BUDGET 2022 should have given focus to replenishing Employees Provident Fund (EPF) savings, as people continue to tap into them to offset Covid-19 hardship, an economist said.

The announcement that the government will be extending the minimum statutory contribution rate of 9% (instead of 11%) until June was unwarranted, according to Lee Hwok Aun, a senior fellow at Iseas–Yusof Ishak Institute, Singapore.

He said it is time the government move towards replenishing EPF savings in tandem with other steps taken towards economic recovery and Covid-19 endemicity.

“I think it is not warranted to extend the reduction in contribution rate to 9% until June 2022, especially after the i-Sinar and i-Lestari (withdrawals),” Lee said, referring to programmes allowing the withdrawal of retirement funds introduced last year.

He was speaking during a webinar hosted by UOB Kay Hian Wealth Advisors on Friday’s Budget 2022 speech by Finance Minister Tengku Zafrul Tengku Abdul Aziz.

However, Malaysian Employers Federation (MEF) executive director Shamsuddin Bardan took a positive view of the extension, saying it was good for the economy and allowed workers more cash in hand.

“With more cash in hand the workers can make the local economy more vibrant (through consumption), which is very much required for the time being,” he told the webinar.

“Of course, we need to talk about the long-term effect of this reduction, but addressing the immediate situation is also critical,” he added. 

Shamsuddin encouraged employers to contribute more to EPF, which could become additional savings for employees in their old age.

He added that employees should also be encouraged to save more after the economy gets back on a stronger footing. 

While tabling the budget, Tengku Zafrul said EPF will extend the minimum contribution of 9% until June 2022.

This, he said, is expected to put RM2 billion in people’s hands for spending. – November 2, 2021.