Union Yes Column @Star

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] 

部长反对60岁提公积金 砂职工会感失望

（本报古晋15日讯）马来西亚职工会砂州分会对一些人士﹐包括部长﹐反对延长雇员公积金退休提款年龄至60岁感到失望。

马来西亚职工会砂州分会秘书罗健源今天在文告中这么表示。文告指出﹐该会一直努力使退休年龄延长到60岁﹐以使雇员能够拥有足够的存款来应付退休后的需求。

文告表示﹐对那些需要部份存款及计划在60岁之前提早退休者﹐目前的50岁提款计划可持续或延迟到55岁。它也使雇员能够有3年至5年的过度时期去适应情况。

拥足够存款过下半辈子

罗健源称﹐如果不是政府规定雇员必须缴付薪水的11%及雇主必须缴付雇员薪水的13%﹐雇员在退休后将没有足够的存款来应付退休后的生活。

他说﹕“雇员公积金是一项规定的存款计划﹐以供退休之后的需求。研究显示﹐那些提出雇员公积金存款者可3年内都会把钱花光。”

“如果该报告正确﹐那些金钱可能是花在购买钻石﹑度假﹑偿还债务﹑孩子的教育﹑投资及甚至孩子的婚礼上。一些人甚至投资在快速致富计划上﹐我们不会同情他们﹐因为他们贪心。”

全球表现最好基金

罗健源表示﹐在过去60年来﹐雇员公积金是全球其中一项表现最优良的退休基金﹐并不断付出红利给会员。它甚至在金融及经济危机时期也拥有良好的表现。

他说﹕“雇员公积金会员的平均存款是12万令吉。如果雇员的寿命达79岁﹐它不足以应付雇员在退休后的需求。根据预测﹐在2060年之后﹐马来西亚有25%的人口年龄超过65岁﹐有谁来照顾他们呢﹖”

因此﹐为了雇员的利益﹐马来西亚职工会砂州分会坚持延长雇员公积金退休提款年龄至60岁。

‘Support EPF’s retirement-withdrawal age proposal’

KUCHING: Malaysian Trade Union Congress (MTUC) is very disappointed with certain quarters, including ministers, for opposing the proposal to extend EPF’s retirement withdrawal from the current 55 years to 60 years.

In a press release yesterday, MTUC Sarawak Division secretary Andrew Lo said MTUC had fought long and hard for this change to ensure employers cannot force employees to retire earlier than age 60 years.

In addition, increasing the retirement withdrawal age to 60 years was one way to allow contributors to build up sufficient retirement savings, argued Lo.

“The qualifying age for retirement must move from 55 years to 60 years, otherwise it would defeat the very objective of EPF as a savings for retirement and the (move to) increase the retirement age.”

For those who needed part of their funds earlier or planned to retire earlier than at age 60, he said the existing partial withdrawal scheme could remain at 50 years or be extended to 55 years.

“This will give the flexibility to contributors.

“Old age savings is a very serious matter, and we cannot agree to some misplaced, 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 make it compulsory for you to save up to 11 per cent of your salary each month and also to compel employers to contribute up to another 13 per cent, it is unlikely you have any money in EPF or any other forms of savings for your old age.”

On studies that showed that those who withdraw their savings tended to spent it within three and five years, Lo said if the comments on blogs were true, the money was used to buy diamonds, go for holidays, pay off debts, children’s education, investments, and even children’s weddings.

Then there were those who invested in get-rich-quick schemes and got conned.

“MTUC has no sympathy for them. They are just greedy.”

To those who demanded they be allowed to withdraw their EPF savings to clear their debts and bankruptcies, Lo opined this could lead to them taking higher debts, probably from loan sharks.

In cases where contributors complained that EPF’s dividend was low, Lo asked them to compare with Singapore’s equivalent, which pays just the average banks’ savings interest rates – about two per cent.

“Over the last 60 years, EPF 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 $120,000 in their savings. This is not sufficient to live on until the life expectancy of 79 years. By 2060, 25 per cent of Malaysian will be in the old age group (above 65).

“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.”

Source :[ The Borneo Post ] 

延至60岁提全额提款 砂职总挺公积金提议

MTUC Sarawak wants EPF at 60 years

KUCHING: MTUC Sarawak is in favour of extending the EPF retirement withdrawal to 60 years in line with the minimum retirement age of 60 years, for the private sector, passed by Parliament in June 2013. 

The minimum retirement age for the private sector is not mandatory retirement. Mandatory retirement only exists in the public sector and is currently set at 58 years. 

“The (qualified) age for retirement withdrawal must be moved from 55 to 60 years. Otherwise, it defeats the very objective of EPF as savings for retirement and the increase in the retirement age,” said MTUC Sarawak Secretary Andrew Lo. “EPF pays better dividends than, for example, Singapore where the rate is only 2 per cent per annum.” 

