Thursday, January 28, 2016

EPF:- Workers suffer again BN Government proposes reduction of EPF contribution?

Najib Tun Razak and the BN government is now proposing that the workers contribution to the Employees Provident Fund(EPF) will be reduced by 3%. 

Sounds great - but wait a minute. This would mean that the amount of monthly monies paid into the Worker's EPF Account would reduce...and this is not right as the EPF is the 'Simpanan Hari Tua' (Savings for old age) - this money is to sustain the livelihood of the worker and his family/dependents in their old age when the worker is no longer able to work and earn....until the day he/she dies.

Public servants generally will get pensions right up to the day they die, and thereafter pension will still be paid out to their spouses, and children who have yet to reach the age of majority. These workers, under the EPF scheme, do not have this guaranteed pension payments. It will be the money that they have in their EPF accounts that is expected to support them in the old age.

As it is, it has already been acknowledged, that for most workers in Malaysia, the amount of money that will be in their accounts will now be insufficient to be able to provide for the livelihood of the worker in his old age, In fact, I believe the government is trying to deal with this very real problem with some form of a 'pension scheme' - but it is all work in progress.

So, this BN government is asking poor workers to reduce the save for their old age - and spend that money now. This is so irresponsible.

If Najib is saying that the workers mandatory contribution is reduced by 3%, whilst the employer's contribution is increased - which results in the same amount of monthly contribution to the EPF accounts, then it is OK.

If Najib is saying that the worker's mandatory contribution is reduced by 3%, and the government will bank in the said 3%- which results in the same amount of monthly contribution to the EPF accounts, then it is OK.

But certainly not, this 'save less for your old age' proposal is absurd, and at the end of the day, it is workers under the EPF/KWSP scheme that loses out in the long run.

WHY? So workers will have more money to spend to help the Malaysian economy. This logic was also used in the past by the BN government in the past - when they started allowing workers to take out money from the 'old age savings account'(EPF Account) to spend now for houses, etc...Then also, the rationale, I believe, was to ensure that more money will be spend now by these workers for the sake of the Malaysian economy... 

How much really should a worker be having in his/her EPF account when he/she reaches 55/60/65 to allow him to be able to survive and sustain his/her and dependents livelihood until he/she dies? RM250,000 - RM300,000? Well, we know that for most workers, they will not have even that amount. Factor in the ever increasing cost of living, and also the other monthly loan-repayment obligations. Some workers who purchased homes, will still be repaying loans even after they reach the age they can withdraw from the EPF (old age savings account).

A perusal of the workers, who have already withdrawn from the EPF account, will also show that many of them now do not enough money to sustain their lives until they die.

Hence, Najib's proposal is short-sighted and do not take into account the future lives of workers and their families.

Remember, the EPF scheme affects all private sector workers - and, this BN government, has been shown to be not bothered. While, government employees minimum wages are raised now to RM1,200, the private sector minimum wage will be raised maybe in the middle of the year to just RM1,000. Government employees have COLA[Cost of Living Allowances], private sector workers do not have this. Government employess enjoy access to very low interest loans, but private sector workers do not.

Government employees generally enjoy regular employment until retirement - but in the private sector the government is allowing the unfettered rice of precarious employment practices - short fixed term employment contracts, the unjust contractor for labour systems,...

Now, Saudi Arabia allegedly gave Najib a RM2 billion 'donation' - but he allegedly returned a large amount of it to the donor - that could have been donated by Najib Tun Razak to the government...?

Our target must be that the workers earn MORE and that is sufficient for the livelihood, and for their spending now. They should not be forced, to reduce the contribution to their 'savings for their old age'.

It is the government itself that is to be blamed for the increase of cost of living - so, what needs to be done is to reduce that, so the monies earned by workers now is sufficient...

When a worker takes a loan, he pays high interest to the bank - but if he saves his money in the bank, he receives such low interest. Then, the government allowed banks to impose other charges for withdrawals, for bank statements, etc .. In short, it looks like the Malaysian BN government discourages savings and encourages spending...and for the future of the worker and their family, this smells trouble...

So, Malaysia must increase subsidies for the basic minimal items required by the worker and family for survival. 

Maybe, the government should abolish road tols... reduce water and electricity rate...

