LETTER | EPF withdrawals show need for a social welfare state in the future

LETTER | One should look positively at the call by the Umno leadership for the government to allow the EPF to accept applications for further withdrawals by various needy groups such as the B40 and others.

One needs to understand that today is as important as tomorrow. The EPF cannot simply be regarded as only a retirement fund but should also be an emergency fund for people greatly affected by the double whammy - the pandemic and the floods.

When times are good, the government can increase the contributions of both employees and employers to make up for the withdrawals. Most of the present withdrawers from the fund will, over the years, be promoted or seek higher-paying jobs and subsequently contribute more to the fund.

The most crucial issue now is that they need financial help, and there is not much assistance coming from anywhere. Hence the people should be allowed to withdraw from their retirement fund. These withdrawals will also have multiplier effects to aid the ailing economy by way of increased consumption.

The government can also help the EPF by providing more opportunities to invest in higher dividend-yielding shares and equities from profitable corporations, both in Malaysia and overseas, thereby increasing the amount in the individual's fund through higher annual dividends.

The government has utilised billions of ringgit from the EPF to finance a large number of socio-economic plans and projects since Merdeka, and it is therefore obliged to provide various incentives such as share allocations locally for the EPF to reap higher profits that go back to the contributors.

One should recall that a few years ago, the EPF was finding it difficult to manage the huge fund with the accumulated hundreds of billions of ringgit as it is confined to investing them only in locally profitable blue chips and ventures.

The EPF was keen on overseas investments to increase its profits, but there was opposition to this idea. Therefore some necessary withdrawals, as are being demanded now, should be encouraged to lessen the burden of the EPF.

Mindful of its socio-economic duty

It must also maximise the use of its local assets to increase its income. The RRI, now known as Kwasa Damansara, was sold by the federal government to the EPF more than 15 years ago and until today, not a single house has been built on this prime property; only the EPF office building is being constructed.

The infrastructure work - the Dash Highway and road widening for Kwasa Damansara, is taking ages to complete. If the RRI had been sold to private property developers, they would have made it into a multi-billion ringgit mixed development by now and made profits of hundreds of millions of ringgit.

The RRI was sold to the EPF due to the government wanting to assist the retirement fund in making more profits through the development of Kwasa Damansara, although the purchase price of the RRI was inflated as was exposed later.

The EPF should not be burdened by the government insisting on Kwasa Damansara projects or developers to be subjected to quotas and other requirements as it can hamper the speedy development of Kwasa Damansara.

The fund should take into account the fact that at least 50 percent of the 2,000 acre-plus Kwasa Damansara must be used for the building of affordable homes for the B40 and M40 groups who form the overwhelming majority of the contributors.

It should not be exclusively focusing on condominiums, bungalows and apartments for the rich only for greater profits but should be mindful also of its socio-economic duty.

A more positive happening in the future could be that the insufficient balance in the EPF fund among the B40 and M40 will finally wake up the government on the crucial need for higher wages and the creation of a social welfare state as is the case with a growing number of countries.

There is no point in stating that more than half of EPF members have less than RM 10,000 in their account and not planning to overcome this kind of serious problem that could snowball in the years and decades ahead. The government has to come with a social pension scheme for retirees and senior citizens.

Duty of govt to look after retirees

Presently, only civil service employees get the advantage of life-long pension and medical benefits. The government cannot simply wish away the plight of the retirees by justifying that the EPF contributions will take care of them and do nothing to address the hardship of a large number of senior citizens who spend their twilight years in misery and poverty.

Even at the best of times, the EPF savings have never been enough for the retirees and senior citizens from the B40 category, what more if prior withdrawals have been made for housing and others like i-Lestari, i-Sinar and i-Citra.

The government should not wash its hands off this major social problem in the country. Some senior citizens opt to work even after reaching the age of 70. Need there be a better illustration of the important need for a social pension for all senior citizens considering that every citizen has done his best in the nation-building process.

It is the duty of the government and country to look after them in their vulnerable old age when they are beset by infirmities, disease, unsupportive offspring and a lack of income. Many senior citizens could have bankrupted themselves due to the high cost of living and by providing for their children's costly private higher education.

A basic social pension of at least RM500 monthly should be paid to the retirees from the B40 and M40 groups under a new social welfare scheme that can be an alternative or addition to the EPF.

All citizens, working or self-employed, will have to contribute to the scheme, which is basically based on the actuarial calculation that the working young will pay for the retirees and senior citizens, and the cycle will go on to benefit all in the future.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.