PUTRAJAYA must carefully reconsider its decision on the implementation of the Employees Provident Fund’s (EPF) Account 3, said Wanita MCA.
Its chairperson Wong You Fong said the government must take into account various factors to formulate more pragmatic policies to ensure that retirees in their senior years can enjoy quality of life with a healthy cash flow devoid of worries.
This is as large crowds were seen thronging EPF offices nationwide on the first day the account kicked in recently.
“Wanita MCA is concerned that since most EPF contributors are mainly transferring their savings from their EPF Account 2 to Account 3, this reflects that due to financial constraints and day-to-day hardships, many Malaysians are forced to prioritise current needs ahead of planning for retirement,” Wong said in a statement on Wednesday (May 15).
“The government needs to tackle the economic difficulties confronting the rakyat. It is necessary to explore and implement comprehensive solutions to improve the economic wellbeing of citizens, increase incomes and curb the rising cost of living, rather than repeatedly approve EPF members under 55 years to withdraw a portion of their retirement savings through Accounts 2 and 3.”
Under a restructuring plan that took effect on May 11, EPF accounts are split from two to three for members aged below 55, where Account 1 is renamed Akaun Persaraan (Retirement) and Account 2 is Akaun Sejahtera (Wellbeing) while the third account is known as Akaun Fleksibel (Flexible).
Wong said permitting early withdrawals of retirement savings through Account 3 is not the solution to the problem.
On the contrary, she said it increases the risk of insufficient retirement funds for Malaysians, which is a misguided practice.
“The government has not fully listened to nor accepted the requests of EPF contributors, and neither has it given EPF members the opportunity of choosing whether to participate,” Wong lamented.
“Compelling every EPF contributor under the age of 55 years to automatically open Account 3, instead of providing an option for members to voluntarily open the Akaun Fleksibel, ignores the reality that not all members need or want to withdraw their savings prematurely.
“It is instead a disguised ‘enticement’ for members to deplete their savings for old age at an early stage as cautioned by Bank Negara Malaysia.”
For context, in April last year, the central bank cautioned that the risk of insufficient savings is worsening, with Malaysians at risk of running out of their savings at the age of 58 due to low wages, high debts and premature withdrawal of their EPF during the pandemic.
“EPF needs to remind its members that EPF savings should be reserved for retirement purposes as much as possible, rather than being exploited casually to meet current consumption needs,” Wong stressed.
She said the government can boost the economy, generate employment opportunities, and increase the overall income level of citizens by formulating and implementing effective economic policies.
These include encouraging foreign investment, supporting innovative technology industries, delve into artificial intelligence and promoting the development of micro, small and medium enterprises (MSMEs), thereby driving economic growth and providing Malaysians with more career prospects and stable sources of income.
“To ensure that the basic living needs of the people are met, the government should implement effective price control measures, especially for essential goods, to ensure price stability,” Wong stated.
“Through tax policies and subsidy programmes, the government should also alleviate the financial burden of low and middle-income households so that they can better cope with life pressures.” – May 15, 2024
Main pic credit: Reuters
