[UPDATED] Time to ensure EPF contributors have enough for retirement: PKR MP

KUALA LUMPUR – Instead of allowing further Employees’ Provident Fund (EPF) withdrawals, it is time for measures to ensure sufficient savings for when contributors reach retirement age, said PKR lawmaker Lee Chean Chung.

The Petaling Jaya MP noted alarming statistics on the high numbers of contributors who only have retirement savings of less than RM10,000 left, and proposed three ways to address the problem.

He suggested tiered dividends to provide higher dividends to those with more savings contributions, as well as increasing foreign investments by EPF and limiting withdrawals after age 55.

“Rather than focusing on the debate over whether additional withdrawals should be allowed, it would be better for all parties to focus on how to ensure that contributions are sufficient when millions of our contributors reach retirement age. 

“EPF as an executor should focus its energy on increasing returns and provide greater awareness about the management of people’s retirement funds,” Lee said in a statement today.

The PKR lawmaker was responding to calls, mainly from opposition figures, urging the government to allow yet another round of withdrawals from the retirement fund to cope with the rising cost of living.

Lee said the previous withdrawal facilities such as i-Lestari, i-Sinar, and i-Citra were allowed because of the economic and health crisis during the Covid-19 pandemic.

Elaborating on his proposals, Lee said tiered dividends could see the highest rate for the first RM50,000 saved. Subsequent rates would then be applied to RM50,000 to RM240,000 saved and to amounts of more than RM240,000. 

RM240,000 is the amount of basic savings EPF deems sufficient to support 20 years of basic living needs upon retirement.

On increasing foreign investments, he said EPF had a return of 8.64% on international investment in 2021, and a 5.02% return on local investments.

“Increasing the investment mandate at the international level will make EPF more productive, as well as more professional,” Lee added.

On limiting withdrawals by contributors after they reach the age of 55, he said this could be done in accordance with the amount contributed and by taking into account a person’s retirement needs.

As of the end of 2022, just over half or 6.67 million EPF contributors had retirement savings of less than RM10,000 left in their accounts, far below the RM240,000 basic savings amount.

“Allowing continuous withdrawals is akin to killing the goose that lays the golden egg. It (more withdrawals) will not help to increase contributors’ assets as it will take between three to five years for savings to return to their previous level,” Lee said. – The Vibes, January 26, 2023