Old-age poverty a big threat after Covid-19 withdrawals, says EPF

 

Almost half of EPF members below the age of 55 have critically low savings because of withdrawals they made under the pandemic assistance schemes.

KUALA LUMPUR: The Employees Provident Fund (EPF) has expressed concern that the majority of its members are now at risk of falling into old-age poverty as Covid-19-related withdrawals have caused insufficient savings for a dignified retirement.

EPF chairman Ahmad Badri Mohd Zahir said this would not only be detrimental to individual livelihoods, but would also be challenging for the economy and its fiscal health.

He said 48% of members below the age of 55 had critically low EPF savings. This was a 28% increase in members reaching critically low EPF savings from before the pandemic.

“With Malaysian life expectancy at 75 years, and assuming EPF members start to draw down their retirement savings at age 55, the savings would need to be sustainable for at least 20 years.

“The median savings for EPF members below the age of 55 stands at RM13,000, which translates to RM54 a month for their retirement years,” he said in his speech at the ninth International Social Wellbeing Conference (ISWC) 2021, held both virtually and physically today.

Badri further said that the median savings of EPF members at age 54 was at RM38,000, which translated to RM159 a month for the next 20 years. In order for members to recover the loss of savings from the pandemic-related withdrawals, they would need to work an extra four to six years.

As of Oct 31, 2021, a total of RM101.1 billion was withdrawn under the i-Lestari, i-Sinar, and i-Citra pandemic assistance schemes.

This was equivalent to 22% of the total RM530 billion of the government’s stimulus programmes for Malaysians, he said.

On the issue of adequacy, Badri said social protection was a human right for all which included all forms of work, formal and informal sectors.

Roughly, only three out of 10 adults in Malaysia are covered by any form of social protection, such as the government pension scheme and EPF coverage.

“We are looking at only 7.5 million out of the 23.5 million working-age population in the country.

“The pandemic has also shifted the employment landscape towards informality. The growth of the self-employed and informal bracket is expected to increase from the current 5.7 million to 8.8 million in 2040,” said Badri.

To address these issues, he said the country would need far-reaching solutions covering an effective safety net programme.

“EPF is truly supportive of the government’s Budget 2022 initiative to extend the i-Saraan programme to include those from age 55 to 60.

“This will make i-Saraan more attractive to those in the informal sector to save for their retirement,” he said.

The Caruman Sukarela Insentif Suri, or i-Suri, which has been integrated with the Social Security Organisation (Socso) and renamed “Kasih Suri Keluarga Malaysia”, meanwhile, gives housewives and widows registered under the e-Kasih system access to social security. - FMT