Short-sighted solution to an endemic problem

 

Employees will soon get to dip into their already depleted retirement funds yet again.

The Employees Provident Fund (EPF) will begin accepting applications from contributors for another withdrawal from April 1.

The government refers to it as a “special” withdrawal… seriously. It’s not an April Fool’s joke.

This will be the fourth such withdrawal scheme after i-Lestari, i-Sinar and i-Citra, all of which were prompted by the economic impact of the Covid-19 pandemic that began two years ago.

Of course, there are conditions attached. Only those aged 55 and below get to enjoy the new benefit and the maximum withdrawal allowed is RM10,000.

The long-term impact of such a scheme has yet to manifest itself, but it does not take a rocket scientist to realise that it will mostly be negative.

Already, a huge proportion of contributors have little in their nest egg to shout about.

According to finance minister Tengku Zafrul Aziz, 6.1 million of the estimated 14 million contributors have less than RM10,000 in their savings.

The next round of withdrawals will wipe them out.

Worse than that, 3.6 million of them do not even have enough in their savings to go for the maximum withdrawal allowed.

There is the potential that by the end of April, as many as six million employees will have to start from scratch to rebuild their personal reserves. For those in the late stage of their careers, this is a frightening prospect.

Most will have little choice but to continue working indefinitely if they are lucky enough to get an extension on their usefulness to the company.

Prime Minister Ismail Sabri Yaakob has advised members to “think carefully” when making the decision to make that additional withdrawal.

But it is difficult to ponder on tomorrow’s pitfalls when one is desperate to meet today’s financial needs.

Many are bound to use the money to repay debts – from credit cards to loan sharks. But this is only temporary relief.

Short of an extra revenue stream, or a higher income from their current jobs, they will soon end up in debt again.

Of course, we cannot rule out the possibility that some will be tempted enough to spend that extra money indiscriminately… perhaps on a new smartphone that they have been eyeing for a while, or a new TV set to replace the one that is broken.

Ultimately, this is a manifestation of a much bigger problem. For a start, the average Malaysian worker is not paid enough to get by, much less put aside some money for retirement or for a rainy day.

Many end up borrowing just to make ends meet. How else do loan sharks do so well?

It may already be too late for the seniors, but there is time yet to ensure that the future generation of workers do not meet a similar fate.

We just need to realise that short-term gain is no relief for long-term pain. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.