KUALA LUMPUR: Malaysians, especially those in the low-income brackets will have to work beyond the retirement age of 60, possibly until the day they die should the government allow another round of Employees Provident Fund (EPF) withdrawals.
Prominent economist Prof Dr Barjoyai Bardai pointed out that as it is, 6.1 million or almost 50 per cent of EPF contributors under the age of 55 have savings of less than RM10,000 for their retirement.
"So by the time they retire, they will probably have between RM15,000 and RM20,000. What can they do with this amount and how long can they survive with it?
"Considering this, it appears that the EPF scheme has failed in its objective to provide protection to contributors when they retire.
"Looking at the present situation, the contributors won't be able to retire at the age of 60. They will all have to work until the day they die or else they won't be able to eat," he told the New Straits Times.
Recently Finance Minister Datuk Seri Tengku Zafrul Aziz revealed that of the 6.1 million contributors, 74 per cent of them are Bumiputeras and what's more worrying was that 79 per cent of them have less than RM1,000 in their respective accounts.
Before the pandemic, only 28 per cent of the total contributors had critically low EPF savings.
According to Tengku Zafrul, a person needs at least RM240,000 to fund their retirement for 20 years and even then, they would only get about RM1,000 a month.
Additional withdrawals, he said, would force EPF to divest its investments which would reduce members' dividends and this would give a knock-on impact on the bond and stock markets as well as erode the confidence of local and foreign investors.
Due to the severity of the Covid-19 pandemic and the implementation of the movement control order (MCO) since 2020, the then Perikatan Nasional-led government had allowed EPF withdrawals through the i-Lestari, i-Sinar and i-Citra facilities. This had resulted in RM101.1 billion withdrawals in total.
Traditionally, money in Account 2 can be withdrawn as it is already allowed for certain uses such as education or housing. In that respect, economists have said that the i-Lestari withdrawal was not too bad.
But, the i-Sinar had allowed contributors to access funds from the so-called sacred Account 1, something that was untouchable before one's retirement as it is the most protected.
After that, i-Citra was introduced, and again, money was withdrawn from Account 1, a fund that should be used for Malaysians to survive in their golden years.
With this in mind, Barjoyai questioned if the government was willing to bear the consequences should another round of EPF withdrawals be allowed, adding that contributors couldn't possibly increase the amount in their funds on their own in a short time.
"They will fall into old-age poverty after retirement. Malaysia is expected to be an ageing population by 2030 and given the state of the EPF savings our contributors have today, we will likely see more poor old people by then," he said.
Rather than allowing another EPF withdrawal, Barjoyai suggested the government introduce specific schemes to cater to current problems faced by contributors.
"Take the current flood crisis for example. If there are 100,000 flood victims and the government allocates RM100,000 to each family, the government will have to allocate RM10 billion. But, as we know, the total flood victims are only about 30,000 so the government can spend less than RM10 billion.
"Or, another way could be the government providing loans to contributors for investments and by the time they retire, they will have enough money for themselves and to repay the loans.
"Of course as Muslims, we believe that Allah will provide but Allah did not say we can stop our own efforts and leave everything to Him."