EPF proposal to disallow contributors from withdrawing their total savings at 55 unlawful and against Employees Provident Fund Act 1991 and DAP will challenge its legality in court as a public interest test-case if it is implemented
by Lim Kit Siang
(Penang, Sunday): The Employees Provident Fund (EPF) proposal to disallow contributors from withdrawing their total savings at 55 is unlawful and contravenes the Employees Provident Fund Act 1991 and DAP will challenge its legality in court as a public interest test-case if it is implemented.
There has been nation-wide uproar by the 10.3 million EPF contributors at the EPF proposal to limit EPF contributors on retirement to withdraw only 20% to 30% of their total savings, with the rest being paid out in monthly payments over 15 to 20 years, with the EPF paying annual dividends for the money remaining in the accounts.
The “daylight robbery” response of the Federation of Malaysian Consumers Association (Fomca) president Datuk Prof Hamdan Adnan to this proposal best sums up the reaction of the EPF contributors to the EPF scheme.
It is one thing for the EPF to propose an attractive scheme offering retired EPF contributors the option of keeping the bulk of their savings with the EPF for investment but altogether a different proposition to deprive the over 10 million EPF contributors their legal right to withdraw their life-savings on retirement!
This proposal, coming after the lowest EPF dividend in 40 years at 4.25 per cent last year, and the nightmare of even lower dividends in the coming years until scraping the statutory minimum of 2.5 per cent, is not calculated to inspire the confidence of the 10 million EPF contributors in the sagacity of the EPF Board and management.
It is even more disturbing when it is recalled that during the nation-wide furore over the lowest EPF dividend in 40 years in April this year, the argument was advanced in the media – clearly inspired by the EPF management – that the EPF only owes the duty to ensure that workers can retire at 55 with what they had remitted to EPF over their working lives, and any dividend or interest is a bonus.
Now, EPF is tinkering with the proposal to take away this right of the EPF contributors to withdraw their savings on retirement at 55!
The latest EPF proposal to deny the 10 million EPF contributors their legal right to withdraw their entire savings on retirement at 55 should be a wake-up to the 10.3 million EPF contributors that there is something very wrong in the EPF management and investment policies and practices and that the contributors should organize themselves to demand a proper and rightful say in the security and quality of their life-savings in the EPF which stand at over RM200 billion.
In April this year, I had asked whether it is not true that the EPF dividend for last year could be 5.43 per cent and not 4.25 per cent if the EPF did not have to set aside RM2.14 billion for “paper losses” in equity last year.
The EPF Board and management should now explain whether EPF is facing a financial crisis because of its tens of billions of ringgit of “paper losses” in equity and doubtful debts. From 1998 to 2002, EPF had to make the astronomical total provision of at least RM5.09 billion in five years, and a MTUC leader had said in April that the EPF was still sitting on RM14 billion of “paper losses”, with RM2 billion from the EPF’s ill-advised and disastrous venture as a housing and land speculator in the mid-nineties through the Malaysian Building Society Berhad (BSB).
A long-time EPF insider who had served for a decade on the EPF Investment Panel had admitted the serious failure to run the EPF in the best interest only of its members, raising serious governance issues as to why the interest of the 10 million EPF contributors had not been given top-most priority over all other considerations and interests by the EPF Board and management.
* Lim Kit Siang, DAP National Chairman