PETALING JAYA: Malaysian Employers Federation has advised workers not to opt for a 3% reduction in their contribution to the Employees Provident Fund because it can affect their retirement savings.
Federation executive director Datuk Shamsuddin Bardan said although extra money could come in handy for some households, lower EPF contribution would erode the retirement savings of about 70% of EPF contributors.
He said private sector employees contribute about RM18bil annually to EPF and the reduction would translate into RM540mil in the hands of employees.
“But the extra money will only be a small sum for a contributor from the lower income bracket or one who earns less than RM5,000 a month.
“If there is no reason to take the extra money, my advice is, they should opt to maintain their contribution,” he told The Star yesterday.
Cuepacs secretary-general Datuk Lok Yim Pheng said employees should weigh their options carefully.
“If they can afford surviving without the extra money, they should opt not to reduce their EPF contribution.
“They should only do it if they really need the money to offset the higher cost of living,” she said.
Lok said the extra money could be useful for children’s education or for getting housing or car loans.
Fomca secretary-general Datuk Paul Selvaraj said EPF was the only form of forced savings for employees.
“The reason why EPF contributions are mandatory is to make sure that we have retirement savings.
“Employees must think carefully if they wish to reduce their contribution,” he said.