Retirement Annuity Funds serve as a great savings tool, however there are restrictions as to the amounts and time of the withdrawal, which may not suit all taxpayers. Taxpayers wishing to use an RAF as a forms of retirement savings who also have a pension fund will find their deductions limited as there is an overlap from a tax perspective. Perhaps this should change and both deductions be allowed in their entirety.
The current 15% cap on RAF contributions does, at first glance, seem to be to small, but on further examination does seem correct. Those lower income earners cannot afford to save more as they need their income for living purposes. With the cost of living being greater than the inflation linked salary increases, retirement savings does seem to only be an afterthought. Those high income earners could be reinvesting their earnings in real growth returning assets for which the primary motive should not be tax driven. Retirement planning should maybe be only part of their investment strategy.
Given all that it would seem that perhaps a pool of retirement savings solutions should be offered not limited to Pension Funds and RAF with a better tax regime.
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