Saving face is not a good reason for EPF withdrawals

 

Those who feel the government should allow contributors to withdraw from their EPF savings argue their point in this way: We need the money now. What is the point of securing our lives in the future if we cannot survive the present?

This argument postulates that the withdrawal of EPF savings is a matter of survival; that if people are not allowed to dip into their pension funds right away they might starve, become homeless, or be unable to afford medication or send their children to school.

But will these people really be unable to survive if they do not dip into their EPF savings? They might still.

In many ways, the clamour to be allowed yet another EPF withdrawal might have more to do with the desire to save one’s face than it has to do with survival.

Most of us are given to assume that our standard of living will continuously improve with time. If we are a waiter today, we will expect to be the manager someday. If we own a motorbike today, we will expect to own a car someday. If we live in a flat, we will expect to live in a house in the future.

No manager who lives in a house and drives a car expects to become a waiter who lives in a flat and rides a bike in the future. If such a thing were to happen, then, rather than treat that change as part and parcel of life, most of us would likely take the decline in our standard of living as a loss of face.

From a systemic and functional point of view, a loss of face is not a critical loss. If a manager becomes a waiter again, or if you switch from riding a car to riding a bike, the restaurant where you work is not going to close, nor will the economy of the country be dealt with a crippling blow.

A person’s quality of life might not necessarily decline either.  Even if you no longer have a car, that does not mean you cannot eat nutritious food, sleep well and maintain a living condition conducive to your health.

A decline in one’s standard of living may not result in a corresponding drop in one’s quality of life.

A loss of face, however, will probably have a deep effect on one’s psychological wellbeing. It is no surprise that during the pandemic, the number of people who suffered from mental health issues shot up drastically.

The pandemic caused many people’s standard of living to drop, which then caused a corresponding spike in the number of people who suffered from mental health issues.

When the economy is expanding at a comfortable pace, the expectation that our standard of living will rise is manageable. Almost everybody’s standard of living will swing upwards in an economy that is doing well.

When the economy slows down or contracts, however, the expectation that our standard of living will keep improving with time will be difficult to meet.

There is a possibility that many of the people hoping for the government to approve a fifth round of EPF withdrawals are those who intend to use the money, not for the sake of survival, but to prop up their declining standard of living in a difficult economy.

The number of people who are hungry or homeless today might not actually be significantly greater than the numbers in the pre-pandemic days.

Yes, many sought food aid during the white flag campaign, but how many among them did so simply because they were trying to defend their standard of living?

Perhaps, they needed food aid because they ran out of money after paying their car instalments, which they needed to do to defend their standard of living.

In life, when we have to choose between losing face or surviving, many of us would probably choose to starve and own a car rather than be a bike-owner who can afford meals.

Face is the single most important factor in the lives of many people.

People who are genuinely facing survival issues – people truly so destitute that they really cannot afford food and shelter – do not clamour for anything. They would probably just give up on life.

The people clamouring to make an EPF withdrawal today are likely to be still very much involved in day-to-day life. They probably feel that if they can just defend their lifestyle for a little while longer – instead of selling their car and buying a bike, or giving up their house and  moving into a flat – they would not have to lose face until they figure out how to rise back up in life.

Yet, the economy must pick up for one to rise back up in life. There is every reason to believe that it may not.

Allowing people to withdraw their EPF savings just to defend their standard of living would just prolong their misery. It might be better simply to tell these people that they should bite the bullet and lower their standard of living today, to prepare for worse things to come.

Maybe it is time the government admits that things may not get better in the foreseeable future. If the government leads the way and changes the way we imagine the future, we might be more willing to accept a decline in our standard of living even if it comes with a degree of resignation.

Then we might realise we need not withdraw from our EPF account after all. - FMT

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