The Malaysian Trade Union Congress, MTUC has come out strongly against the HR Ministry’s proposal to convert employee’s EPF saving into a pension scheme, saying it both not viable and impractical.
According to the body’s secretary general, G Rajasegaran, accumulated EPF savings, upon retirement, will not be able to fulfill a retiree’s monetary needs when it is given on monthly basis, rather than lump sum.
He quoted that, on average, majority of the seven million private employees in Malaysia who contributed to the EPF account have accumulated savings of only RM50,000 or less. If this RM50,000 were to be given on monthly for a period of 20 years, the retiree can only get a meager sum of over RM200 per month.
RM200 income per month for a typical Malaysian is hardly exciting. In fact, this would automatically enter the recipient into the category of poor citizens.
The Malaysian Employers Federation (MEF), on the other hand, takes the more reasonable approach by emphasizing that the employees should be given the rightful option on what they want to do with their EPF savings. In other words, they should be able to choose to get the money out in lump sum, or withdraw through monthly installment.