ONE should look positively at the call of the Umno leadership for the government to allow more early EPF savings withdrawals by those in need of cash.

One needs to understand that today is as important as tomorrow. The EPF cannot simply be regarded as only a retirement fund but also an emergency fund for people greatly affected by the double whammy of pandemic and floods. When times are good the government can raise the mandatory contributions of both employees and employers to make up for the withdrawals. Most of the withdrawers will over the years, be promoted or seek higher paying jobs and subsequently contribute more to the fund. The crucial issue now is that they need financial help which is nowhere to be found. Hence the people should be allowed to withdraw from their old-age savings while these withdrawals will also have multiplier effects on the economy by way of increased consumption.

The government can also help the EPF by providing more opportunities for investment in high dividend yielding shares and equities in profitable corporations in Malaysia and overseas, thereby increasing the sum of savings in the individual accounts. 

The government has utilised billions of ringgit from the EPF to finance a large number of socio-economic plans and projects since Merdeka. It is therefore obliged to provide incentives for the EPF to reap higher profits that are returned to the contributors. One should recall that a few years ago the EPF was finding it difficult to manage the huge fund with the accumulated hundreds of billions of ringgit and only investing the money in local profitable blue chip and venture companies. The EPF was keen on overseas investments to increase its profits. Therefore withdrawals that are necessary now should be encouraged to lessen the burden of the EPF.

The EPF must also maximise use of its local assets to grow its income. The RRI, now known as Kwasa Damansara, was sold by the federal government to the EPF more than 15 years ago and until today, not a single house has been built on this prime piece of land; only the EPF office building is being constructed there. Infrastructure work in Kwasa Damansara is taking ages to complete. If the RRI had been sold to a private property developer, it would have been turned into a multi-billion ringgit mixed development and made a profit of hundreds of millions of ringgit by now. 

The RRI was sold to the EPF because the government wanted to help the retirement fund to make  profits via the development of Kwasa Damansara, although the purchase price was inflated as was later exposed. The EPF should not be burdened by the government’s conditions, such as for Kwasa Damansara projects to be subject to quotas. This will hamper speedy development of Kwasa Damansara. The EPF should take into account the fact that at least half of the of the 800ha Kwasa Damansara must be used allotted for the building of affordable homes for the B40 and M40 groups, who form the overwhelming majority of the contributors. It should not be focused on condominiums, bungalows and apartments for the rich to gain greater profits but should be mindful of its social duty.

A positive effect of Malaysians’ insufficient retirement savings could be that it highlight to the government the urgent need for higher wages and the creation of a social welfare state as a growing number of countries have realised. There is no point in bringing up the problem if there is no plan to overcome the issue, which can snowball over the years. The government has to come up with a social pension scheme for retirees and senior citizens. Presently, only civil service employees have the advantage of lifelong pension and medical benefits. 

The government cannot simply wish away the plight of the retirees and say that their EPF contributions will take care of them. It cannot do nothing to address the large number of senior citizens who spend their twilight years in misery and poverty. Even in the best of times, EPF savings have never been enough to see the B40 earners into their old age, what more after the funds have been depleted for housing and the i-Lestari, i-Sinar and i-Citra withdrawal schemes.

Some senior citizens continue to work even after reaching the age of 70. Is there be a better illustration of the pressing need for a social pension for every citizen who has helped to build the name? It is the duty of the government to look after them in their old age when they are infirm and without income. 

A basic social pension of at least RM500 monthly should be paid to retirees in the B40 and M40 groups under a new social welfare scheme that can be an alternative or addition to the EPF, whereby all workers will pay for the retirees in a cycle that will go on to benefit everyone in future. – January 5, 2022.

* V. Thomas 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.