Don’t play with our old age savings
The Malaysian Trades Union Congress (MTUC) is very disappointed with certain quarters including ministers, who are against the proposal to extend the Employees Provident Fund (EPF) retirement withdrawal plan to 60 years of age.
MTUC has fought long and hard for the implementation of the minimum retirement age of 60, so employers cannot force an employee to retire earlier than 60.
The increase in the minimum retirement age to 60 years is one way to allow, contributors to build up sufficient retirement savings. Therefore, the qualifying age for retirement must moved from 55 to 60 otherwise, it would defeat the very objective of the EPF as a savings for retirement and the increase in the retirement age
For those who need part of their funds earlier and plan to retire earlier than 60, the existing 50 years withdrawal scheme can remain at 50 or be extended to 55. This would give the flexibility to contributors and will be the right thing to do. There can be also a 3 to 5 year transition period of those who already planned to retire earlier.
Old age savings is a very serious matter and we cannot agree to some misplaced and ill-informed and laughable comments such as “EPF is my money and I know what to do with it”, or “I should be allowed to withdraw it anytime”.
Well, if not for EPF which makes it compulsory for employees to save up to 11 % of of their salary each month, and also to compel employers to contribute up to another 13 %, it is unlikely you have any money in EPF, or any other form of savings for your old age. Can you depend on your children to take care of you? Your children will probably find it hard, to take care of themselves.
EPF is a compulsory savings for retirement and old age protection. Studies have shown that for those who withdraw, they spent it within three years. Why? If the comments of the blogs are to be believed, the money is used to purchase diamonds, go for holidays, pay off debts, children’s education, investments and children’s weddings. There are those who unwisely invest in get rich quick scheme as well.
MTUC have no sympathy for them – they are just greedy. These are the same people who now demand that that they are allowed to withdraw their EPF savings, to clear their debts and their bankruptcies. This will only lead to us taking higher debts and creditors, including loan sharks who are more than happy to extend loans, knowing that debtors can use EPF money to settle these loans.
For those with the perennial complain that EPF’s dividend is low, just look at the Singapore equivalent which pays just the average Banks’ savings interest rates – of about 2%. Then, there are those who insisted that they are smarter than EPF and can generate better returns themselves.
EPF performance over the last 60 years has been one of the best performing pension funds in the world, consistently paying dividends above inflation, meaning contributors enjoy real returns. It has demonstrated resilience through financial and economic crisis.
The average contributor has less than RM120, 000 in their savings. This is not sufficient to live on until the age 79 years, which is the average life expectancy of Malaysians. By 2060, 25% of Malaysians will be in the 65 and above old age group. Who is going to take care of them?
Everyone wants to be rich before we get old. For the majority of EPF contributors, we get old before we can get rich. The setting of retirement age to 60 is a major step towards a more comfortable retirement. Don’t destroy this dream by insisting on earlier withdrawals. – April 15, 2015.
*Andrew Lo is the secretary of Sarawak’s MTUC division.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.
Source :[The Malaysia Insider]