Last Thursday, it was reported that the benchmark for basic retirement savings would increase to RM390,000 by Jan 1, 2028, up from the current RM240,000, under the Employees Provident Fund's (EPF) Retirement Income Adequacy (RIA) framework.
For a Malaysian worker earning RM2,000, whereby the employer contributes 13% of wages, and the employee contributes 11%, which means that the monthly EPF savings of 24% of RM2,000 = RM480
If RM480 per month, for a worker working 35 years[i.e. from 25 years to 60 years], then the total that flows into the EPF savings is RM201,600-00 - which is far short from the RM240,000 (or in 2028, RM390,000 required0 for BASIC retirement savings....
# Note this not take into account the annual EPF dividends, or the fact that many a worker now do take out from the 'old age savings' because of Account 1, 2 and 3(Akaun Flexible).
Note, that since the minimum wage is RM1,700 - and we have used a higher wage of RM2,000-00
Note, since Malaysia has not insisted that workers be provided REGULAR EMPLOYMENT, most workers are on short-term contractual employment of 1 year or less, and contract not renewed but employer just hires a NEW worker - why? To prevent the employee from being able to claim REGULAR EMPLOYMENT
Note that in Malaysia, the law provides MORE RIGHTS to the worker based on TENURE - the longer you work with the same employer - you are entitled to more Annual Leave, Sick Leave, Etc...
Section 60E Annual leave {EMPLOYMENT ACT 1955](1) An employee shall be entitled to paid annual leave of-
(a) eight days for every twelve months of continuous service with the same employer if he has been employed by that employer for a period of less than two years;
(b) twelve days for every twelve months of continuous service with the same employer if he has been employed by that employer for a period of two years or more but less than five years; and
(c) sixteen days for every twelve months of continuous service with the same employer if he has been employed by that employer for a period of five years or more,
Section 60F Sick leave
be entitled to paid sick leave-
(aa) where no hospitalisation is necessary-
(i) of fourteen days in the aggregate in each calendar year if the employee has been employed for less than two years;
(ii) of eighteen days in the aggregate in each calendar year if the employee has been employed for two years or more but less than five years;
(iii) of twenty-two days in the aggregate in each calendar year if the employee has been employed for five years or more; or
(bb) of sixty days in the aggregate in each calendar year if hospitalisation is necessary, as may be certified by such registered medical practitioner or medical officer:
This means that a worker who is employed for a 1 year or less contract, and the contract is not renewed, he/she have NO RIGHT to claim termination or retrenchment benefits. So, no TERMINATION BENEFIT if worker works less than 1 year, is this JUST?
EMPLOYMENT (TERMINATION AND LAY-OFF BENEFITS) REGULATIONS 1980
3 General provisions for the entitlement of employees to termination or lay-off benefits payment
(1) Subject to these Regulations, an employer shall be liable to pay termination or lay-off benefits payment calculated in accordance with regulation 6 to an employee who has been employed under a continuous contract of service for a period of not less than twelve months ending with the relevant date if-
(a) the contract of service of the employee is terminated; or
(b) the employee is laid-off within the meaning of regulation 5.
Usually, when an employee is employed as a REGULAR employee, he/she can reasonably expect annual pay increment - maybe RM50 or more... Hence, workers on short term employment, maybe repeatedly enjoys NO wage increment.
REGULAR EMPLOYMENT benefits the worker, but does not prejudice the employer - who still can legally terminate the worker if no longer needed(RETRENCHMENT), if the employee commits a serious employment misconduct - if not, the Employee enjoys permanent employment until retirement, or lawful termination.
If the worker works for more than 12 months, then he also get TERMINATION/RETRENCHMENT Benefits as provided in law.
One phenomena with the advent of MINIMUM WAGE, many employers end up hiring and paying workers minimum wages - RM1,700 as the starting salary. The wages is no longer dependent on skill, experience or even academic qualifications..
Rafizi's progressive wage policy attempts to provide for Minimum Wage for different jobs, but was again 'totally ignored' by Prime Minister Anwar Ibrahim when he introduced the new Minimum Wage policy of RM1,700 regardless of skill, experience, academic qualification, age - Now, Malaysia could have come out with a MORE COMPREHENSIVE Minimum Wage laws - that provided for different minimum wages based on type of work, skills/qualification/experience, age,area of work. In country like India, a higher minimum wage is provided for 3D work - to attract more local workers and to be fair.
CONTRADICTION
- Progressive Wage Policy fixed Minimum Wages for 380 categories of
workers - so why is Anwar's Minimum Wage lower PWP wages for even these
380 categories of workers??