He was expressing disagreement with “ill-informed and misplaced comments” like “EPF is my money. I know what to do with it”. MTUC Sarawak was also expressing disappointment that certain quarters, including Ministers, were against extending the EPF Retirement Withdrawal to 60 years. 

Lo advises the retired against depending on their children to take care of them in their old age. “The children can hardly take care of themselves.” 

He pointed out that MTUC had fought long and hard for the implementation of the minimum retirement age of 60 years “so employers cannot force an employee to retire earlier than 60 years”. “For those who need part of their funds earlier and plan to retire earlier than 60 years, the existing 50 years withdrawal scheme can remain, at 50, or extend to 60 years,” said Lo. “This would give the flexibility to contributors and will be the right thing to do.” 

“There can also be a three to five year transition period for those who already planned to retire earlier.” 

In any case, MTUC is against earlier retirements.

“The setting of the retirement age at 60 years is a major step towards a more comfortable retirement. Don’t destroy this dream by insisting on earlier withdrawals,” pleaded Lo. “Everybody wants to get rich before they get old. For the majority of EPF contributors, we get old before we can get rich.” 

The situation is hardly ideal. 

Citing EPF figures, he added that most contributors have an average RM120,000 in their savings at retirement. “This is not sufficient to live on given the life expectancy of 79 years,” warned Lo. “By 2025, 25 per cent of Malaysians will be in the old age group i.e. above 65 years.” 

Who is going to take care of them? 

He lamented that most people who withdraw their EPF, according to studies, spend it within three years. “The money is used to buy diamonds, go for holidays, and pay off debts, children’s education, investments and even children’s weddings.” 

There are those who are greedy, he continued, and invest in get rich quick schemes. 

EPF proposals well received, more needed for retirement

KUCHING: Financial experts and advisers view the proposal to raise the withdrawal age of the employees provident fund (EPF) is a ‘lauded move’ as it addresses the issue of retirees not having enough money to live comfortably during their golden years.

Iris Lee, editor of iMoney, a financial service comparison service understood that the EPF’s proposal was to help address the issues with its member retiring without enough funds.

“Their heart was in the right place but the execution was definitely too jarring for their members,” she told The Borneo Post via email.

“While the Prime Minister’s move to retain the status quo is definitely the right (and most popular) move, it doesn’t address the real problem – that too many Malaysians are hitting retirement without enough money.”

Standard Financial Adviser Sdn Bhd’s licensed financial adviser representative and director of advisory and practice management, Lee Khee Chuan and associate financial adviser Eno Wong said the proposal to raise the EPF withdrawal age is ;noble’ because statistics coming out from EPF is quite worrying.

“Now, only one in four of active age 54 EPF members have RM196,800 or more in their EPF account, the minimum basic sum recommended by EPF for retirement,” they pointed out to The Borneo Post.

They further explained that at RM196,000, it is not enough for a retiree to go far.

Khee Chuan and Wong noted that this is also assuming that the retiree is disciplined, budget conscious, and able to ward off all pressure from overspending or spending on expenses such as house renovation, expensive holidays, and others, or avoid investments in risky funds or schemes. However, there are still factors to consider when it comes to changing the withdrawal age of EPF.

Iris from iMoney pointed out that changing the withdrawal age of EPF could derail a person’s carefully-mapped retirement plan.

“However, if a person is planning for an early retirement, this will completely throw his/her original plan out the window as EPF makes up the biggest part of one’s retirement savings,” Iris noted.

Nevetherless, she pointed out that the first proposal could work, as the younger people in the workforce can still adjust their retirement plan to fit the new ruling.

Still, she stressed, for employees with more labourous jobs, this proposal might not be ideal for them as they might not be able to continue working pass 55, or they might not even be able to find a job after a certain age.

“Not having an income and not being able to access their retirement savings can definitely be harsh on his/her financial situation,” she said.

As for the second proposal EPF presented, which is to align the minimum contributions with the minimum wage legislation, it might not be effective now as a lot of Malaysians are still finding it hard to cope with the rising cost of living.

“By taking away more from their monthly salary for EPF can be painful on their monthly income,” she added.

As for the third proposal, which is to extend the dividend payments for those who choose to keep their money with the fund, from age 75 to 100, Iris said it might not be “attractive to most” as with the average life expectancy of Malaysians at 75 years old (according to UNICEF’s stats in 2012), it is safe to say that not many will live to see their dividends at 100 years old.

“The fourth proposal just gives EPF members another option to invest their EPF savings, but the returns may not be the same,” she added.

Overall, Iris said to address the issue of not having enough funds for retirement, private retirement schemes (PRS) and EPF should work together to solve this issue instead of working independently to solve the problem.

