A PLAN to turn the Social Security Organisation (Socso) into a pension scheme has received a mixed response.

While some said turning the fund into a pension scheme will provide a better social safety net for the subscribers, others said there is no need for government interference in how Socso is managed.

Economist Dr Yeah Kim Leng said it would be beneficial to the subscribers if Socso and the Employees’ Provident Fund (EPF) were to be merged.

“It could be good to integrate (EPF and Socso). Amalgamate the two funds so they provide greater social security that covers pension unemployment and healthcare to create a bigger social safety net,” Yeah told The Malaysian Insight.

“The social safety net (in Malaysia) is not advanced. We need to raise the quality. This fragmentation can be consolidated to come up with a better approach.

“Combining both funds also means they can be managed more efficiently with lower cost. 

“(If they are both) under one agency, there is greater economy of scale, reduction of administrative cost and that may result in more gains to the contributors.”

Contributors first

Former Malaysian Trades Union Congress secretary-general J. Solomon did not think it is a good idea to turn Socso into a retirement fund.

“You don’t need to transform Socso into a pension scheme as we have a well-managed existing pension scheme that meets private sector needs,” Solomon said.

“Socso should start administrating for contributors’ interest, not administrators’ interest or the interests of the politicians.

“It should revisit its obsolete laws, increase a sustainable quantum for employment injury, and expand the coverage to meet current needs.”

He also called on Socso to stop the challenging legitimate claims of contributors.

“Socso should stop engaging high-profile lawyers to challenge contributors’ claims and legitimate queries. 

“It should go back to ibasics and not use contributors’ money for government duty bound projects,” he said.

On Tuesday, Human Resources Minister M. Saravanan said there are plans to transform Socso contributions into a pension scheme so that private sector employees will have a safety net upon retirement.

He said it is worrying that workers in the private sector do not have a safety net, income or savings when they turn 60 years because most would have stopped working and withdrawn their EPF savings by then.

The i-Lestari, i-Sinar, i-Citra withdrawal schemes, which allowed contributors to tap into their EPF savings during the pandemic, saw a total of RM145 billion withdrawn.

As of mid-year, 6.62 million members, or 52%, of 12.78 million EPF members aged under 55 had savings of less than RM10,000. Seventy-five per cent of of the number were Bumiputera.

More than 3.2 million members, 81% of whom were Bumiputera, under the age of 55 have savings of less than RM1,000. – September 23, 2022.