Maybe, the recent increase in MP, Senators and ADUNs allowances should be reduced... PM and Ministers pays should be cut. GLC CEOs, Directors and

Sadly, the rich feels it not - but please do consider the majority who are poor... 

Worker earning RM1,000 - with reduction of EPF contribution by 3%, he will take home an extra RM30 a month, RM360 a year. 

RM360 a year - with, say an EPF interest of 6%, he gets  RM21 in interest per year.

So, happily the government said that all this will be spent - RM8billion. Hello, that is the workers' money not being saved but spent... 

REVISED BUDGET 2016: Workers’ EPF contribution cut 3%

EPF contribution by employees will be reduced by 3% under the revised Budget 2016. – The Malaysian Insider file pic, January 28, 2016.EPF contribution by employees will be reduced by 3% under the revised Budget 2016. – The Malaysian Insider file pic, January 28, 2016.


Prime Minister Datuk Seri Najib Razak announced the following measures under Putrajaya's recalibration of Budget 2016:
  • EPF contributions by employees to be reduced by 3% from March this year until December 2017. Contribution rate by employers, however, remains the same.
  • Najib said the reduced contributions would boost spending by an estimated RM8 billion.
  • Tax exemption of RM2,000 for Malaysians earning RM8,000 and below for the financial year of 2015, a move that would affect two million tax payers.
Food and cost of living
  • To reduce the cost of daily food items, approved permits (APs) for agricultural products, including coffee beans and meats, will be liberalised.
  • The Federal Agricultural Marketing Authority (Fama) will open MyFarm outlets to sell produce direct from farmers to consumers at prices between 5 to 20% cheaper.
  • Domestic Trade and Consumer Affairs Ministry to increase the number of affordable shopping outlets like hypermarkets.
  • RM50 incentive for every metric tonne of rice for paddy farmers.
  • MyBeras programme introduced – 20kg of free rice for every registered hardcore poor household.
  • GST to remain at the same rate (6%).
  • Cash aid programme BR1M will be continued: "The government will not compromise on what is right for the country and people," Najib said.
  • For new housing developments, sale of houses priced not more RM300,000 to be limited to first-time house buyers.
  • Bank Simpanan Nasional and Bank Rakyat to offer assistance packages at 4% for homes costing RM35,000 under the People's Housing Projects or PR1MA.

Human resources
  • 30% of levy contributed to the Human Resources Development Fund will be used to improve workers' skills and competency, including for those retrenched.
  • Government to continue fine-tuning foreign worker management system. Foreign workers' levy will be clustered into two categories but will not include domestic helpers.
  • To implement a relocation and rehiring programme for undocumented workers so that they can get valid work permits.
Datuk Seri Najib Razak addresses senior government officials in Putrajaya today to announce changes to Budget 2016. – The Malaysian Insider pic by Afif Abd Halim, January 28, 2016.Datuk Seri Najib Razak addresses senior government officials in Putrajaya today to announce changes to Budget 2016. – The Malaysian Insider pic by Afif Abd Halim, January 28, 2016.Improving revenue collection
  • Government to increase action against tax evaders; late-filing penalties to be reduced.
  • Sale of alcohol and cigarettes on tax-free islands to be limited to licensed, tax-free stores, in order to reduce leakage of up to RM1 billion in revenue.
  • Tighten taxes on exemptions for imported vehicles on tax-free islands.
  • Optimise revenue from telecommunications by redistributing bidding processes.
  • Develop government-owned strategic areas through a bidding process. 
Development spending
  • Priority to be given to affordable housing, hospitals, schools, roads, public transportation and security.
  • Non-physical projects and projects that are still at planning stage will be postponed. This move is expected to save the government RM5 billion.
Civil service and government-linked companies
  • Government to keep its promise of July 1, 2016 additional salary increase for civil servants.
  • Government will not touch civil service emoluments and will not stop the services of contract staff in the public sector.
  • GLCs urged to reduce salary gap between top management and staff. This will be monitored by the Economic Planning Unit.
  • Government to keep its promise of July 1, 2016 additional salary increase for civil servants.
Education and scholarships
  • Government to continue the following four Public Service Department (JPA) scholarships for 2016:
1. The National Scholarship Programme (Program Biasiswa Nasional) will allow 20 top SPM-scorers to pursue their studies in universities abroad;
2. The Engineering Special Programme (Program Khas Kejuruteraan) for 200 students to pursue their studies in Germany, France, Korea and Japan;
3. The Bursary Programme (Program Lepasan Bursary) for 744 students to pursue their undergraduate degrees in public and private higher education institutions in the country; and
4. Scholarships for 8,000 students to pursue undergraduate degrees locally.
  • The National Higher Education Fund Loan (PTPTN) allocation of RM5 billion will remain.
  • Offers to enroll in MyMaster programme to increase by 15,000, MyPhd by 5,000 and IPTA (public universities) Academic Training Scheme by 300. Government to boost allocation by RM300 million.
  • MyBrain1 and the Bumiputera Academic Training Scheme will be continued. – January 28, 2016.
- See more at:

