IT was a competition of sorts between two numbers – 55 and 60. Which number would hold up? Which would take home the trophy, so to speak?
Both numbers referred to ages. Ages which had great significance to when employees in the country, who are members of the Employees Provident Fund (EPF), would finally be able to have their hard-earned savings in the fund all to themselves.
In the end, it was 55 that won, hands down, Eye should say.
The issue of possibly raising the age for full withdrawal of EPF savings didn’t just crop up recently. Rumours were rife back in 2012 that the EPF would implement 60 as the age eligibility for members to withdraw their savings.
This followed the raise in retirement age from 58 to 60. So, earlier in the week, the EPF set up an online poll for its members to see if the eligibility should remain at 55 or be raised to 60.
The initiative to conduct the poll is a commendable one, showing fairness and transparency on EPF’s end by allowing the people to have their say. By Thursday, more than 50,000 Malaysians who have savings in EPF had taken time to respond to the poll.
The results were not a surprise. The majority held steadfast to 55 as their choice in eligibility to withdraw their savings.
That very day, Prime Minister Datuk Seri Najib Tun Razak announced that members of the EPF would retain their right to fully withdraw their money at 55.
He added that while there will be improvements to EPF, these would apply only to those who decided to work beyond 55, and as of 2017 the EPF would also embark on Syariah-compliant investment options.
Based on the feedback, the majority of Malaysians feel that they are able to take care of their retirement funds without having the EPF ‘police’ their money.
Some felt that the EPF was insulting the people’s intelligence by assuming that they could not manage their funds by themselves and would blow all their savings upon withdrawing the full amount from EPF. There were even a handful who claimed that the EPF had its own agenda in retaining the people’s hard-earned money.
Nonetheless, the intentions of the EPF to assist people in managing their funds are good. Of course, there are very valid reasons on both sides. For the people, the reason was as clear as day, and it is that they should have access to the money which is rightfully theirs at the age that they think is right.
At the same time, we have frightening statistics reflecting heavy debts among the younger generation who are unable to control their spending.
This is where options could be introduced to help those who need help managing their funds. Let the eligibility to withdraw a person’s savings remain at 55, but have an option where those who feel that they need help can choose to withdraw only a part of their savings.
Alternatively, set up a scheme where members can also opt to have funds released in small amounts, like a pension, to their bank accounts monthly.
The whole retirement concept today differs very much from, say 20 years ago. Back in the day, retirement meant that a person would really be free of work, sit back and not earn any additional income. Those on a pension scheme would wait, like those still working, for ‘salary day’ when they would receive their pension.
Those who were on EPF would slowly utilise the funds that they saved, month by month, year by year. Today, retirement is different. Many continue to work beyond their official retirement age to generate some form of income, be it part-time or full-time.
Factors like the rising cost of living and even having started families later in life add to the need to have some sort of income beyond 55. Those nearing retirement often plan and make commitments to use their EPF savings when they hit 55.
Some may have committed to a small business that they can run at their own time and leisure just to keep themselves occupied and as an investment to generate more income. Others use part of their EPF withdrawals to invest in other ways, for example through unit trusts which provide returns in a shorter time.
However a person decides to utilise his or her EPF savings, it is that individual’s responsibility.
The EPF should, however, still offer options for its members to keep their savings in the fund for an additional five years by offering added incentives.
For example if the members opt to retain at least 50 per cent of their savings in the fund for an additional five years, they could be given a bonus on top of the annual dividends.
It will work both in the favour of the members and EPF to have options that the members can choose from, rather than just setting an age to be eligible for withdrawing one’s savings.
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