Tuesday, January 20, 2009

Don't Touch My Cookie Jar!

The Human Resources Ministry is looking into setting up a pension scheme for private sector employees so that their Employees Provident Fund (EPF) savings can last a lifetime. Through the scheme, the employees would receive a monthly pension instead of withdrawing all their savings upon retirement.

(Findings showed that many EPF contributors used up all their savings within two years and were left without any source of income).

However Malaysian Trades Union Congress felt that it was not viable as individual savings are too small. On average, savings upon retirement of the majority of the seven million contributors was less than RM50,000. Assuming the retiree lives for the next 20 years, he would receive about RM214 monthly as pension. This amount would probably feed him for only a week!

Malaysian Employers Federation said such a scheme should not be forced on EPF contributors. To make it viable, the employees are to be given an option either to withdraw their savings in a lump sum or on a monthly instalment basis. The savings rightly belonged to the employees and they had a right to decide on the options.
As a contributor, I would prefer to be given the option. I would use the option to withdraw lump sum as I believe there are many better managed investment opportunities in the market (high risk high gain la!).

Anyway, the authority has been flip flop and inconsistent in managing EPF for the past year. On one hand, it encourages the contributors to contribute less and withdraw more from its various schemes. On the other hand, it wants to retain the savings of the retirees. C’mon guys, make up your mind!

What say you? Trust these guys with your savings or ‘I’m an Accountant - Get Me Out Of Here’?

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