Retirement woes for Malaysians

Difficult question: How much money one needs for retirement is perhaps one of the most asked questions among the people.

THE Government has again raised the topic on Employees Provident Fund (EPF) members not having enough money to finance their living during old age.

While the worry of not having enough money to survive during one’s golden years is common, any proposal by EPF to restrict the withdrawal of the contributors’ entire savings upon age 55 will definitely draw flak from the public.

Nevermind that EPF claims that its studies have shown that contributors who withdrew all their savings will finish using the money in a few years.

In fact, the EPF had made the same claim back in 2003, in its bid to impose a proposed withdrawal scheme for old age.

The controversial proposal — members reaching 55 were only allowed to withdraw between 20% and 30% of their total savings, and the remainder to be paid in monthly payments over the next 15 to 20 years.

The then Cabinet chaired by Prime Minister Datuk Seri Abdullah Ahmad Badawi had turned down the proposal quickly.

The Cabinet was of the consensus that the Government should not stop EPF members from withdrawing all their savings upon reaching 55 years old.

That was almost 11 years ago.

Last Saturday, the EPF’s proposal to raise the age for withdrawal of all the savings from 55 to 60 has not gone down well with the people.

“How we use our savings is our right. It is not as if EPF will have to take care of us after we used up our money,” said a contributor.

Well, the EPF may be genuinely concerned over the welfare of retirees who withdrew all their savings and finished using the money quickly.

But who is EPF to dictate how its contributors lead their life after retirement.

Perhaps EPF’s major concern should be how to help its contributors grow their savings faster, especially for the 70% of contributors who have less than RM50, 000 in their account upon retirement.

It will be great if the EPF can come up with a special dividend to help contributors earning RM3, 000 or below a month.

With that, the EPF would be able to help the lower income group to inch nearer to the target of having at least RM196, 800 in their account upon their retirement.

According to the EPF, a member should retire with at least RM196, 800, in their basic savings in order to have a monthly income of RM820 for another 20 years.

Well, life after retirement need not be just doing nothing but exhausting one’s savings.

For instance, some people may opt to retire early, say 55, and use their EPF savings as seed money to start a small business.

Some may have planned to use their EPF savings, probably their only savings, to finance their children’s tertiary education.

There are also contributors who look foward to withdrawing their savings to pay off their mortage and be debt free.

For some, they may look forward to use part of their savings upon retirement to go on a holiday abroad for the first time in their life.

And there are also people who just want to be in full control of their EPF savings once they reached retirement age.

While the Government has raised the official retirement age to 60, this does not mean that EPF can raise the age to 60 for the contributors to withdraw their entire savings.

The EPF’s role is to help the people save for their old age — compulsory savings from the time they start work.

But it is absolutely the right of the contributors to decide on how they spend their EPF savings after retirement.

After all, the contributors are responsible for their own decision, irrespective of whether it is a good one or otherwise.