Thursday, 28 January 2016 | MYT 12:11 PM

Najib presents revised 2016 Budget

PETALING JAYA: Prime Minister Datuk Seri Najib Tun Razak (pic) has announced a revised Budget 2016 to optimise the country's developmental and operational expenditures in the face of slower economic growth.

The revised budget will include precautionary and proactive measures in managing national revenue and expenditures, while ensuring that the well-being of the people remained a priority.

Najib said the recalibration is necessary due to a slump in global oil prices and a slower economic growth in the United States and China.

When Budget 2016 was unveiled in Parliament last October, the crude oil price was at US$48 (RM203) per barrel.

However, the current price per barrel stands at US$30 (RM127), a sharp fall since the Budget was presented.

- The 2016 global economy expected to be more challenging and economic groweth expected to fall from 3.6% to 3.4%.

- Malaysia not alone in facing global economic challenges. Current crude oil price stands at US$31 (RM131) per barrel.

- Latest developments indicate that the global economy is at a very volatile stage and requires a proactive move to revise Budget 2016.

- We are not in a recession, neither are we in a technical recession.

- Eleven recalibrated measures announced.

- 1. EPF contributions by employees to be reduced by 3%. This is expected to increase private sector spending by RM8bil.

- 2. Tax relief of up to RM2,000 to those with income RM8,000 a month or lower. Two million taxpayers to benefit.

- 3. To reduce cost of living, Govt to liberalise APs for agricultural products including coffee beans and meats.

- 4. Domestic Trade, Cooperatives and Consumerism Ministry ordered to increase enforcement and action against unethical traders.

- 5. 30% of contributions to the human resource development fund to be utilised for skills training, including those who are unemployed.

- 6. MyBeras programme to be introduced until Dec 2016. Each hardcore poor family will be given 20kg of rice every month.

- 7. The Government will update the management system of foreign workers, with levies clustered into two categories, not including foreign maids.

- 8. Government will exercise prudent spending on supplies and services and to continue with grant rationalisation.

- 9. Development budget to focus on projects and programmes that place the people first, have high multiplier effect and reduce imports.

- 10. Development financial institutions and Government venture capital funds to increase allocations by RM6bil for benefit of start-ups and SMEs.

- 11. GLCs urged to implement initiatives to reduce the income gap between senior management and workers, to be monitored by the Economic Planning Unit.

Najib said Thursday's recalibrated budget was based on the approach of "shared responsibility" by certain segments of society.

He said lower-income groups will not be affected, and continue to benefit from measures such as the 1Malaysia People's Aid (BR1M).

"The present rate of the Goods and Services Tax (GST) will also be retained at 6%. The Government has no plans to increase this," said Najib at the Putrajaya International Convention Centre (PICC).

He also said that Malaysia would not resort to imposing capital controls and pegging the Ringgit, such as was done during the 1997-1998 financial crisis.

"The Government remains committed to maintaining the fiscal consolidation measures for 2016, which is to achieve a GDP target of 3.1%.

"Our country's debt will be reduced and will not exceed 55% of the GDP. The Government also has no plans to impose capital controls and peg the Ringgit," he said.

Najib also made mention of the Trans-Pacific Partnership Agreement (TPPA), which had been debated at a special Parliamentary sitting on Tuesday and Wednesday.

He provided assurances that with the signing of the free trade agreement, there would be no compromise on the country's sovereignty.

"The Bumiputera agenda remains intact. In fact, it is no longer a national agenda. With the TPPA, it has reached a global scale," he added. - Star, 28/1/2016

1 comment:

Yap said...

Thank you for a good write up.