Only 3% of EPF contributors have enough retirement savings!

The government should seriously consider an old-age social protection scheme

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The chief strategy officer of the Employees Provident Fund, Nurhisham Hussein, has pointed out that only 3% of Malaysians can afford to retire on their EPF savings.

This is a wake-up call to the government on the old-age financial survival ability of our workers.

The truth remains that massive EPF withdrawals (due to i-Sinar, i-Lestari and i-Citra withdrawals), estimated at some RM70bn or more, are the major factor behind this sad state of affairs.

The financial challenges arising from the onslaught of the Covid pandemic would have warranted the government to provide sustained financial aid to the people.

The government, however, deemed it fit to allocate piecemeal financial handouts that were grossly inadequate to meet the financial obligations of those who had lost their jobs or suffered pay cuts. 

Defaulting on its obligations, moral or otherwise, to provide meaningful financial aid to the people, the government enticed the people to dip into their EPF retirement savings for their old age to ease their financial burden.

Sadly, the folly of the government has now morphed into the present reality of 97% of EPF members not having the privilege of retiring upon reaching the retirement age of 60.

As the EPF officer said, these senior citizens would need to continue working an extra four to six years and, we may add, even longer! As the nation rapidly moves towards an ageing population, what are the consequences of working beyond the retirement age?

A study by the World Health Organization (WHO) and the International Labour Oraganization (ILO) has revealed that working long hours is a contributory factor to work-related deaths. Working long hours, and by extension working between four to six years beyond the retirement age, would inevitably lead to a worsening of the physical and mental health of workers over 60 – what more, the possibility of death as a consequence.

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Given the reality that the vast majority of workers are left with insufficient savings after retirement, the government should seriously consider an old-age social protection scheme. A nominal percentage from taxes collected could be set aside into a pension fund or channelled to the EPF so that an equitable pension payment scheme can be devised to provide for retiring workers.

Until and unless such proactive measures are put in place quickly, we will witness an ageing population who would have neither sufficient EPF savings after their retirement nor an old-age social security network to provide them with financial sustenance.

K Veeriah is secretary of the Penang division of the Malaysian Trades Union Congress

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