Tapping into workers savings is irresponsible

 

MP SPEAKS | The decision to impoverish workers is political and not fiscal. It’s ironic when we have to teach the government about being responsible.

The government tapping into worker's savings to support its social protection policies is being irresponsible and complacent.

In other words, workers are asked to dig into their pension savings to help manage their current financial challenges, when they are actually in dire need of state support.

Earlier in the year, the government introduced the i-Lestari scheme which allowed contributors to withdraw RM500 per month from their Account 2 of the Employees Provident Fund (EPF) for a period of 12 months, benefiting about 4.7 million people.

Budget 2021 proposes a similar approach, with RM500 withdrawal for a period of 12 months from Account 1 to help reduce the financial burden of workers. But, the numbers don’t favour the proposal by Prime Minister Muhyiddin Yassin’s administration.

For example, in 2018, EPF estimated that 38 percent, or 2.8 million of 7.36 million members, do not have enough money in their Account 2 to withdraw the maximum RM500 a month, or RM6,000 per year.

And a further 18.8 percent of EPF members, or 1.38 million contributors, did not have a total of RM6,000 saved up as of end-2018, to take advantage of the i-Lestari scheme.

About 65 percent of EPF contributors aged 54 and below only had savings of less than RM50,000. And approximately 60 percent of retirees used up their EPF savings within three years of retiring.

This gloomy reality indicates that a significant number of workers are in poverty. This means a further reduction in their savings will lead to a complete loss in financial security upon retirement. But the government chooses to further burden people who are financially struggling at this time.

The combined withdrawals will have an impact on the future earning capacity of workers through the loss of dividends plus the compounding interests in lost savings. It will also wipe out financial security for old age.

Let’s get this straight though: it’s not like the government doesn’t have the funds to support workers.

It has no qualms allocating millions of ringgit for projects that can be considered propaganda and political in nature, putting up buildings to promote individual personalities, or appointing a 70-person cabinet.

Can the government, therefore, revamp this budget?

For a start, it can transfer funds to support workers by eliminating or re-evaluating the following budget proposals:

1. Jasa’s allocation amounting to RM85.5 million

2. Penggerak Komuniti Tempatan amounting to RM8.63 million

3. PMO “Project Khas” amounting to RM1 billion

4. Ministry of Finance “Pelbagai Suntikan Modal” amounting to RM13.61 billion

So, you see, the government has the funds. Does it have the political will to support the people who need it most?

Or is Muhyiddin‘s administration taking the easy way out by transforming EPF savings, which is supposed to be a retirement fund, into an emergency fund?

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CHARLES SANTIAGO is the DAP MP for Klang. - Mkini

The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.