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THE letters, 'No tax bias? What about workers aged 50-54?' by Mr Chua Kim Cheng (ST, Oct 11) and 'Older workers do pay more income tax' by Ms Ho Shou Kwang (ST, Oct 13), argue that because workers contribute less to their CPF accounts from the age of 50 and are unable to contribute to the Supplementary Retirement Scheme (SRS) beyond the age of 62, their effective tax rates are higher.

The writers did not understand that the purpose of the tax advantages from the CPF and SRS is to help working people to save for their retirement.

The tax benefits granted on CPF and SRS contributions accrue to the individual throughout his working life.

He then enjoys the benefits when he retires and draws upon his CPF and SRS savings. At the age of 55, an individual can start to withdraw his CPF savings, entirely free of tax. Similarly, an SRS member can withdraw his SRS savings in phases after retirement, with minimal or no tax.

Besides providing significant tax advantages for workers to save for their retirement, the Government has topped up the CPF accounts of older workers by more than $800 million over the past three years to bolster their savings.

For those in the 50 to 59 age group, the top-ups received by each worker ranged from $400 to $850, while those aged 60 and above would have received top-ups ranging from $650 to $1,100.

CHEONG SWEE YING
CHIEF TAX POLICY OFFICER
MINISTRY OF FINANCE