Hike EPF contributions by two pct to increase retirement savings, suggests expert

22 Jan 2023 06:40pm

5.1 million or 76 per cent of bumiputera contributors under 55 identified as having savings of less than RM10,000 at the end of 2022.

SHAH ALAM - The government and employers should raise Employees' Provident Fund (EPF) contributions to assist employees in rebuilding their savings.

There are 5.1 million or 76 per cent bumiputera contributors under the age of 55 with savings of less than RM10,000 as of end of 2022.

To overcome this issue, Universiti Utara Malaysia economist Dr K Kuperan Viswanathan said the government or companies should increase EPF contribution by an additional two per cent and increase the individual’s contribution by an additional one per cent.

"That will help in a big way to rebuild EPF savings for those who have low savings at the moment," he told Sinar Daily.

Kuperan also commented that savings are only feasible if incomes are adequate and expenses are carefully controlled.

"Most people do not make enough money to save or spend all of what they earn," he added.

"For people to be able to build their savings, wages will have to go up and inflation has to be kept under control."

PKT Logistics Group Sdn. Bhd Chairman Datuk Jalilah Baba also agreed that the majority of people don't earn enough to save or spend all of their income.

Jalilah said that it was important for people to be frugal in their spending.

"It is also necessary to develop and diversify the existing business by improving more extensive and effective marketing techniques, and I believe this effort can increase business income," she added.

EPF contributor Nur Syazwani Shaharudin, 24, from Penang, told Sinar Daily that she withdrew her savings during the pandemic last year.

"I am also involved in a small business during my free time," she said, a full time barista and runs a small food business during weekends for extra income.

"It is a hard but for now we have the opportunity to restore all our savings by doing extra work," she added.

EPF Chief Strategic Officer Nurhisham Hussein said the median for bumiputeras had fallen from RM6,600 at the end of 2021 to RM4,700 in 2022.

Nurisham said EPF could not afford to uphold any additional withdrawals and any decision to withdraw additional savings after the four previous withdrawal packages may have an impact on contributors’ retirement fund.

“We currently have 18.5 per cent of EPF contributors by age who have achieved the basic savings of RM240,000.

“Even though EPF recognises that some contributors continue to be affected, EPF was entrusted to protect the retirement fund.

Meanwhile, Umno vice president Datuk Seri Ismail Sabri Yaakob said the unity government needed to focus on the rising cost of living.

"In the past, during my service, many people were arguing when we were doing a study on whether the EPF should be withdrawn.

"This is a very important issue for the rakyat, and I hope that the voices of these people are heard now," he said during MCA's Chinese New Year celebration at Wisma MCA, here, today.