COMMENT The Malaysian Trades Union Congress (MTUC) is very disappointed that there are certain quarters including ministers who are against the proposal to extend the Employees Provident Fund (EPF) retirement withdrawal age to 60 years old.

 

MTUC has fought long and hard for the implementation of the minimum retirement age of 60 so employers cannot force an employee to retire at earlier than 60.

 

The increase in the minimum retirement age to 60 years is one way to allow contributors to build up sufficient retirement savings. Therefore the qualifying age for retirement must be moved from 55 to 60, otherwise it would defeat the very objective of EPF as a savings for retirement and the increase in the retirement age.

 

For those who need part of their funds earlier and plan to retire earlier than 60, the existing 50 years withdrawal scheme can remain at 50 or be extended to 55. This would give the flexibility to contributors and will be the right thing to do. There can be also a three-to-five year transition period for those who already planned to retire earlier.

 

Old age savings is a very serious matter and we cannot agree to some misplaced and ill-informed and laughable comments such as, “EPF money is my money and I know what to do with it,” or “I should be allowed to withdraw it at any time.”

 

Well, if not for EPF which make it compulsory for you to save up to 11 percent of your salary each month and also to compel employers to contribute up to another 13 percent, it is unlikely you would have any money in EPF or any other form of savings for your old age. You think you can depend on your children to take care of you? “Wait long long.” Your children can hardly take care of themselves.

 

The EPF scheme is a compulsory savings for retirement and old age protection. Studies have shown that for those who withdraw, they spent it within three years. Why? If the comments of the blogs are to be believed, the money is used buy diamonds, go for holidays, pay off debts, children’s education, investments and  even children’s weddings.

 

Then there are those  who invested in get-rich-quick schemes (and got conned equally quickly.) MTUC has no sympathy for them - they are just greedy. These are the same people who now demand that that they be allowed to withdraw their EPF savings to clear their debts and their bankruptcies.

 

Leading to higher debts

 

This will only lead to us taking higher debts and creditors, including loan sharks who are more than happy to extend loans, knowing that debtors can use their EPF money to settle these loans.

 

For those with the perennial complaint that the EPF’s dividend rate is low, just look at the Singapore equivalent which pays just the average banks’ savings interest rates - about 2 percent.

 

Then there are those who insist that they are smarter than EPF and can generate better returns themselves.

 

EPF’s performance over the last 60 years has been one of the best performing pension funds in the world, consistently paying dividends above inflation meaning contributors enjoy real returns. It has demonstrated resilience through financial and economic crisis.

 

The average contributor has less than RM120,000 in his or her savings fund. This is NOT sufficient to live on until the life expectancy of 79 years. By 2060, 25 percent of Malaysian will be in the old age group (above 65). Who is going to take care of them?

 

Everyone wants to be rich before we get old. For the majority of EPF contributors, we get old before we can get rich. The setting of the retirement age to 60 is a major step towards a more comfortable retirement. Don’t destroy this dream by insisting on earlier withdrawals.

 

ANDREW LO is secretary, Sarawak division of the Malaysian Trades Union Congress (MTUC).