THE EPF has made a wise decision in introducing the flexible third account which gives contributors the freedom at anytime to withdraw part or whole of their savings in this account for their emergency needs without going for withdrawals from their total accumulated fund, which risks depleting their retirement savings.

Many have criticised the EPF and the government for this move, which I feel is shortsighted as both are duty-bound to help the contributor.

By setting aside only 10% for urgent withdrawals, the EPF has done the right thing. Assuming that a contributor has RM50,000 in his EPF savings, a maximum of 5000 or less can be withdrawn to meet any urgent financial needs instead of going to the loan sharks or pawn shops.

No matter how one looks at this it is a good idea to help the B40 or lower income group especially when they need the money at the end of the year for their school children’s expenses or for any medication, surgery or hospitalisation.

One needs to look at this proposal positively and constructively. However, the same rate of dividends needs to be paid for Account 3 and should not be lowered just because the money in Account 3 can be withdrawn at any time. As long as there is some money in Account 3 the same rate of dividends should be maintained.

Another 20%can be withdrawn for housing or educational purposes. The rest 70% remains intact as retirement savings that cannot be withdrawn until the age limit of 55 or 60 is reached. This is a good balancing act, considering that the present is as important as the future.

There is also a need to fully segregate conventional and shariah-compliant funds, just like separating the EPF and the KWAP for public employees. This will reduce suspicion concerning the allotment of dividends for both schemes.

The government cannot depend only on the EPF to take care of private sector workers. Sooner or later, a social welfare scheme to provide all the retirees with at least a minimum of benefits needs to be devised.

The main group that does not have enough money to tide over their post retirement years are the B40 and to a certain extent the M40 as these categories draw lower salaries and are therefore unable to contribute much.

As such even when 100% of the fund has not been withdrawn earlier, it does not total much. Inflation is another big worry as it devalues their savings substantially. Within about five years the money will be spent on various needs of their old age from personal to medical expenses.

Children may or may not help. As such, they end up in a pitiable condition in their old age. It is here that the government has to come to help these people by way of a social pension to enable these people, who had worked throughout their lives in the nation-building effort, to have a decent living.

The government cannot wash its hands off these snowballing problems and just concentrate on its own civil service employees. All are Malaysians and need to be treated fairly. - May 1, 2024

V. Thomas is a Focus Malaysia viewer.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.

https://focusmalaysia.my/may-day-wish-list-private-sector-employees-need-something-more-solid-than-epf-for-peaceful-retirement/