KUALA LUMPUR: Two-thirds or 71% of Employees Provident Fund (EPF) active contributors who are aged 55 and below do not have enough funds to raise them above the poverty level, warns Datuk Seri Anwar Ibrahim.
The Prime Minister said this was due to the four special withdrawals approved during the Covid-19 pandemic.
Anwar, who is also Finance Minister, added that the number of active members who had reached the basic savings target of RM240,000 by the age of 55 had gone down from 36% in 2020 to 29% at the end of last year.
"The EPF estimated that members are required to work between four and six extra years to rebuild the savings that were withdrawn during the pandemic," he said in a parliamentary written reply in response to a question from Datuk Seri Amirudin Shari (PH-Gombak).
Amirudin had asked the government to state its stance on EPF withdrawals as a way to help ease the people’s financial burden.
Anwar also noted any more withdrawals would only worsen the already alarming lack of savings among EPF members.
He added that any additional withdrawal could also affect EPF's new investment opportunities and profit-generation for the purpose of dividend payment to contributors in the future.
"As of Dec 31 last year, a total of 6.7 million contributors or 51% of those aged under 55, had savings of less than RM10,000 following the withdrawals.
"With this amount, members only have on average RM42 a month in retirement funds over a period of 20 years," explained Anwar.
He said the insufficient EPF savings requires attention as the nation was moving towards an ageing nation status, adding that it could have a large impact on the country and its people, especially in terms of productivity, social wellbeing, quality of life and health.
He also pointed out that any new withdrawals would require EPF to provide more cash flow to replace a large amount as well as measures in portfolio balancing by taking into consideration cash holdings, liquidity and maturity while slowing down domestic investments.
This means that regardless of whether targeted or not, any type of EPF withdrawal was not the right long-term solution to resolve the financial burden faced by contributors, especially those who are struggling.
Anwar noted the social security system should instead be strengthened to ensure Malaysians had enough protection in events such as loss of job and income.
"As a huge social security institution, EPF must cooperate with government agencies in building and strengthening a holistic and sustainable social security system for the wellbeing of Malaysians," said the Prime Minister.
