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Monday, November 30, 2020

Hard lessons in store for those who take our EPF savings, says planner

 

According to EPF statistics, 50% of members above 55 exhaust their savings within five years. (Freepik pic)

PETALING JAYA: Malaysians who withdraw money from their EPF retirement account will learn the consequences of their actions the hard way, according to a licensed financial planner.

The planner, Robert Foo, said there would be long-term effects of withdrawals which would not benefit contributors, especially if the EPF sells its assets to make available billions of ringgit for withdrawals.

Earlier this month the government allowed EPF contributors to withdraw up to RM10,000 each in 2021 from the EPF Account 1, which contains retirement savings.

Foo said the idea of allowing contributors to withdraw their hard-earned money to tide over difficult times was “fundamentally flawed”. Instead, it is the government which should help the people.

He said the government should reduce operating expenses, such as cutting the salaries of ministers in the “very large” Cabinet and MPs, or allocations for the special affairs department (JASA), and channel the money to aid programmes.

A capital gains tax could be levied on the super-rich, even if the tax rate was a small one.

“Now we are allowing the poor who are already struggling to make decisions which are bad for them in the long run,” he said, accusing the government of being “very irresponsible” by allowing people to dip into their retirement savings.

“We know full well that many have a problem with managing their funds,” said Foo, who runs MyFP Services Sdn Bhd.

Foo said from his experience, many do not actually keep track of their savings and spend without a plan. It is only later when they have no more incomes, do they realise how much or how little money they have for retirement. “By then it will be too late.”

Last year, The Edge reported EPF statistics as showing that two out of three EPF members aged 54 have less than RM50,000 in retirement savings, while 50% of members above the age of 55 exhaust their savings in five years. - FMT

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