KUALA LUMPUR (Nov 22): The National Union of Bank Employees (NUBE) had on Monday (Nov 22) urged the Employees Provident Fund (EPF) to demand that the government return monies withdrawn by bottom 40% (B40) and middle 40% (M40) segment EPF members to protect their retirement savings at a time when EPF members’ retirement savings have depleted due to Covid-19 pandemic-driven economic challenges.
In a statement, NUBE general secretary J Solomon said every decision made by the EPF must take into account its responsibility to sustain members’ funds for contributors' wellbeing for their old age as Malaysia is expected to become an ageing nation by 2030.
"While these withdrawals are ploughed back to the economy and the business community benefited in a short term, the poor members’ retirement savings have been depleted,” he added.
"The government's move to extend the period for the reduction in the EPF contribution rate from 11% to 9% in the recently announced Budget 2022 will further heighten the low retirement savings problem faced by workers,” Solomon said.
Solomon said some 6.1 million EPF contributors are now left with savings of less than RM10,000 each.
Out of the estimated 6.1 million EPF contributors,, some 3.6 million members have less than RM1,000 each in their savings, leaving them vulnerable and unprotected for their retirement, he said.
"Based on the minimum target of RM240,000 savings that EPF members should have upon reaching the age of 55, only 3% can afford retirement, and sustain it with their savings,” he said.
Solomon indicated that the majority of the estimated 7.4 million EPF members who withdrew their money from their EPF accounts due to pandemic-driven financial constraints are from the B40 and M40 segments.
"The government needs to find a mechanism for the replenishment for the protection of the contributors when they retire,” he said.
At the time of writing on Monday, the EPF had not issued a statement in response to NUBE’s statement.
The EPF had, however, said in a statement on Oct 31, 2021 that following the special withdrawal facilities due to the Covid-19 pandemic, the EPF is now focused on assisting members to rebuild their savings for their retirement future.
According to the EPF, the withdrawal facilities were exceptional in nature, and were introduced considering the circumstances at the time when the pandemic severely impacted the local economy.
"These withdrawals, namely i-Lestari, i-Sinar and i-Citra, resulted in a total of RM101 billion being disbursed to over 7.4 million members, which is close to half of all EPF members.
"While they provided some financial relief to members during the pandemic and various MCOs (Movement Control Orders), the withdrawals have inevitably led to 6.1 million members now having less than RM10,000 in their EPF accounts, of which 3.6 million have less than RM1,000, leaving them vulnerable and unprotected for their retirement,” the EPF said.