Pengguna perihatin

EPF cuts 'lead to lower retirement benefits'

S Pathmawathy and Hafiz Yatim | Nov 5, 08 6:57pm

In yesterday’s ‘stimulus package’ speech, Finance Minister Najib Abdul Razak included the option to reduce employees’ contributions to their Employees Providents Fund (EPF).

This is part of the government’s plans to put more money into worker pockets as they face a harsher economic climate.

Presently, employees contribute 11 percent of their pay to EPF, while their employers top up another 12 percent, bringing the total contribution to 23 percent.

Starting January - for two years - they can reduce their monthly contribution from 12 to 9 percent.

The short-term gain will, however, mean lower long-term savings for all those who volunteer to reduce their EPF contributions.

The following are reactions Malaysiakini received from various interest groups and individuals.

On EPF reductions

protes kenaikan tol committee 191206 syed shahrirSyed Shahrir Syed Mohamud, Malaysian Trade Union Congress (MTUC) president

Although it is said to be optional – knowing our fellow Malaysians, they would likely take it.

In my view, less contributions mean less dividends in the long run. The more you pay, the more dividends you receive.

Looking at the cost of living, it is not wise to reduce the 11 percent contribution to eight percent.

For example, although the fuel price is going down, the price of consumer goods are not corresponding.

In the long run, contributors will lose out.

Omar Osman, Congress of Unions of Employees in the Public and Civil Services (Cuepacs) president

cuepacs omar osman 181007Although the stimulus package is welcomed, it did not meet with our expectations.

This will depreciate savings in the long run.

The 43,000 civil servants on EPF will deplete further their savings by taking this option. Most before this have regretted shifting to the EPF system as they lost their annuity and pension.

I propose instead that the government make employers increase their portion to 14 percent (from 12), to offset the savings losses.

Andrew Lo, Sarawak Bank Employees Union (SBEU) chief executive officer and MTUC Sarawak secretary

andrew loSarawak Bank Employees Union (SBEU) is of the view that this is a clueless knee-jerk reaction.

It jeopardises the already meagre retirement savings of workers.

More than 90 percent of 5.4 million active contributors have less than RM100,000 in their EPF savings, which is not enough for their retirement.

Please note that most workers earn less than RM1,000 and those in the hotel sector pay EPF as little as RM250 monthly.

Again the government, instead of making real efforts to raise wages to increase disposable income and increase domestic demand, has chosen to sacrifice the meagre retirement savings of private sector Malaysian workers.

SBEU and MTUC strongly urge workers not to volunteer for the reduction because it will then give employers an excuse not to increase wages.

On housing

Meanwhile, several comments addressed the housing provisions made in yesterday’s speech.

Omar Osman, Cuepacs president

house low cost housing 200307 type 03The supplementary budget does not help enough the lower income bracket.

Particularly civil servants earning RM650 to RM750 monthly. How will this help meet their needs?

There are 45,000 civil servants within this bracket and we are worried the stimulus package may not benefit them.

We’ve asked the prime minister to increase housing allowance to RM230 from RM180.

However there was nothing said about it.

We approve the RM1.2 billion for low cost and low medium cost homes construction. However, the selling price must be below RM40,000 for low costs houses.

Muhammad Sha'ani Abdullah, Federation of Malaysian Consumer Associations (FOMCA), National Consumer Complaints Centre chief executive

It looks more for traders, banks, and contractors.

Allocations are seemingly there to sustain contractors in a slowdown.

The focus of expenditure should be where it provides service and facilities to the lay public.

The low income group should be give interest free or very low interest for housing loans by the government or banks.

All contracts – open or closed tenders – must be awarded through competitive basis transparent basis to obtain money's worth to the people.

Dr Jacob George, Consumers Association of Subang and Shah Alam, Selangor (CASSA) president

jacob georgeThis is primarily to ‘jump start’ the economy which has gone into a recession.

While we welcome the idea of deductions to employees deductions, micro credit schemes and affordable housing.

The entire exercise must be performed transparently, with good governance as its cornerstone.