Group wants employers to increase EPF for poorer workers

The Social Protection Contributor Advisory Association Malaysia (SPCAAM) has reminded the Employees’ Provident Fund (EPF) that its dividends need to be measured against factors such as the performance of its investments and the rising cost of living.

In a statement today, SPCAAM international labour adviser Callistus Antony D’Angelus said the government must not allow the lower-income group to withdraw more of its EPF savings as this would have dire implications for their long-term retirement security. 

He suggested that employer contributions to this sector be increased instead.

“The dividends declared by the EPF, which is at 5.5 percent for conventional savings and 5.4 percent for Syariah savings may well be seen as healthy and reasonable, when compared to funds of a similar nature globally. 

“This though, has to be measured against factors such as the performance of EPF’s investments and the rising cost of living. 

“In the case of the latter, it has been acknowledged by the present government that the cost-of-living crisis is acute for the lower-income group in the country,” said D’Angelus.

He said that over the past few months, the situation has been exacerbated by the weakening ringgit, which has the effect of increasing the cost of imports, in turn further increasing the price of essential goods and services.

“Where the lower-income population is concerned, it has been a downward spiral for decades now, where inequitable and poor policies have widened the income divide and caused irreparable damage to Malaysians in the B40 and M40 communities.

“EPF has a social responsibility, where its primary consideration has to be the social protection of its contributors.

“EPF itself, through its chief executive officer Ahmad Zulqarnain Onn, has expressed its concern about retirement savings for Malaysians with only 33 percent of its active contributors having recorded basic savings of RM240,000 as of last year,” he added.

Govt should not have allowed withdrawal

He said that it was not an issue with EPF alone and has to do with the broader issue of income and wealth distribution in the country. 

“Wage and employment policies are a contributor as well, with the system built in favour of big business.

“Allowing EPF members hard pressed for cash during the Covid-19 pandemic to withdraw from their savings was a wholly immoral and detestable act of the previous government.

“The government should have stepped in and provided aid to those from the lower income group instead,” he said.

D’Angelus said that while the EPF has considered setting up an Account 3, this should not be allowed for unilateral withdrawals by contributors as it would only serve to worsen the problem of the inadequacy of retirement savings. 

“The economic and social costs will be greater down the road. 

“If the intent is to allow for the withdrawal in times of crisis, Account 3 should be funded through additional contributions from the employer.

“It is time that the country reverses the trend of favouring businesses, in particular big businesses, at the expense of the common people,” he added. - Mkini