As Prime Minister Datuk Seri Najib Tun Razak has officially announced that the withdrawal age would be retained at 55, Lee and Wong advised, retirees should be serious in making sure that their retirement nest eggs are secured.

They also cautioned retirees to be aware of businesses looking to leverage on their retirement funds and as such, they advised retirees to seek independent financial advisers who will be more neutral n objective in their recommendations since they are not tied to a particular financial product manufacturer.

“One should bear in mind that if a retiree loses the retirement nest egg, there is no more time to recover from investment losses,” Lee and Wong stressed.

Meanwhile, Sarawak trade unions Malaysian Trade Union Congress (Sarawak division) and Sarawak Bank Employees Union (SBEU) are in favour of the proposal to lift the age of EPF withdrawal to 60.

“The fact that most of us want to withdraw as early as possible does not mean it is the right thing to do. We cannot depend on our children as they can hardly make ends meet, neither should we depend on BR1M,” Andrew Lo, secretary-general of MTUC Sarawak said in a text message.

“Old age financial protection is a serious matter. We must approach it in a rational and holistic manner, and we must display responsible leadership on the issue. We cannot decide by MOB rule,” he added.

SBEU secretary-general Law Kiat Min has stated that early withdrawal of EPF could be a problem for retirees as “quite a lot of us make emotional decisions when it comes to our own money and are our own worse enemy”.

He also said withdrawing early could mean that employers do not have to contribute and therefore, do not have to increase their contributions to the fund, hence a lower savings fund.

Sharing MTUC Sarawak’s view, he also pointed out that old age financial protection is a serious matter and should be addressed rationally.

Source :[ The Borneo Post ] 

A high-income nation with low-wage workers

The minimum wage was introduced by the Human Resources Ministry after it found out that about 34 percent of private sector employees earn less than RM700 per month, which is below the poverty line of RM800. A similar study in 2010 revealed that 48 percent of Malaysian employees earn less than RM1,000 per month.

This is the ground reality, but the Malaysian government wants the country to be a high-income nation by 2020. This situation prompted the government to implement the minimum wage to attain the high-income economy.       

The national minimum wages of RM900 in peninsula Malaysia and RM800 in Sabah and Sarawak introduced in January 2013 is up for review this year. In view of the increase in prices across the board last year and the imminent increase in price due to the implementation of the goods and services tax (GST), workers deserve an increase in minimum wages in 2015.

While the Malaysian Trades Union Congress (MTUC) wants an increase to RM1,200, the Malaysian Employers Federation wants the old wages to remain as it is. Media report says the government would propose an increase to RM1,000 to appease the employers.

Minimum wages are basic wages, excluding any allowances or other payments. But many employers like estate owners and factories have adjusted the salary scheme to include allowances and other payment to be part of minimum wages.

Weak labour laws and the government issuing Umno and BN cronies permits and licences to bring in foreign workers have made employers addicted to foreign workers, discouraging the transformation to automation, self-service and high-technology industries.

Foreign workers - estimated to number about 6 million, both legal and illegal - have suppressed and stagnated wages. The Malaysian government took the easy route of attracting foreign direct investments (FDIs) by offering low wages, unorganised work force and poorly skilled labour.

The elitist BN government has amended laws to curb workers from unionising and deprive them of their legal rights. Worker’s rights have deteriorated, with only 6.44 percent of the 12.4 million private workers being unionised members.  

Minister in the PM’s Department Abdul Wahid Omar says the government is looking into gradually increasing the ratio of wages to gross domestic product (GDP) from 33.6 percent to 40 percent in the long term.

The government lacks new thinking and political will on transformation into higher value chain. In other countries like Singapore, the wages to GDP ratio is about 43 percent, Taiwan 46.2 percent, South Korea about 43.7 percent, Norway 51.3 percent, Australia 48.7 percent and Japan 51.9 percent. While others have moved up, Malaysia remained stagnated in low wages by allowing Umno cronies to reap the profit by recruiting foreign workers in droves.

Workers short-changed by the gov’t

To quote a 2005 figure, for every ringgit earned in Malaysian employees get 28 sen, company 67 sen and the government 5 sen; unlike in Singapore where employees get 42 cents, company 47 cents and government 11 cents. Workers in Malaysia are short-changed by the government itself.

Unless it is redressed the vision of high income economy in 2020 will remain elusive. Malaysia needs more political will and creative ideas to implement policies that will bring about structural changes in policy implementation than mere slogan chanting and scoring political points.

Malaysian workers deserve the MTUC-proposed increase of RM1,200 minimum wage and employers have the capacity to pay the extra RM300. Extra spending by workers will help the economy too. It is low-wage earners who support the very government which keeps wages down. Malaysian workers are disorganised into race, religion and partisan politics, which is conveniently used by the ruling party to suppress wages. The ball is in the workers’ court.

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