Since I’m hardly an unbiased observer in this instance, I’ll forbear from commenting. However, public feedback on this and on the other three proposed changes to the EPF Act can be given here. You will need to open an i-Akaun, if you don’t have one already.
The four proposals are:
- Raising the withdrawal age to 60, with two options given: Either a graduated increase in the withdrawal age (to take place over 15 years); or an immediate switch, with full withdrawal at 55 still available, but new contributions after 55 to be sequestered until age 60.
- Streamlining EPF contributions to the minimum wage i.e. those paid below the minimum wage will now be required to contribute as if they were paid the minimum wage, to apply to both employees and employers.
- Raising the dividend payout period from 75 to 100.
- Giving members a choice for a Shariah compliant portfolio.
Posts
Dear Sir, what's in it for EPF?
ReplyDelete@anon 4.05
DeleteNothing but headaches. We're not doing this for the fun of it
Oh but the bond market would like the EPF money.
DeleteBtw,
Last I heard/thought I heard, (before this) EPF actually wanted less assets under management...was I wrong?
Following in the footsteps of Singapore's CPF?
ReplyDeleteNext step - raising the retirement age, maybe.
That's not going to go down well with the hundreds (thousands?) of fresh graduates and school leavers entering the workforce each year.
Nor will it go down well with companies who are trying to rejuvenate and upskill their workforces.
Where is the commitment to continuous skills upgrading and lifelong learning?
@anon 5.01
DeleteWe're "following in the footsteps" of CPF (or more precisely, every other pension system in the world), for the same reason they did - pension adequacy in an environment of population longevity and ageing.
The difference is that we're doing it much earlier than many others did. The median age of the population of Singapore is nearly 40; Malaysia is around 28. From a demographic standpoint, Malaysia is approximately where Singapore was 30 years ago.
Hello Froggy under coconuts...
DeleteMy CPF is only giving me less than 3% annually from 1988 - 2013. In fact average out about 2.83% annually over the duration.
Notice tat when it comes to EPF versus Singapore, no clowns come out and say, Singapore tis, Singapore that.
Travel more n open eyes.
Mat Bonk
Dear Mat Bank,
DeleteCPF only deducts contributions up to SGD6,000 of your salary. Agreed that the yield sucks big time, which is actually an implicit tax, but it doesn't mean we cannot learn from their innovations. We can learn from mistakes too. The size of EPF and its unrealistic dividends r pushing us to take more risks. Who is the frog here?
Damn autocorrect!!!! LOL
DeleteNot during my time. 20% employer, 20% employee. 1988-1993.
DeleteNo SGD 6k limit. Slight higher CPF deductible tax offset. Nothing to shout lah.
Mat Bonk
Dear Hisham,
ReplyDeleteWe both know that leakages through early withdrawals are a major factor, but that is not really highlighted. Inflation is actually eating away the purchasing power of an older generation of EPF members. While I totally endorse the need to align the withdrawal age with the retirement age (as well as the differences in minimum wage definitions), I think it is a tad dishonest to claim that the 3rd and 4th suggestions will make much of a difference. The irony is that it is the same low income workers who need to save longer will want their money sooner. Why isn't the EPF exploring the wage ceiling option to reduce the headaches? Free up the wealth of the millionaires and high income group and let them inject their funds into the stocks and bonds market. That would also make PRS folks much happier.
Just saying.
@anon 8.11
DeleteIt's been considered, that's all I can say.
The leakages are to pacify the pampered "poor" Malaysian masses. Politician are guilty of playing to gallery to the detriment of the future financial health of the populace.
DeleteTry giving 4% return and say that is better than Singapore CPF. Ahaks.
However, I am amazed that EPF did not seem fit to reward "old timers" who did not withdraw from their account, pehaps something along the line - no withdrawal for last 5 yrs +0.2% more, no withdrawal last 5 years +0.5 % more. Too much computing power required?
That way it could discourage leakages and reward the frugal.
Mat Bonk.
Or we can be creative and set a cap to provide dividends only to those with a balance of less than RM1 million. Or reduced dividend to high income earners. Alas, without a transparent way of calculating dividends, EPF could just adjust the returns and no one will be the wiser. Rewarding "old timers" can also serve to choke the entrepreneurial spirit. It is like rewarding people to continue to become salaried workers. Just my quick 2 sens.
Delete@Mat Bonk
DeleteAgain, both different dividends and caps have been considered, but I can't comment any further than that.
In addition, hoping that the public will not realize the much bandied near 70% of EPF members do not have RM50,000 balance at age 54 actually included the non-active accounts is really disingenuous.
ReplyDeleteIt is 2003 all over again.
ReplyDeleteI hate to say this, at 55 years old, they are adults, way beyond adults. If they still do not know how to save and spend everything on a brand new car or renovating their houses or go for expensive travel. I think they deserve it.
ReplyDeleteGoodness gracious, they are adults, stop treating them like a 5 years old kids.
@anon 1.52
DeleteThis goes back to the question of where the line between social good and personal responsibility lies.
Nearly 80% of EPF members on retirement have less than the amount they would need to stay above the poverty line. I saw a presentation by EPU last week that showed 25.5% of households in the bottom 40% of the income distribution are headed by men and women above the age of 60. That's equivalent to 10% of all households, and higher than the proportion of >60 year olds in the entire population.
Unless you're arguing that old age poverty is something that society should ignore?