Strengthen safety nets, don't dictate retirees' use of EPF savings, says social activist
KUCHING (Aug 7): The government should focus on strengthening social safety nets, improving financial literacy and ensuring Employees Provident Fund (EPF) returns remain strong instead of controlling how retirees use their savings, said social activist Voon Shiak Ni.
She said any attempt to retroactively or unilaterally change withdrawal terms after contributors have met the required conditions undermines public trust in the system.
'In light of this, public feedback is to urge the federal government to uphold the current withdrawal policy at age 55 without additional restrictions; refrain from introducing any new conditional withdrawal mechanisms for eligible retirees; and recognise that financial freedom in retirement is a personal right – not a government-controlled benefit.
'It is a fundamental principle that Malaysian EPF contributors are entitled to withdraw their savings in full upon reaching the age of 55 in accordance with existing EPF regulations.
'These funds represent the hard-earned savings of workers accumulated over decades, and the right to access them upon reaching retirement age must be respected and protected,' she said in a statement yesterday.
Voon stressed that once members reach this milestone, it was no longer within the government's discretion to dictate how and when their savings should be accessed, and reiterated that the decision on how to manage their own retirement funds should rest fully with the account holders.
'EPF was never intended to be managed like a pension scheme, where funds are released monthly – it is a retirement savings fund, and contributors must retain the freedom and autonomy to make financial decisions based on their individual needs and circumstances.'
She said the government must honour the rules and regulations of EPF contributions and commitment to protect the retirement rights of Malaysians.
On the other hand, Labour Law Reform Coalition deputy president Andrew Lo said theoretically, the government's proposal was 'the way forward' as retirement income should be on a regular sustainable withdrawal instead of a lump sum.
'This will only work if the current inadequate retirement savings amongst majority of EPF contributors – current and future – is resolved, otherwise the monthly withdrawal or payout will be a pittance.
'It will also work if adequate monthly retirement withdrawal is about 40 per cent of pre-retirement income,' he said, adding pensions for civil servants were currently at 50 per cent of basic salary before retirement.
Lo said the proposal might also work if retirement age was increased to at least 65 to enable workers to build up sufficient savings, reduce pension costs and boost labour productivity and improve fiscal and economic performance.
'On top of that, the government must introduce a universal basic pension which can be funded by the many welfare and handout schemes which are currently being implemented on ad hoc and at the whims of political convenience.'
Meanwhile, it was reported that several leaders here opposed to proposed move to restrict EPF lump sum withdrawals, stating such a policy would deprive contributors of rightful access to their own savings.
EPF said the proposal was still under review and in the interim, existing rules and withdrawal mechanisms remain unchanged. epf safety nets Voon Shiak Ni
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