A total of 6.3 million EPF members, or 48% of those under the age of 55, have less than RM10,000 in their retirement savings with the provident fund, Prime Minister Anwar Ibrahim told the Dewan Rakyat.
With savings of less than RM10,000, members are expected to have a retirement income of less than RM42 per month over a period of 20 years, he said. - FMT, 20/11/2023
That means 42% or 2.65 million EPF members 55 and ABOVE have LESS than RM10,000 in their EPF accounts - and THAT is a very serious problem.
Malaysia is set to become an ageing society in less than a decade, with up to a sixth of its 32 million over population being 60 and above by 2030.
Even a member has RM250,000 in his/her EPF account at age 55 - it means he/she can withdraw a sum of RM1,040 monthly for the next 20 years. Is that enough to sustain his/her livelihood factoring in the increased COST of living, and the removal of subsidies by the PM Anwar Ibrahim's government?
ONE solution is a MANDATORY Pension Scheme for ALL - that will provide for monthly incomes until death. Like, the EPF scheme, it will require mandatory contributions by employer/employee monthly for at least 30 years or more. Higher contributions means a higher monthly pension. Like the EPF, the money received by the Pension Scheme will be INVESTED to generate more income by way of annual dividends.
BUT sadly, PM Anwar Ibrahim's government has NO PLANS for the establishment of a new PENSION SCHEME in an effort to assist in the livelihood of Malaysians after they RETIRE at age 55 or 60. Does this mean the government DO NOT CARE about our RIGHT TO RETIRE and our ability to survive during our retirement? Are we expected to work and generate income until we die? There seems to be NO PLANS of increased welfare assistance for those above 55 - maybe regular monthly income to sustain our livelihood...Is it not AN IRRESPONSIBLE ACT by our Prime Minister, and Finance Minister Anwar Ibrahim...
The government has no intentions to implement a universal pension scheme due to the related costs, says Nurhisham Hussein[Prime Minister’s Office (PMO) senior director of economics and finance.]...Such schemes in countries like the Netherlands, New Zealand, and Sweden provide a minimum income to all citizens upon retirement age, funded through taxation...Malaysia’s retirement system has significant gaps, with many Malaysians relying on their children for retirement support.
My reading is that our Prime Minister and Finance Minister seems to have NO IDEA about what to do do to ensure the future well-being of Malaysians, especially those past retirement age. YES - he does not want to even move towards a universal pension scheme - so what is his PLANS? No Plans is NO OPTION. There will be 5.3 million Malaysians over 60 in 2030 - majority of whom are not pension receiving civil servants, and we know that majority of EPF members do not have sufficient funds...AND the GOVERNMENT OF MALAYSIA is to be BLAMED.
WHY? Malaysian EPF was established in 1 October 1951 pursuant to the Employees Provident Fund Ordinance 1951. It required MANDATORY monthly contributions by employer and employee, and access to the funds was only after retirement age, then 55. This ACT understood that many Malaysians may not have the self-discipline to SAVE for Old Age, and that is why it was made MANDATORY in terms of contribution, and a DENIAL of access to the monies until ONLY after retirement age. The money in the fund grew also by reason of INVESTMENTS, whereby dividends were deposited annually into the member's accounts.
The EPF fund's purpose and objective was 'defeated' by the Malaysian government's own actions. The government saw this monies in member's OWN accounts as a solution to its own financial problems, and the government allowed by law - early withdrawals for all kinds of reason.
In 2007, the government by law allowed withdrawal of up to 30% of the worker's old age savings. The government should NEVER have touched the EPF - but should have found other means to help the worker.
Effective 1 January 2007, a member's EPF savings consists of two accounts that vary by their share of savings and withdrawal flexibilities. The first account, dubbed "Account I", stores 70% of the members' monthly contribution, while the second account, dubbed "Account II", stores 30%. Account I restricts withdrawals to the moment the member reaches an age of 50 years, to boost retirement fund by investment in unit trust, is incapacitated, leaves the country or passes away. Withdrawal of savings from Account II however, is permitted for down payments or loan settlements for a member's first house, finances for education and medical expenses, investments, and the time when the member reaches 55 years of age
Anwar Ibrahim, in November 2023, seems to blame his predecessors for diminishing EPF members' old age savings...for allowing so much 'special' EPF/KWSP withdrawals...
In April 2020, before the introduction of special withdrawals related to Covid-19, there were 4.7 million EPF members (or 37%) whose accounts had less than RM10,000, said Anwar in his reply to Zulkifli Ismail (PN-Jasin)...Three EPF withdrawal schemes were introduced by the government of Muhyiddin Yassin, who is the PN chairman, during the Covid-19 pandemic. A fourth round was allowed after Ismail Sabri Yaakob took over as prime minister.
