If I am age 55 this year, and my SA alone is sufficient to hit FRS for RA, by the time I am age 65, my RA would have exceeded the FRS by virtue of the added interest over 10 years.
This means the money going into CPF life at age 65 will be [FRS (@year 2021) + 10 years on interest)] ??
And during these 10 years, can I choose to continue to do volunteer cash contributions (maybe up to $7k for tax deduction)?
Suppose you were 55 this year, and your RA has been created and credited with current FRS ($186k for 2021).
Come Jan 2022, the prevailing FRS would have increased to $192k (already announced for 2022), and so there would be a chance for you to use $6k cash to top up your RA to $192k.
Note that RA interests earned for 2021 (and credited 31 Dec 2021) are never considered in all these computations. Your $6k will have tax savings but if you top up $7k (allowed since can top up all the way to prevailing ERS of $288k for 2022) only $6k is eligible for tax relief.
And yes, you can do this every year as long as the FRS keeps increasing ( should be $6k for the next few years and likely more after that to adjust for inflation. Noticed that the increase was $5k from 2020 to 2021).
Your query also triggered me to ask: can one use property pledge to reduce RA to BRS (plus some possible top-ups), and in fact just partially, so as to be able to maximise tax relief of $7k? In your example, it would be to reduce RA to $185k or less so as to be able to top up $7k to $192k, and so on every year after that? Theoretically sounds possible but I am not sure if there are other practical hurdles? (This assumes one is able to make good use of the withdrawn RA to get 4% or more, but the goal here is tax savings..)
