DS Najib’s populist demand put EPF at huge risk

The former Prime Minister Datuk Seri Najib Razak’s populist proposal to restructure EPF’s dividend payout, in which members with lower savings receive higher dividends, reflects that he does not understand the fundamentals of the EPF system. Instead, DS Najib only covets political capital by utilizing the large fund at the expense of all employees when they retire.

DS Najib, who is also Pekan MP, recommended that the EPF should restructure its dividend payment policy by paying higher dividends for those with lower savings in stages. According to DS Najib, it would make sure that more EPF members will have enough savings for retirement instead of making those who have enormous EPF savings richer.

However, DS Najib’s remark proved that he does not understand the basic principles and concepts based on which the EPF operates. He is unworthy of becoming an elected representative and should stop proposing foolish ideas about the EPF.

First of all, the EPF is actually a social protection scheme implemented by the government to make it compulsory for citizens to save part of their salaries for retirement protection. The system is independent of the government budget and does not require taxation. Employers and employees are required by law to deposit a certain proportion of their salaries into the employees’ personal EPF accounts and enjoy dividends in the savings.

Due to the power of time and compounding interests, EPF members will obtain a considerable amount of retirement savings after working for 20 to 30 years. With that, the EPF members will be able to enjoy a decent retirement.

Given that most EPF members are employees, some have a considerable amount of EPF savings due to the effect of time and compound interests. As such, they are not rich as claimed by DS Najib. On the other hand, most of the entrepreneurs and investors who possess enormous wealth will not invest in the EPF.

Wealth inequality is not an issue when it comes to EPF members, for all of them accumulate their savings using the power of time and compounding interest. As such, DS Najib was simply wrong to point his finger at members who have considerable amounts of EPF savings!

Allowing members with lower deposits to obtain higher interest rates is actually a robbery in disguise against the law-abiding and honest members who have made long-term deposits as well as a complete betrayal of the principles of fairness and justice.

The EPF released a report a month ago, stating that after three rounds of allowing members to withdraw from their retirement fund during the pandemic, a total of RM101 billion was disbursed to over 7.4 million members.

As a result, some 6.1 million EPF members now have less than RM10,000 in their EPF accounts. Out of the 6.1 million EPF members, 3.6 million have less than RM1,000 in their retirement savings. The EPF pointed out that 73% of its members will not meet the Basic Savings threshold (RM240,000) at the age of 55. In other words, at the age of 55, members with insufficient funds will be unable to withdraw RM1,000 per month for 20 years consecutively.

DS Najib resorted to populism by inciting the people to pressure the government to open up EPF withdrawals at the expense of the retiree’s quality of life in the future. Moreover, the country’s financial and economic situation will also be greatly affected as a result.

Therefore, I call upon the EPF to stand firm and resist the populist demands made by DS Najib Razak in order to truly protect the benefits and guarantee the future of all EPF members.

Chiong Yoke Kong
DAPSY DEPUTY CHAIRMAN & SA FOR TANAH RATA
Media statement by Chiong Yoke Kong in Cameron Highlands on Thursday, 25th November 2021