[##Zulkifli APPARENTLY asked about the government’s initiatives to deal with the problem of insufficient retirement funds among Malaysians, but again Anwar FAILED to give a complete answer to the actual question, and touched on OTHER minor or irrelevant issues >> HOW WILL YOU DEAL WITH INSUFFICIENT RETIREMENT FUNDS AMONG MALAYSIANS? - that was the question]
Then, Anwar Ibrahim and this government MADE IT EVEN WORSE - by permitting even more withdrawals from EPF/KWSP Old Age Savings when he recently introduced another 'Flexible Account' which allows the member to withdraw even more from their old age savings. When they reach retirement age of 55 or 60, how will they survive with RM42 per month[or less] for over a period of 20 years.
Unlike government Pensioners, who will still continue to receive MONTHLY pensions from the government until they die, for all other workers and Malaysians, their 'old age' income safety net is ONLY the monies in their EPF/KWSP Old Age Accounts.
Anwar knew the state of affairs - the inadequacy of monies in EPF accounts to cover old age livelihood until death (noting already about 2 million plus Malaysians who reached 55 had less than RM10,000 in their 'old age savings' account - meaning they would have RM42 or less per month to spend until they reach 75) - so why did the he make it worse? It is an ACT OF IRRESPONSIBILITY - more so since he does not have any CONCRETE plan to overcome the hardships of Malaysian senior citizens. He could pass a WELFARE ACT guaranteeing that all old folks get at least RM1,000(or a sum sufficient to sustain a decent living) but he did not. He has No plans for any universal pension scheme for ALL.
25 APRIL 2024: The Employees Provident Fund (EPF) has announced a restructuring of its members’ accounts effective 11 May 2024 that seeks to enhance their income security after retirement while addressing members’ current life cycle needs.
Member accounts will be restructured from two (2) accounts namely Account 1 and Account 2 to three (3) accounts: -
• Akaun Persaraan to accumulate savings that will serve as income during retirement;
• Akaun Sejahtera to address life cycle needs that contribute to well-being during retirement; and
• Akaun Fleksibel as a new account that provides flexibility for short-term financial needs. Savings in this account can be withdrawn at any time according to members’ needs.
Are Malaysian EPF members HAPPY - yes, many will be as they now have access to their 'old age savings' to use as they please now WITH no worry about how they will financially survive after retirement age of 55.
REMEMBER, the government was fully aware of worker's on the Malaysian's nature in Malaysia - they spend now with little worry about how they will survive financially in their post-retirement period, and that is exactly WHY the EPF ACT prevented any early withdrawal from the EPF's Old Age Savings - not until they reached their retirement age.
If workers and Malaysians had REAL short-term financial needs like payment of outstanding debts, etc - the government should have HELPED by making some financial provisions - one off payments to settle personal debts, etc ...after all did not Anwar's government pay off FELDA settler's debt(or was it FELDA's debt) for with Anwar, a lack of clarity in his words makes it difficult to conclude whose debts was paid by the government - FELDA Settlers(personal debts??) or FELDA's debts. If the government settled personal debts of the FELDA Settler families, could they also be settling debts of OTHER Malaysians so that they do not have to withdraw from their 'old age savings' to pay off their debts? Why pay off debts of some but not others?
Prime Minister Datuk Seri Anwar Ibrahim over the matter of the RM8.3 billion Federal Land Development Authority (Felda) settlers’ debt write-off will begin on Dec 2 next year.
Anyway, the point is that the Malaysian government should not have allowed Malaysians from taking out any monies from their personal EPF/KWSP old age savings. If financial assistance needed, then the Malaysian government should have found another way - maybe the immediate provision of interim loans(with no or very low interest) or outright financial assistance > why allow Malaysians to take out from their 'old age savings' when the government too currently have no idea how to ensure the livelihood of senior citizens above 55(or 60) until their death. The hope that children will take on the burden for their parents/relatives is really not practical or feasible today.
With regard senior citizens, the proposal that the government at least set up DAY CARE Centres for the aged in every town, so the family can sent old folks to these care facilities, go to work and pick their old folks up and return home. Without such day-care facility, one adult will have to stay at home to look after the elderly/sick, when he/she could have been out earning an income ...Malaysia also still does not pay persons who stay home looking after the elderly a CARE INCOME.
How much did the Malaysian Government(with about RM1.5 Trillion Debts) spent for the MERDEKA celebrations? for PM Anwar's many overseas trips? Malaysia is spending more than it earns annually - and so the DEBT burden's will remain on all of us, our children, etc after PM Anwar is no more. We need a government that CARES...
6.3mil people with less than RM10,000 in EPF
The sum amounts to less than RM42 per month over a period of 20 years, Anwar Ibrahim told the Dewan Rakyat.
With savings of less than RM10,000, members are expected to have a retirement income of less than RM42 per month over a period of 20 years, he said.
In April 2020, before the introduction of special withdrawals related to Covid-19, there were 4.7 million EPF members (or 37%) whose accounts had less than RM10,000, said Anwar in his reply to Zulkifli Ismail (PN-Jasin).