Now, Malaysia can PROTECT WORKERS - by requiring all workers to be employed as REGULAR EMPLOYEES - no more short-term employment contract. Employer to retain SAME worker - and not allowed an terminate and re-employ NEW worker for the same work the previous worker has been doing??
All very SIMPLE, and the Government can easily do to protect workers - all it requires is POLITICAL WILL - but sadly, the government don't care about workers, and tend to be more PRO-EMPLOYER - and made worse, when a lot of MPs are employers, or have business/corporate interest. Hence, to protect or improve worker rights may be against MPs personal interest - WHICH POLITICAL PARTY IS REALLY COMMITTED TO PROTECTING AND ADVANCING WORKER RIGHTS IN MALAYSIA?
Now, if a worker is just on a short-term employment contract. After the end of the contract period, he/she is out again job-hunting and trying to a new employment, who may again be offered the MINIMUM WAGE as the starting pay - so, the Malaysian worker, will continue to go back to square one - again finding an employment at RM1,700 - the salary will not increase with AGE, which is needed as monies needed by workers do INCREASE, from his bachelor days to becoming a married worker..to having kids - worker needs MORE money as time passes by.
Is it easy to find work near the OLD workplace, not really as the next available employment will be in some other town. What then about his home(rented or bought), his spouses employment/business, his/her children's schooling and friends - will this mean a re-location to a different town. Would this mean 'separation' of families, where one spouse may have to stay elsewhere because of work?
As the worker grows older, he may be competing with younger workers - imagine a 50 year old competing with 20 year olds for a job - the older you are the more difficult to find jobs...
And, now it is so easy for employers to be able to get migrant workers - so what happen to the local workers that is growing older and older?
Can we say that this Malaysian Government simply do not care for its OWN Local Workers?
DIMINISHED RIGHT TO CLAIM REINSTATEMENT WHEN WRONGFULLY TERMINATED..
If a worker is a short-term contract worker, their right to employment reasonably is just for the duration of the contract, not indefinitely until retirement age for REGULAR WORKERS - so, what about claims for REINSTATEMENT by reason of wrongful dismissal for short-term contract employees - what right? Malaysian government by law can insist that all workers are REGULAR employee, no more short-term employment contract - that is IF GOVERNMENT CARES FOR WELL BEING OF WORKERS
Fight to be reemployed for the remaining few months in your contract - foolish, and thus even though employers are prohibited from WRONGFULLY terminating workers, the claim may be 'worthless' because your employment contract is just for a short period. Further, the fact that the legal process may take years discourages many a local worker(with low wages) from making claims and taking legal action against their employer..
You may have read of cases where workers have been successful in wrongful dismissal claims getting hundreds of thousands of ringgit - BUT wait, these were HIGH EARNING workers, not the workers earning minimum wages or less than RM5k ...Do not form wrong conclusions - the law is BAD, when in limits the claim for back wages to just 2 years (RM1,700 X 24 = RM40,000, and there are deductions - so maximum may just be RM20-30k, MINUS cost, legal fees, etc..). Previously, when the court finally decides that a worker had been unlawfully dismissed - worker gets back wages from date of wrongful termination until the date of judgment ...so, even if the judgment comes after 5 or 9 years - workers get justice.
The Kuala Lumpur Industrial Court has awarded Ang Chin Gaik RM1,380,722.20 in compensation after ruling that his former employer had dismissed him without just cause. Ang was entitled to only 20 months' back wages, as he had not completed one year of service with the company. His last drawn salary was RM68,836.11, which included a RM200 fixed monthly allowance. - NST, 14/3/2025
WOW...so much because that worker monthly salary was about RM68,000 plus - when do you see reports of workers with monthly wages of RM2,000 to RM6,000 winning.
Most wrongfully dismissed of the lower and middle income group simply 'give up' fighting for justice - more so, when the decision comes years later. This is a case of Justice Delayed Justice Denied. How can they afford to pay legal fees, the cost, the taking of leave to attend court(Malaysia no paid leave to attend Court of Labour Department).
CONCLUSION - Malaysian government simply does not PRIORITIZE worker rights and justice for workers. How many GLCs prevent UNIONS from forming?
Back to 'OLD AGE SAVINGS' and post retirement(60 years) survival - the EPF/KWSP scheme fails, if the Minimum Wage is only RM1,700-00. We have shown that a worker with a regular monthly income of even RM2,000, who does not take out from his/her EPF savings any monies for other expenses WILL fail to even accumulate RM240,000 in his EPF account (the previous amount needed for very basis survival, let alone RM390,000 which will be required from 2028 onwards...
Finance Minister Anwar Ibrahim, what is your PLAN to ensure basic livelihood for Senior Citizens after age 60...?
Should the government be paying monies into EPF accounts? WHAT? WHAT?
