When workers were entitled to withdraw their Employees’ Provident Fund (EPF) savings to sustain themselves during the Covid pandemic, it resulted in only about 3% of them having adequate savings to afford to retire.
Thus, the indisputable fact is, our working population is stranded with inadequate or no savings, post-retirement.
Given that we are fast becoming an ageing society, coupled with the fact that many don’t have sufficient post-retirement savings, our nation may well be heading towards a future of growing poverty.
Without sustainable post-retirement savings, senior citizens would either be compelled to continue to work or to depend on the goodwill of society for survival, unless the government initiates an appropriate social safety system to address the situation.
We, in the Malaysian Trades Union Congress, believe it is possible to implement a comprehensive post-retirement safety net if the government is minded to:
- Merge the EPF and the Sosial Security Organisation (Socso) entities and consolidate their resources to introduce a retirement safety scheme: As we understand, EPF investment assets are about a trillion ringgit. And Socso’s asset size is in the billions. With such massive financial assets, and through prudent returns on investments, we are convinced that a post-retirement safety system is possible
- Set aside, say 1%, of taxes collected: With the consolidation of EPF and Sosco and with an annual allocation of a portion of taxes collected to the [merged] entity, we believe a retirement safety scheme may well be possible
- Enhance EPF contributions: Enhancing existing statutory EPF contributions would increase savings with our proposed consolidated EPF-Socso organisation, which, in turn, would ensure the sustainability of our suggested old-age support scheme
- Move towards a living wage: While progressive improvements to the minimum wage are welcome, they do not meet the threshold for a living wage, as expounded by Bank Negara Malaysia. According to Bank Negara, an individual needs a living wage of RM2,700 to sustain him or herself. Moving towards a living wage would consequentially translate to higher savings – again, with our proposed consolidated entity
Recognising that we are fast approaching an ageing society, we urge the government to consider our proposals. And we believe the government ought to consider our suggestions in formulating its 2023 Budget.
K Veeriah is secretary of the Penang division of Malaysia Trades Union Congress