Economist Prof Dr Barjoyai Bardai has claimed that Malaysians will need to work beyond the retirement age of 60 if the government permitted another round of Employees Provident Fund (EPF) withdrawals. In fact, they may even need to work until the day they die, especially those who fall under low-income groups, he said.

Barjoyai highlighted data from the EPF to support his statement, saying that as it is, 6.1 million EPF contributor under the age of 55 – or almost 50% of contributors – have savings of less than RM10,000 for their retirement. Even assuming that they are able to earn between RM15,000 to RM20,000 by the time they retire, Dr Barjoyai questioned how long the amount will be able to sustain contributors.

“Considering this, it appears that the EPF scheme has failed in its objective to provide protection to contributors when they retire. Looking at the present situation, the contributors won’t be able to retire at the age of 60. They will all have to work until the day they die or else they won’t be able to eat,” said the economist.

In light of that, Barjoyai asked if the government is willing to bear the consequences if another EPF withdrawal were to be allowed. He also emphasised that it is not possible for contributors to increase the amount in their funds on their own within a short period.

“They [the contributors] will fall into old-age poverty after retirement. Malaysia is expected to be an ageing population by 2030 and given the state of the EPF savings our contributors have today, we will likely see more poor old people by then,” said Barjoyai.

To alleviate the situation, Barjoyai suggested that the government could introduce specific schemes that cater to current problems faced by the contributors instead of allowing more EPF withdrawals. “Take the current flood crisis for example. If there are 100,000 flood victims and the government allocates RM100,000 to each family, the government will have to allocate RM10 billion. But, as we know, the total flood victims are only about 30,000 so the government can spend less than RM10 billion,” he said.

Additionally, Barjoyai said that the government can also consider providing loans to contributors for investments. This way, they can earn enough money by the time they retire to repay the loans that were given as well as to provide for themselves.

Between 2020 to 2021, the government introduced a total of three withdrawal facilities – i-Lestari, i-Sinar, and i-Citra – to allow Malaysians to withdraw from their EPF funds (Akaun 1 and 2) so that they can cope with the financial burdens brought on by the Covid-19 pandemic. This resulted in a total withdrawal of RM101.1 billion, and left many EPF contributors with insufficient nest egg to survive in their golden years.

Meanwhile, several parties have also recently begun calling for the government to allow another round of EPF withdrawals following devastating floods across the country. The EPF, however, has pushed back by saying that this could cause an “erosion of trust” that will ultimately affect the country’s capital markets. Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz also reminded that the EPF should not be seen as a solution to every challenge faced.

(Source: New Straits Times)

• TAGS:
• Akaun 1 Withdrawals
• Akaun 2 Withdrawals
• Barjoyai Bardai
• Employees Provident Fund (EPF)
• EPF
• EPF Akaun 1
• EPF Akaun 2
• EPF i-Citra
• EPF i-Sinar
• EPF Withdrawals
• i-Citra
• i-Lestari
• i-Lestari Withdrawal Scheme
• i-Sinar
• i-Sinar Withdrawal Scheme