Written by: Averroes
(1.0) Introduction and the stigma
What is EPF?
EPF stands for Employee Provident Fund. It is governed under the Employee Provident Act 1991 which is rudimentarily a saving scheme for employees. They are liable to contribute their savings to EPF, which is then managed under;
i) Simpanan Konvensional or,
ii) Simpanan Syariah.
The savings are the composition of their monthly contributions and yearly dividends. What categorises as contributions? Well there is a list and that would include something as these;
Salaries, Payment for unutilised annual or medical leave, bonuses, allowances (there are exceptions), commissions, incentives, arrears of wages, wages for maternity leave, study leave, half-day leave and other contractual payments or otherwise.
The problem right now is that, many Malaysians are tapping into their EPF savings through the i-Lestari, i-Sinar and i-Citra programmes which totaled up to an amount of RM101 billion. Currently, EPF members could withdraw to a maximum of RM71,000 only.
This is mainly due to the COVID-19 pandemic that intensified economic and social hardships, added that of the recent monsoon inundations.
(2.0) The opposers
For the Malaysian Institute of Economic Research (MIER) they stated that the EPF was not for situations of dire need or hardships, especially the pandemic. The EPF is to ensure convenient lives of those after their retirement.
These EPF funds could be used to pay for medical bills, accommodation, daily basic needs and for travelling among others. Malaysia is soon to be an aged nation by 2030 and that is where EPF would be required to serve most of the aged population. Tengku Zafrul, the Finance Minister also agreed. That would be around 15% or 5.6 million Malaysian that are to transition into senior citizens.
According to the reports made by Bernama, the withdrawal schemes from i-Lestari, i-Sinar and i-Citra was said to be a short-term financial relief. The RM101 million were depleting in the retirement funds of the EPF members. 6.1 million members have less than RM10,000 in their accounts. Another staggering 3.6 million have less than RM1,000.
(3.0) The supporters
Since there are RM10,000 left in the EPF savings for certain groups or people, an NGO stepped forward and urged the government to allow the withdrawal of that remaining amount of money. They state that the RM10,000 should be a one-off basis. Khairul Anuar Othman of Pertubuhan Aktivis Rakyat Malaysia or ProRakyat perceives this a solution for those people undermined by the monsoon inundations.
It is the monsoon season and many Malaysians are withdrawing their contributions due to destruction of facilities and the disruption of daily affairs. It is acknowledged that the EPF is important for retirement, but desperate times comes for desperate measures. The withdrawal is not only for the inundations, but also employment opportunities that waned down.
For some attendees of one press conference, they adduced that those withdrawing the money are those aged 30 and above. That age group has at least RM30,000 in EPF, but these statistics are from social media posts. If not, their livelihood and sustenance are hampered with loans, debts and the inability to generate income or finance their own families in these trying COVID-19 times.
(4.0) What the government intends to do
The MIER proposed to the government for a long-term measure to alleviate these problems. These would include more social protection, safety net strategies and better fiscal policies. Contingency plans and schemes were mentioned.
That would mean to establish a disaster relief fund that comprise of adequate social protection toward the self-employed and informal sectors, who may not have stable or steady income. They also suggested that the government should relocate families to temporary vacant shelters with basic furniture and amenities.
The government could also focus on prevention management from the floods, by modelling the Singaporean Marina Barrage model for urban water catchment, similar to that of the Thames Barrier. It is a canal system underground for collecting water inside a tank. The underground tanks could connect with waster water treatments as well.
Apart from that, the government could revise their spending rather than channeling it into unnecessary expenditures.
Despite the government providing a one-off financial aid during the inundations amounting to RM2000, equally divided in half from the Federal and State Government, it is not enough.
One resident in Kampung Kubu Gajah complained of it and if she were to divide RM2000 with her five family members with 30 days, they can only use RM13.33 to survive per day. There are proposals to apply for loans from the Bank Simpanan Nasional, but that would also add another burden of debt, if not paid timely.
(5.0) Conclusion
The author believes that, it is entirely on the choice of EPF members to withdraw their savings from EPF. However, this comes at a price to pay and entirely on the risk of their decisions. However, if the EPF members are able to find other alternatives or solutions then it is encouraged.
In the meantime, with Budget 2022 passed and the recent 12th Malaysia Plan, the government should review their unnecessary spending and provide more social security or improved schemes toward the Rakyat. The government should also improve flood or natural disaster technology as preventive measures in the future to prevent situations of EPF withdrawal to occur again.
Better fiscal and job policies should be implemented. In these regards, Malaysians should also find ways to generate side-income through gigs or start their own businesses as of now or invest.
(6.0) References;
FMT Reporters. (January, 2022) EPF not meant for crises, pandemics, says MIER. Retrieved from, https://www.freemalaysiatoday.com/category/nation/2022/01/06/epf-not-meant-for-crises-pandemics-says-mier/
Foundingbird. (n.d) Employer contribution of EPF, SOCSO, and EIS in Malaysia. Retrieved from, https://foundingbird.com/my/blog/what-employers-should-know-about-epf-socso-and-eis
Adib Povera. (January, 2022) NGO wants government to allow further EPF withdrawals. Retrieved from, https://www.nst.com.my/news/nation/2022/01/760455/ngo-wants-government-allow-further-epf-withdrawals
Loh, J. & Yeo, A. (January, 2022) Do not use EPF as lifeline for victims. Retrieved from, https://www.thesundaily.my/home/do-not-use-epf-as-lifeline-for-victims-LK8729904
Azreen Hani. (January, 2022) Eight out of 10 EPF members will retire in poverty. Retrieved from, https://themalaysianreserve.com/2022/01/06/eight-out-of-10-epf-members-will-retire-in-poverty/
TheStar. (January, 2022) Tengku Zafrul: EPF not solution to challenges, retirement savings important. Retrieved from, https://www.thestar.com.my/news/nation/2022/01/02/tengku-zafrul-epf-not-solution-to-challenges-retirement-savings-important
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