MANY have expressed their disappointment in the Employees’ Provident Fund, particularly over the requirements for withdrawal. They were different from the announcement made by the Finance Minister during the budget. Many people have been flooding EPF to get an explanation or check on their eligibility. The people cannot be blamed because they are frustrated and under financial stress.

Without adequate aid from the government, many have no choice but to dip into their savings.

However, I agree with EPF that approval for withdrawal should be conditional on the applicant meeting the some requirements instead of being blanket for all.

EPF mandate

Firstly, we should understand EPF’s principal mandate, which is to help Malaysian workers save for retirement. The current withdrawal arrangement does not align with its agenda/objective. It is exactly the opposite. Imagine if everyone were allowed to make a withdrawal. Many will take the opportunity to withdraw funds which will subsequently impact their retirement in the future. Many could lose their money to scams or unwise investments.

The fact that EPF is going against its mandate should make us question the government’s role in this situation. It should be the government’s responsibility to assist households with cash assistance until the pandemic is over. How is it that the government can bail out Malaysia Airlines and pay off 1MDB debt, but when it comes to the people, they have no resources for aid. Why not ask these corporate institutions to utilise their shareholder’s savings fund instead of providing them with assistance?

Compare the EPF’s requirements for withdrawal with the banks’ for a loan moratorium. 

Both specify that the applicant’s income must have been adversely affected by Covid-19 to qualify.

Previously the argument against a blanket moratorium was that it would cause financial loss to the financial system.  Why can’t we apply the same argument for EPF?

We have more reason to take care of EPF, the 15th largest of such funds in the world, which has consistently yielded competitive returns. The fund nearly always outperforms itself except during 2008 due to the global financial crisis. Hence, it is in our best interest to make sure that EPF minimises its risk to continue contributing to the wellbeing of Malaysians. 

Malaysians do not have enough retirement savings

The data is deeply worrying. About two in 10 have less than RM6,000 in their EPF accounts, while half have an average savings of only RM12,000. Figures from the Human Resources Ministry show 99,696 were laid off between January to November, 75% of them in the B40 group earning RM4,000 and below a month. Imagine the lowest income earners losing their jobs and simultaneously utilising the little retirement funds they have. What is their future when they retire?  

Malaysia’s demographics are also changing. The World Bank forecasts that Malaysia will reach ageing nation status by 2035. The low retirement age will lead to a life expectancy-pension gap, which at 19.2 years is higher than that of other countries in the region. Only half of those in the labour force are contributing to EPF, leaving the other half without age pension coverage. This is a catastrophe for the future. Hence it has been recommended that Malaysia re-examines its retirement policy.

The pandemic has caused great difficulties in the lives of many but if nothing is done now, it will cause greater difficulties that can affect the next generation’s wellbeing too. If we don’t manage the EPF, what will be left of our future? EPF is not a corporate organisation where the profits are enjoyed by a few, but one whose earnings are for all Malaysians. If we don’t protect EPF, who will? – December 7, 2020.

* Suzanne Lee reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.