EPF contribution rate cut: Look before you leap

ACT prudently when deciding to take a cut on Employees Provident Fund (EPF) contribution, said a trade union veteran.

Former Malaysian Trade Union Congress (MTUC) president Syed Shahir Syed Mohamud advised that only those who had their incomes affected should take up the option to reduce their contributions to savings fund.

“I don’t see any problem for those who were not affected to continue with the existing contribution rate,” he told FocusM.

Earlier today, EPF announced that the employee’s share of the statutory contribution rate will be reduced to 9% from the current 11%, for next year.

It said the decision would only affect employees below 60 years of age. The statutory contribution rate for employees aged 60 and above remains unchanged.

“Members who wish to maintain the contribution rate for employees at 11% may fill in the “Borang KWSP 17A (Khas 2021)”, which will be made available on the EPF website starting Dec 1,” it said.

Syed Shahir said the measure by EPF was not unique as it was done in the past economic downturns which affected Malaysia.

“Of course, I do agree that in the long-run, the contributors’ retirement savings will be affected and we also don’t know how long the current economic problems will last,” he said.

Offering solutions, Syed Shahir urged the Government to provide more assistance for the B40 groups as the latter were severely strained due to the pandemic.

“The Government needs to reach out to them. We can offer them food coupons, vouchers and other direct assistance.

“With that, they will be less inclined to touch their EPF savings to survive the current ordeal,” he said.

Syed Shahir added that the Government should also look into how other nations are dealing with pandemic induced economic recession and learn from them.

“I agree there is no one size fits all solution to this. Let us take the right examples from them and adjust it to meet our realities.

“Besides, we’re a just small nation with 32 million population. What matters is the end result,” he said. –Nov 28, 2020.

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