TWO-thirds of Employees Provident Fund (EPF) contributors who are aged 55 and below – or 71% – do not have enough funds for retirement to raise them above the poverty level, revealed Prime Minister Datuk Seri Anwar Ibrahim.
He said this was due to the four special withdrawals that were approved during the COVID-19 pandemic.
According to Anwar who is also the Finance Minister, the number of active EPF members who had reached the basic savings target of RM240,000 by the age of 55 had dwindled from 36% in 2020 to a mere 29% at the end of 2022.
“The EPF estimated that members are required to work between four and six extra years to rebuild the savings that were withdrawn during the pandemic,” he said in a parliamentary written reply in response to a question from Gombak MP Datuk Seri Amirudin Shari.
Amirudin had asked the government to state its stance on EPF withdrawals as a means of easing the people’s financial burden.
This is amid recent calls from lawmakers from both sides of the political divide for the government to approve another round of EPF withdrawals for the people.
On this matter, Anwar further warned that anymore withdrawals would only worsen the already alarming lack of savings among EPF members, adding that any additional withdrawals could also affect EPF’s new investment opportunities and profit-generation for the purpose of dividend payment to contributors in the future.
“As of Dec 31 last year, a total of 6.7 million contributors or 51% of those aged under 55 had savings of less than RM10,000 following the withdrawals,” Anwar asserted.
“With this amount, members only have on average RM42 a month in retirement funds over a period of 20 years.”
He explained that the insufficient EPF savings requires attention as the country shifts towards ageing nation status.
He further noted that the lack of EPF savings could have a large ramifications on the country and its people especially when it comes to productivity, social wellbeing, quality of life and health.
Anwar explained that any new withdrawals would require EPF to provide more cash flow to replace a large amount as well as measures in portfolio-balancing by taking into consideration cash holdings, liquidity and maturity while slowing down domestic investments.
As such, whether targeted or otherwise, any type of EPF withdrawal was not the right long-term solution to resolve the people’s financial burden, he added. – Feb 23, 2023
Main pic credit: Bernama