The Government’s policy to cut the employee’s EPF contribution rate from the existing 11% to 8% is basically using our future savings and income to boost the present dire state of economy. It is sacrificing our retirement protection for the present short-term relief.
To boost our economy, the government should be reducing 3% of the Goods & Services Tax (GST) instead of reducing 3% of the employee’s contribution rate.
The reduction of 3% of the contribution rate today will severely affect 80% of the contributors’ retirement plan and livelihood, especially those belonging to the middle and lower income group.
According to the report by the CEO of the EPF board in March, 2015, 80% of the contributors will be living at poverty level after retirement.
In his report, he highlight that, there were about 14 million EPF contributors, out of which, 69% will have less than RM50,000 EPF savings upon retirement. Without any extra income, they will finish this savings within 5 years.
In fact, the recommended savings for retirement according to the EPF board is RM196,800, a sum which is sufficient to pay for a meagre monthly expenses of RM800 for a period of 20 years.
Bearing in mind that the poverty income level in Malaysia is RM830 per month. Even with an EPF savings of RM196,800 upon retirement, that contributor will still be living under poverty level for 20 years after retirement.
The shocking fact is that, only 20% of the contributors will have this recommended amount of RM198,600 when they retire while a great majority will have a lot less saving than this amount. And even with this amount, one shall not fall sick if one wish to live for 20 years with RM800 per month.
Under the circumstances, a good government should be thinking about how to increase our retirement savings rather than how to use our savings to save the mess that it has created, using our retirement savings to boost the present economy statistics and figures.
The present policy to reduce the contribution by 3% will be most felt by the lower middle income group when they retire.
In the last two years, the Government is targeting the general public to finance its extravagance and corruption. The following are but some of such policies:
1. when international oil price was high, the people had to buy expensive petrol, but on the other hand, when the international oil price came down by more than 50%, the people are still forced to buy expensive petrol.
2. cut in the subsidy on education for the poor.
3. implementation of Goods & Services Tax (GST), taxing the poor.
4. reducing the EPF contribution rates, using our future income.
These are only some of such policies which have a direct impact on the people. Besides these, there are also some other which are not so visible ones, like the so-called “investment land purchase deals with 1MDB” by some trust fund boards.
At the end of the day, we, the people are paying the debt of mega corruption and the wasteful spending og Barisan Nasional government for the past few decades. The worse is that, despite the people’s and the nation’s sufferings, such wasteful spending and corruption of the government still continues in the continuous revelation of the scandals affecting the prime minister and the non-transparent allocation to the Prime Minister’s Department in our budget allocations.
We call on the government to cut GST by 3% and not to cut the EPF contributor’s contribution saving rates by 3%.