Misguided and ill-informed


It is ridiculous to accuse the Government of wanting to extend the retirement age to force EPF contributors to keep their money for a few more years just so the former could continue to abuse it.

Yes! The minimum wage will be effective next January. Employers with five employees or less will have until July 1 to fully comply.

The Dewan Negara has followed the Dewan Rakyat and passed the Minimum Retirement Age Bill, setting retirement age at 60 for the private sector.

All that is left now is the royal seal from the Yang di-Pertuan Agong and the gazette order to implement it.

I am in the implementation work group as a representative of workers and I will be calling for it to be implemented by Jan 1 next year.

While most would rejoice, there are some concerns as to whether the withdrawal age for Employees Provident Fund (EPF) contributions will remain at 55 or pushed to 60.

There was a proposal by the Deputy Finance Minister that full withdrawal should be extended to 60 as well, but with a transition period. I fully support this proposal.

Increasing the retirement age from 55 to 60 is an optional move for employees as some may prefer to retire earlier.

Those aged 50 and above may have prepared or planned what to do with the money upon reaching 55.

The transition period will still enable those who have already retired or plan to retire in the next five years to withdraw the full amount.

However, I feel that if they wish to continue working until 60, then they can only have full withdrawal at 60, otherwise it would defeat the very objective of the EPF as a savings for retirement.

For those who need part of their funds earlier, the existing withdra-wal scheme can remain at 50 or extend to 55. This will give flexibility to contributors and will be the right thing to do.

Unfortunately, there has been a lot of negative comments in the social media and blogs making all sorts of accusations against the EPF and the Government on the withdrawal issue.

What I find idiotic is the accusation that the Government wants to extend the retirement age to force EPF contributors to keep their money in the EPF for another five more years just so that the Government can continue to abuse EPF funds.

Nothing can be further from the truth.

I am personally involved in the long-standing quest by unions and workers to increase the retirement age, having spent the last 15 years trying to convince employers and the Government to finally agree to enact the law for a mandatory minimum retirement so that employers cannot force those who want to continue to work, out of their jobs.

This push is for a host of cogent reasons and overwhelming evidence that it is in the best long-term inte-rest of workers and EPF contributors. To say that there is an ulterior motive just shows how idiotic and paranoid some so-called EPF contributors are.

It is also damaging to the struggle of workers because the Government may delay the implementation of the retirement age.

Amongst the misplaced and ill-informed comments are: “EPF is my money and I know what to do with it. I should be allowed to withdraw it anytime”.

Well, if not for the EPF which makes it compulsory for you to save up to 11% of your salary each month and also compels employers to contribute up to another 13%, it is unlikely you would have any money in the EPF, or any other form of savings for your old age.

You think you can depend on your children to take care of you? Think again, your children can hardly take care of themselves.

The EPF is a compulsory savings for retirement and old age protection.

Studies have shown that those who withdraw at 55 finish the money within three years.

Why? If the comments of the blogs are to be believed, the money is used to buy diamonds, go for holidays, pay off debts, children’s education and investment.

I suspect that some invest in get-rich-quick schemes (and get conned equally quickly.)

Then there are those who insist that they are smarter than the EPF and can generate better returns themselves.

For those with the perennial complaint that the EPF’s dividend is low, just look at the Singapore equivalent which pays just the average bank savings interest rates — about 2%.

The EPF’s performance over the last 50 years has been one of the best among pension funds in the world, consistently paying dividends above inflation.

It has demonstrated resilience through various financial and economic crises.

It is also an investment scheme to give flexibility to contributors without leakages.

Maybe one or two other funds have paid higher dividends over a number of years, but these are specific purpose funds and limited to certain segments of Malaysians only.

The irony is that those who have millions in the account are reluctant to withdraw their money because these groups know they have been getting reasonable returns, with a guaranteed rate of 2.5% and capital preservation.

EPF has introduced the million ringgit withdrawals to encourage them to take out the funds.

So who says that EPF does not have enough money?

As to all these accusations that EPF has run out of money, the fact is that EPF has too much money (almost half a trillion ringgit and fully accounted for as at July 1 last year) relative to the investment opportunities in Malaysia that it is investing part of its funds abroad.

On the other hand, the average contributor has less than RM120,000 in their savings.

This is not sufficient to live on until the life expectancy of 79 years.

By 2060, 25% of Malaysians will be in the old age group (above 65). Who is going to take care of them?

The increase in the retirement age is one way to allow contributors to build up sufficient retirement sa-vings.

To turn around and accuse the Government of extending the retirement age because it wanted to keep your money for their own use is absolutely rubbish.

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