PUTRAJAYA should look into tiered dividends for the majority of contributors who have low savings with the Employees Provident Fund (EPF), Petaling Jaya lawmaker Lee Chean Chung said. 

He said the implementation of tiered dividends will provide the highest returns to the first RM50,000 savings contribution, RM50,000 to RM240,000 savings (basic savings target), and savings of RM240,000 and above.

“If the contributor has more than RM1 million in savings, he can still get a high dividend for his RM50,000 savings,” he said in a statement.

Lee was referring to the calls from several parties to allow contributors to make withdrawals from their EPF. 

Contributors were previously allowed withdrawals under the i-Lestari, i-Sinar and i-Citra programmes, which have reduced the ability of many contributors to deal with their cost of living after reaching retirement age. 

He, however, said the decision at that time was necessary because the people were faced with the economic crisis and the Covid-19 pandemic.

Lee also said another way to tackle the issue is to increase the foreign investments mandate. 

“In 2021, EPF achieved a return of 8.64% for international investments, while the return of local investments was only 5.02%.

“Increasing the investment mandate at the international level will make the EPF more productive, as well as more professional.”

He also said that EPF can limit withdrawals after contributors reach the age of 55 according to the amount of contributions and taking into account retirement needs.

“Rather than focusing on the debate over whether additional withdrawals should be allowed, I think it would be better for all parties to focus on how to ensure that contributions are sufficient.

“This is when millions of our contributors have reached their retirement age. 

“EPF as an executor should focus their energy to increase returns and provide awareness and intelligence in the management of our people’s retirement.”

Lee said at the end of last year, as many as 6.67 million EPF members or 51.5% only have savings below RM10,000. 

“This value is much less against the target of RM240,000 for basic savings.  

“Continuous withdrawals is like killing the goose that lays the golden eggs. It not only misses the opportunity to increase the contributor’s assets, but also requires between three to five years for the savings level to return to the original level,” Lee added. – January 26, 2023.