Most EPF members may fall into old age poverty

This will pose a challenge to the socio-economic landscape of the country and its fiscal health, EPF chairman says


MAJORITY of Employees Provident Fund (EPF) members are at risk of falling into old age poverty following the Covid-19 related withdrawals have worsened the situation for members, many of whom also face the risk of having insufficient savings to live a dignified retirement.

EPF chairman Tan Sri Ahmad Badri Mohd Zahir said this will not only be detrimental to individual livelihoods, it will pose a challenge to the socio-economic landscape of the country and its fiscal health.

“The situation is that 48% of EPF members aged 55 and below have critically low EPF savings, a 28% increase in members reaching critically low EPF savings from pre-pandemic. For members to recover the loss of savings from the Covid-19 related withdrawals, they would need to work an extra four to six years.

“To address adequacy of savings and retirement income, we need far-reaching solutions covering an effective safety net programme, comprehensive life-cycle social protection systems, robust labour market and wage policies, sustainable economic growth, reskilling and upskilling of labour force, as well as policies to encourage automation and digitalisation to help increase productivity,” he said in his opening speech at the International Social Wellbeing Conference 2021 (ISWC 2021) “The New Narrative: Turning the Tide on Inequality” yesterday.

The two-day ISWC 2021 was launched by Prime Minister Datuk Seri Ismail Sabri Yaakob.

As at Oct 31, 2021, a total of RM101.1 billion have been withdrawn under i-Lestari, i-Sinar and i-Citra. This is equivalent to 22% of the total RM530 billion of the government stimulus programmes as a support to Malaysian society as a whole.

The EPF is truly supportive of the government’s Budget 2022 initiative to extend the i-Saraan programme to include those aged 55 to 60.

This will make i-Saraan more attractive to those in the informal sector to save for their retirement.

Ahmad Badri added that the Caruman Sukarela Insentif Suri, or i-Suri, which has been integrated with the Social Security Organisation and renamed “Kasih Suri Keluarga Malaysia”, meanwhile, gives housewives and widows registered under the e-Kasih system to gain access to social security.

“Another interesting facility the EPF is set to launch is the i-Lindung facility which allows the withdrawal from Account 2 to purchase life and critical illness insurance through the EPF platform.

“Also, to be launched in the first quarter of 2022 (1Q22) is the i-Sayang facility, which allows for the voluntary transfer of 2% EPF contributions from the husband’s to the wife’s account,” he added.

Other initiatives EPF is exploring include the gradual approach towards mandating legal EPF coverage to non-agriculture informal sector workers.

“We will also be advocating our voluntary excess scheme where members can compel their employers to increase their EPF contribution to more than the 11% statutory rate,” he said.

Meanwhile, EPF CEO Datuk Seri Amir Hamzah Azizan, in his preliminary remarks, said one of the most worrying concerns exposed by the Covid-19 pandemic was the intensified issue of inequality.

“The issue of inequality has been festering well before the pandemic. While many nations have tried to stem the Covid-19 impact through intensive and short-term mobilisation of resources, these initiatives can only be temporary fixes, and not long-term solutions that are able to protect the lives and livelihood of the people.

“We have with us at this conference not just Malaysia policymakers, but also members of the public. With this, we hope with a good mix of participation, no rock is left unturned in discussing and finding resolutions to the issue of inequality and its many different facets that includes economic inequality, healthcare inequality, education inequality and gender inequality,” he said.

Ismail Sabri said new and innovative social protection solutions are urgently required to strike a balance between the provision of safety nets, promote financial resilience and human capital development.

“More collaborative efforts by the public and private sectors are also vital to form strong synergies between social security organisations, relevant stakeholders and policymakers.

“Quick responses are required to uplift the community, promote rights, and bridge social protection gaps in the country, especially for informal economy workers, housewives, or unpaid family workers, such as caregivers,” he said.

He also urged policymakers to recognise the role of social protection in promoting social wellbeing by crafting effective policies that consider voices of the rakyat.