
The benefits from topping up $7k to parent's CPF Retirement Account are:
a) Tax savings of $490 for tax bracket of 7%
b) Interest of $280 per annum earned in the retirement account based on 4% p.a rate and not factoring in the following
The first $60,000 of your combined CPF balances, of which up to $20,000 comes from your OA, earn an additional 1% interest per year. Since 2016, an additional 1% interest is paid on the first $30,000 of combined CPF balances for all members aged 55 and above.
Hence, I will enjoy at least $770 of "earnings" from this move.
I have already topped up my CPF Special Account $7k in Jan and Feb 2020 to enjoy the same benefits.
I have also topped up $15.3k into my SRS account to enjoy tax relief.
CPF is a controversial double-edged retirement financial instrument. There are advocates and naysayers on CPF. The advocates know how to make use of the system to their own benefit while those naysayers are pawned by the system.
I decided to make full use of the CPF and SRS system for my benefit.
Not forgetting today is General Election day with a possibility for a change of Singapore government but will not change the CPF system overnight. Happy voting folks! Thanks for reading.
With Love & Peace,
Qiongster
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