Malaysians still impacted by the Covid-19 pandemic and now many hit by devastating floods, there have been calls to allow further withdrawals from savings in the Employees Provident Fund .
When the policy was suggested in March 2020, he had been cautious and, along with former EPF CEO Tunku Alizakri Alias, had made clear that many members had limited funds to support such a scheme. The underfunding of EPF accounts is structural and preceded the current crises, and they made this clear at the outset.
It is also to the credit of the current EPF CEO Datuk Seri Amir Hamzah and his team, headed by Nurhisham Hussein, EPF chief strategy officer, that they are making the case based on facts and logic that the withdrawals cannot continue. Third, as EPF has pointed out, its funds are increasingly held by a smaller group of members, who have accounts with higher savings. This group may be spooked by further withdrawals from EPF or the selling of local shares in Bursa, which may threaten their annual dividend outlook.
If we add to this the EPF estimate that 73% of their active members have inadequate cover, then we get about 87% of the working age population with insufficient pensions. Someone on a median income of RM2,062, who works an extra five years beyond the current retirement age of 60 would retire at 65, with only RM165 extra per month to add to their pension. Someone on the average income of RM2,933 would have an extra RM235 per month from their extra five years of work. So, working longer adds virtually nothing to retirement income.
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