Wrong to CLAIM responsibility for EPF's higher dividends - That is the achievement of CEO and EPF Board, not Anwar or Government? National Accounts determines Government achievement?
Raising retirement age won't solve savings problem without data, says expert [WATCH]
JOHOR BARU: The proposal to raise the national retirement age, prompted by concerns over insufficient basic retirement savings, requires more comprehensive studies and data.
Universiti Tun Hussein Onn Malaysia (UTHM) Leadership and Competency Centre Director, Professor Dr Nor Hazana Abdullah, warned that increasing the retirement age without thorough research and data could lead to social repercussions and ultimately harm the well-being of the majority.
She criticised suggestions for Malaysia to emulate developed countries that have raised their retirement age to 69, calling them oversimplified conclusions to address the insufficiency of retirement savings among citizens.
"We cannot view this issue literally and conclude that Malaysians lack sufficient retirement savings, so the retirement age must be raised to ensure their savings increase and become adequate for their golden years," she said.
"If the issue is insufficient retirement savings, will extending the retirement age ensure that citizens have enough? Especially when such decisions are made without robust data, research, and simulations that consider inflation rates and current income levels," she told Berita Harian.
Last Thursday, it was reported that the benchmark for basic retirement savings would increase to RM390,000 by Jan 1, 2028, up from the current RM240,000, under the Employees Provident Fund's (EPF) Retirement Income Adequacy (RIA) framework.
This new benchmark was announced during the launch of the Belanjawanku 2024/2025 guide and the RIA framework by EPF.
To facilitate a phased implementation, EPF stated that the basic savings benchmark would increase incrementally by RM50,000 annually over three years, reaching RM290,000 Jan 1, 2026, RM340,000 by Jan 1, 2027, and RM390,000 by Jan 1, 2028.
Meanwhile, Singapore's National Trades Union Congress (NTUC) recently announced plans to raise its retirement age to 64, with the option to extend to 69 for eligible workers starting Jan 1, 2025. This adjustment, announced on Dec 9, will take effect 1.5 years earlier than initially planned.
In Malaysia, the retirement age has been adjusted three times in the past two decades. It was raised from 55 to 56 in 2001 for civil servants, increased to 58 in 2008, and extended to 60 in 2012.
Nor Hazana stressed on the need for a detailed study on how raising the retirement age might affect the country's youth.
She explained that some developed countries, such as Singapore and France, raised their retirement age due to labour shortages caused by a larger retiree population compared to the working-age demographic.
"Malaysia cannot simply replicate the policies of other nations, as each country faces its own unique challenges and circumstances.
"In Singapore, for example, not only do they have more retirees than active workers, but their longer life expectancy is supported by advanced healthcare and public services.
"More importantly, we need research to determine why a significant portion of Malaysians still struggle with insufficient wages and income, which hinder their ability to save adequately in the face of rising living costs," she added. - NST, 16/12/2024
Industrial court awards RM1.38 million to ex-employee for wrongful dismissal
KUALA LUMPUR: The Kuala Lumpur Industrial Court has awarded Ang Chin Gaik RM1,380,722.20 in compensation after ruling that his former employer had dismissed him without just cause.
Ang was entitled to only 20 months' back wages, as he had not completed one year of service with the company.
His last drawn salary was RM68,836.11, which included a RM200 fixed monthly allowance.
The claimant had also sought reinstatement at the company; however, Industrial Court chairman Augustine Anthony found it to be an unsuitable remedy.
"Considering the factual matrix of this case, including the manner in which the claimant was dismissed and the lack of evidence indicating any meaningful purpose in reinstating him to his former position, particularly when he remains a director of the company, though without the position of general manager.
"It is this court's view that reinstatement as an unsuitable remedy in the circumstances," Anthony stated in his written judgment published on the Industrial Court's website on March 3.
Ang's evidence remained uncontested, as his former employer, WV Services Malaysia Sdn Bhd - an events training, conference, and personal development seminar organiser - failed to appear during the trial or submit any defence.
Ang claimed he was terminated from his employment on June 18, 2022, without being given any reason for his dismissal.
He initially joined the company as a director on Dec 11, 2015, and was later appointed general manager on May 1, 2016.
However, his services as general manager were terminated on Dec 4, 2020, and he remained a director without pay.
On Nov 15, 2021, he was reappointed as general manager but was dismissed only seven months later, on June 18, 2022.
The company's solicitors withdrew from representing WV Services on August 6 last year, and no new lawyer was appointed for the trial, which began on November 25.
Represented by Muhendaran Suppiah and Carmelia Yong, Ang argued that the company had violated principles of natural justice, engaged in unfair labour practices, and victimised him.
He also claimed that the company had disregarded his legitimate expectation of continued employment until retirement. - NST, 14/3/2025
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