The automatic three percent reduction for members of the Employees Provident Fund (EPF) has drawn flak from the MAS Employees Union of Peninsular Malaysia (Maseu).

mas and kwsp epf In a statement today, Maseu executive secretary Mustafar Maarof said the automatic reduction automatic goes against Finance Minister Najib Abdul Razak's announcement Tuesday that it would be voluntary.

"Maseu is of the view that those workers who agree to the said reduction should be the ones to fill in the application forms to do so as the proposal presented in the Dewan Rakyat is an exceptional one from the government, involving a directive to make exemptions to the Employees Provident Fund Act," he said.

"As such, a special application to EPF to reduce the contribution of a worker should be done voluntarily and signed by that worker. Given that EPF has issued the said directive, it means the reduction of workers’ EPF contributions will be done involuntarily."

In tabling the RM7 billion economic stimulus package in Parliament, Najib announced that in order to increase their disposable incomes, employees will be given the option to reduce their EPF contribution by three percent for two years beginning January.

Employers currently contribute 12 percent to EPF while employees contribute 11 percent of their wages to the fund.

According to Najib, should all the members volunteer to reduce their EPF contribution, the amount involved will come up to RM4.8 billion a year.

Assuming that only 50 percent take up this option, the level of private consumption spending will increase to RM2.4 billion, he added.

Yesterday, EPF said the reduction of the employees' contribution from 11% to 8% would be made automatically for the convenience of members and implementing measures.

"This arrangement will be implemented until the December 2010 wage," said EPF public relations senior manager Nik Affendi Jaafar in a statement.

'Clueless knee-jerk reaction'

Members who wish to maintain their 11 percent contribution rate can do so by filling up Form KWSP 17A (AHL) and handing it to their employers for submission to EPF, he added.

Meanwhile, Mustafar said Maseu received a lot of feedback from its members who expressed disagreement with the automatic deduction of their EPF contributions.

He also said the union is unsure as to whether EPF had briefed its board of directors and the Malaysian Trades Union Congress (MTUC).

"Until now, unofficial sources have said there has been no such briefing by EPF. As such, Maseu disagrees with the automatic reduction. To the contrary, it is those workers who agree to reduce their contributions who should be made to apply for that end," he added.

The Sarawak Bank Employees Union had earlier objected to the move to reduce employees' EPF contributions and described it as a "clueless knee-jerk reaction".

The union's chief executive officer Andrew Lo said the move "would further jeopardise the already meagre retirement savings of Malaysian private sector workers".

He said instead of seeking to raise wages to increase disposable income and increase domestic demand, the government has chosen to sacrifice those savings.

"We strongly urge workers not to volunteer for this reduction because it will then give employers an excuse not to increase wages," added Lo, who is also Sarawak MTUC secretary, in a letter to Malaysiakini .