KUALA LUMPUR: Allowing Employees Provident Fund (EPF) contributors to withdraw their savings will lead to a complete loss in financial security for many upon retirement, says Klang MP Charles Santiago.
Instead, he called on the government to do away or to re-evaluate certain allocations in Budget 2021 for projects, which he described as political in nature or for propaganda.
Santiago was referring to the RM85.5mil allocated to the Special Affairs Department (Jasa), RM8.63 mil to Penggerak Komuniti Tempatan, RM1bil for “special projects” under the Prime Minister’s Office and the Finance Mininstry’s RM13.61bil “Pelbagai Suntikan Modal”.
“So you see, the government has funds. Does it have the political will to support the people who need it the most?” he told a press conference in Parliament on Monday (Nov 16).
Under Budget 2021, the government will allow EPF contributors to make early withdrawals from Account 1 to help them cope with financial problems during the Covid-19 crisis.
The withdrawals are capped at RM500 a month for up to 12 months.
“In other words, workers are asked to dig into their pension savings to help manage their current financial challenges, when they are in dire need of state support, ” said Santiago.
Based on EPF data in 2018, he said he estimated that 38% or 2.8 million out of 7.36 million contributors did not have enough money to withdraw RM500 a month.
He also said a further 18.8% EPF members or 1.38 million contributors did not have a total of RM6,000 saved up at the end of 2018, while approximately 60% of retirees used up their EPF savings within three years of retiring.
“This gloomy reality indicates that a significant number of workers are in poverty This means a further reduction in their savings will lead to a complete loss in financial security upon retirement.
“The combined withdrawals will have an impact on the future earning capacity of workers through loss of dividends plus the compounding interests in lost savings.
“It will also wipe out financial security for old age, ” he added.
Did you find this article insightful?
91% readers found this article insightful