A COUPLE of months ago, I wrote about saving for retirement. I now need to pen another article as there are calls for the government to allow one more round of early EPF withdrawals. We know most Malaysians don’t have enough to retire on, mainly due to bad policies and low wages. 

I wonder why some are pressing so hard for more EPF withdrawals even though the fund has warned that loss of trust in it could cause a massive withdrawal that will negatively impact capital markets.

During the pandemic, EPF withdrawals totalled RM101 billion. More than six million members were left with less than RM10,000 in their accounts and more than 11 million will spend their retirement in poverty.

It seems that the EPF withdrawals are sought to pay debts or to start a small business. After the recent floods, some sought the help of a former prime minister to faciilate the withdrawals. 

The former prime minister said EPF savings that have been depleted can be replenished in just “a year or two” after the pandemic and he listed the ways to do that.

Increasing the employers’’ contribution is easier said than done as it increases cost and reduces profits. It would adversely affect small and medium enterprises (SMEs), where most of the people asking to withdraw from the EPF are employed. Banks are seeing higher impairment ratios for SMEs. Strangely, the former PM is not in favour of raising corporate tax to 33% for companies that made a profit of more than RM100 million in 2022, saying that could hurt investor confidence. 

True, most Malaysians are responsible people who will work hard to top up their savings but we are living in unprecedented times and will remain in uncharted territory for an unknown time. It may be feasible to restructure dividend rates but I hope they understand the beauty of compounding interest for savings in the EPF. 

Suggesting that the government help the EPF by giving it more lucrative projects will set a dangerous precedent. Now that will really affect investor confidence and make the tendering system and transparency mockery.

Starting a small business is well and good but without experience and guidance, most will get burned, and there goes their savings. We have seen that many, despite help from Mara, Tekun, Teraju and more, did not make it.

Here are some alternatives to withdrawing from the EPF:

Despite total emoluments for the civil service is RM115 billion or about half of the operating expenditure allocation for 2022, the government can still afford to give 2.3 million civil servants (including pensioners) a one-off special financial assistance like it did in 2021. I believe it can do the same to the people who are requesting this one-off payment which may not be 2.3 million people. Remember, civil servants still have their jobs and have other perks.

Malaysian banks can help. A report says the sector continued to display resilience in 2021 and performed better than 2020 despite persistent economic headwinds, prolonged movement restrictions, moratoriums and repayment assistance. The sectors’ dividend yield is expected to improve from 2.5% in 2020 to 3.9% 2021. Overall profit performance for the first nine months of 2021 rebounded with loan growth expectation of 5.2% in 2022.

Insurance companies can also give more assistance and contribute. Findings from Deloitte’s 2022 insurance industry outlook shows accelerated growth in 2022. Global outlook foresees above-trend in premium growth with projected growth of 5.8% annually over the next decade. 

The Panama, Paradise and Pandora Papers showed funds kept in offshore financial centres were estimated at RM1.8 trillion from 2004 to 2014. For illicit capital flight, Malaysia ranks fifth in the world. These are mostly accumulated wealth evading government tax. Assuming, 1% is brought back, we have RM18 billion that can be distributed. This is the time to help Malaysians and boost the national economy. 

We can offer a special voluntary disclosure programme that was offered for eligible taxpayers a few years ago. 

Meanwhile, what happened to the investigations and the proposal for a royal commission of inquiry?

Last but not least, many politicians and heads of government agencies/GLCs/GLICs who are multi-millionaires can also contribute. In 2020, there were 606 people with a high net worth of US$30 million each in Malaysia. The number is forecast to grow to 801 in 2025. 

This is the time for Keluarga Malaysia to help each other and for an infaq for Muslims.

What say you… – January 18, 2022.

* Saleh Mohammed reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.