Consider these proposals to create a safety net for retirees now

WHEN workers were allowed to withdraw money from their Employees’ Provident Fund (EPF) savings to sustain themselves during the Covid-19 pandemic, it resulted in only about 3% of them now having adequate savings to be able to afford to retire.

The indisputable fact is that Malaysia’s working population will be largely stranded without enough savings – or any whatsoever – post retirement. Given that we are fast becoming an ageing society, coupled with the fact that those who are ageing don’t have sufficient post-retirement savings, our nation may well be heading towards a future of growing poverty.

Without sustainable post-retirement savings our “warga emas” (senior citizens) would either be compelled to continue to work or become dependent on the goodwill of society for survival – unless the government initiates an appropriate social safety system to address the situation.

We in the Malaysian Trades Union Congress in Penang believe that it is possible to implement a comprehensive post-retirement safety net if the government is minded to:

> Merge EPF and the Social Security Organisation (Socso) to consolidate their resources. We understand the EPF’s investment assets are about a trillion ringgit; and Socso’s assets are in the billions. With such massive financial assets, and through prudent returns on investments, we are convinced a post-retirement safety system can be financed.

> Set aside, say, 1% of taxes collected. With the consolidation of EPF and Socso, an annual allocation of a portion of taxes to the merged entity will add to the safety scheme.

> Enhance existing statutory EPF contributions. This will increase savings in the proposed consolidated EPF/Socso organisation, which in turn would enable the sustainability of the old age support scheme.

> Move towards a living wage for everyone – while progressive improvements in wages are welcome, the current minimum wage still does not meet the threshold of a living wage. According to Bank Negara, an individual needs RM2,700 a month to live on. By moving towards a living wage it would, consequentially, translate to higher savings, again, in the proposed consolidated entity.

Taking cognisance of the fact that we are fast approaching ageing society status, we would urge the government to consider these proposals. We believe the government ought to consider them when formulating the 2023 Budget.

K. VEERIAH

Secretary,

Malaysia Trades Union Congress, Penang