Zulkifli asked about the government’s initiatives to deal with the problem of insufficient retirement funds among Malaysians.
Anwar said the government has increased the limit on matching contributions to RM500 per year under the i-Saraan programme that allows self-employed EPF members or those without a fixed income to make voluntary contributions.
He said the i-Suri programme, designed for housewives listed in the eKasih database, now permits those under 55 to receive a matching contribution incentive.
Anwar also said EPF has introduced several strategies to further assist its members such as an option to contribute above the standard 11% rate and the allowance for voluntary contributions, with an annual limit set at RM100,000, effective from June 1, 2023.
Earlier today, deputy finance minister Ahmad Maslan said a flexible third EPF account will be implemented from April next year.
Ahmad said the funds in the third account will only be able to be withdrawn for emergencies, adding that the ministry is working on defining what constitutes an emergency.
Ahmad also brushed off repeated calls for yet another EPF withdrawal scheme, saying the third account is a new formula to help those in need.
Perikatan Nasional had been pressing for another round of EPF withdrawals, and made it one of the coalition’s pledges under its manifesto for the general election last year.
Three EPF withdrawal schemes were introduced by the government of Muhyiddin Yassin, who is the PN chairman, during the Covid-19 pandemic. A fourth round was allowed after Ismail Sabri Yaakob took over as prime minister.
A total of RM145 billion was reportedly withdrawn during the pandemic by 8.1 million EPF members. - FMT, 20/11/2023
Government has no plans to introduce a universal pension scheme
- Nation
-
Wednesday, 21 Aug 2024
PETALING JAYA: The government has no intentions to implement a universal pension scheme due to the related costs, says Nurhisham Hussein.
The Prime Minister’s Office (PMO) senior director of economics and finance, said that Malaysia’s retirement system has significant gaps, with many Malaysians relying on their children for retirement support.
Nurhisham, formerly the chief strategy officer at Employees Provident Fund (EPF) noted that shrinking family sizes mean fewer working adults are available to support retirees.
"We are considering several reforms, but implementing them quickly is unlikely.
"We still need to garner public support, and a full-scale national pension scheme is currently unaffordable," he said.
Speaking on BBC Radio 4’s "Crossing Continents" programme titled "Ageing without a Safety Net in Malaysia," Nurhisham confirmed that he was referring to a universal pension scheme.
Such schemes in countries like the Netherlands, New Zealand, and Sweden provide a minimum income to all citizens upon retirement age, funded through taxation.
Although proposed to address low EPF savings among Malaysians, Nurhisham cited the country’s relatively low tax levels as a barrier to funding such a plan.
"Culturally, we haven’t prioritised community sacrifice and our relatively low tax rates limit our ability to fund a universal pension scheme," he added.
Last
November, Prime Minister Datuk Seri Anwar Ibrahim revealed that 6.3
million EPF members, or 48% of those under 55, have less than RM10,000
in their retirement savings—equivalent to less than RM42 per month over
20 years. - Star, 21/8/2024
Reforms needed for pension scheme, says UM professor
- Nation
-
Thursday, 06 Jun 2024
PETALING JAYA: Reforms are needed for pension schemes so that all aged Malaysians have income security, says Universiti Malaya’s Social Wellbeing Research Centre director Emeritus Prof Datuk Norma Mansor.
"Currently, around 50% of the workforce is not under the Employees Provident Fund (EPF) scheme, and women have a lower participation rate in EPF because many take part in informal jobs and caregiving roles," she said.
The multi-tier pension scheme she proposed would entitle every Malaysian to a retirement income.
The first tier of this pension scheme can be funded through taxation, she said.
"We should push for the government to broaden the tax base and better rationalise subsidies so that income can be redistributed to those in need.
"The second tier would involve contributions from every adult Malaysian to a national solidarity fund, effectively providing a cross-subsidy from the rich to the poor," she said.
She said that contributions by the people would be capped at certain amounts, for example, from a minimum of RM60 to a maximum of RM400.
"For those who cannot afford it, the government should contribute on their behalf, similar to the approach taken in Japan," Norma said.
The third tier would resemble the current EPF model but introduce flexibility, including a mix of fixed monthly payouts and lump-sum withdrawals.
Mansor said that, as an ageing country, changes to the current model are needed to ensure social security for the elderly.
"I am optimistic that we will move there, and continuous efforts to push for reform are needed," she said.
On Tuesday (June 4), Prime Minister Datuk Anwar Ibrahim said that only 29% of Malaysians had pension-like income upon retirement and spoke of the need for serious reforms to the national pensions framework.
He
said the lump sum nature of the EPF had caused many aged individuals to
have insufficient funds, with EPF data showing that one in four members
exhausted their savings within five years after reaching withdrawal age. - Star, 6/6/2024
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