PETALING JAYA: An economist has called for an overhaul of the Employees Provident Fund (EPF), saying it must become more than a place to “keep and grow” retirement savings.
Barjoyai Bardai of Universiti Tun Abdul Razak told FMT that there was no guarantee now that an employee’s savings would be enough for his or her retirement.
He said reports that one third of EPF holders had emptied their accounts were “alarming” and this was why an overhaul was needed.
Recently, former EPF CEO Tunku Alizakri Alias revealed that 30% of EPF members had withdrawn almost all their savings, with some only keeping RM100 in their accounts.
Barjoyai said the move to allow people to withdraw their savings to cope with the Covid-19 pandemic did not help, as there were bound to be those who took out more than they had to.
“The EPF needs to function like a real pension fund rather than a bank offering fixed deposits.”
It should be helping people plan for their retirement, taking into account salary levels and what they would need to retire.
“To me, the most important reform would be for EPF to have an endowment function. Instead of allowing people to empty their accounts after retirement, they should instead be paid a certain amount each month like a salary.”
This, he said, would better ensure the sustainability of funds, particularly for those earning low-wages.
Meanwhile, financial planner Robert Foo said that if EPF holders were falling back on their withdrawals now, the problem was symptomatic of a deeper illness.
“Malaysians are too fixated with putting out short term fires to see a long term goal,” he said. “The people who are emptying their savings now, in fact, didn’t have any long-term goals to begin with.”
In this regard, he said there was not much EPF could do on its own to help its contributors see much farther than the pandemic. - FMT
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