EPF is the best choice to replace pensions

28 Sep 2023 11:51am
Picture for illustrative purposes - FILE PIX
Picture for illustrative purposes - FILE PIX

SHAH ALAM - Financial experts believe that the Employees Provident Fund (EPF) retirement scheme is the best choice for replacing civil service pensions to reduce the government's burden.

UiTM Melaka Branch Economics Finance Senior Lecturer Dr Mohamad Idham Md Razak said it is a good mechanism to balance the country's fiscal situation.

"In my opinion, the pension system practiced in this country is a good method to help individuals or civil servants as long as they are alive.

"They don't need to worry about income in their old age.

"However, EPF is a better initiative than pensions because the government does not need to bear the high expenses of the retirement scheme for a long period," he told Sinar.

Mohamad Idham added that through EPF, retirement payments are made in a lump sum with deductions made throughout an individual's service, which can save the government finances to some extent compared to the pension scheme.

"So, it's the best mechanism, but before implementation, feedback should be obtained from civil servants, but it can be implemented for Members of Parliament first," he said.

Furthermore, he also suggested that new civil service hires should use the EPF scheme to change the mindset and dependency of the public on government pensions.

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"EPF also indirectly instills a greater sense of commitment in anyone serving the government," he said.

At present, the government spends about RM40 billion on pensions for retired civil servants, including Members of Parliament.

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