I do not deny the fact that peoples’ hardship has worsened in the last months with the Covid-19 pandemic and recent floods.
We are all aware of business closures, job and income losses but that’s no excuse for ignorant decisions, which would rob poor Malaysians from financial security in their old age.
So, the appeal by the Malaysian Muslim Consumer Association and former Prime Minister Najib Razak
or UMNO’s suggestion for an one-off RM10,000 EPF withdrawal are populist and misguided moves.
Yes, the state needs to step in but not by leaving the rakyat with no choice but to fork out their retirement savings in order to rebuild their homes and get their lives together.
What is required is a robust social protection system that could address emergencies such as the floods and help people mitigate the consequences of the pandemic.
Withdrawing EPF funds is destructive in the long run as it creates old-age poverty and financial vulnerability.
EPF revealed that 6.1 million members now have less than RM10,000 in their EPF accounts, with 3.6 million having less than RM1000, leaving them vulnerable and unprotected after their retirement. 48% of EPF members below age 55 have critically low savings.
About 85% of EPF contributiors will face the risk of old-age poverty, and they would have to extend their work life by extra four and six years to rebuild savings that were utilised during the pandemic.
This group will not benefit from future dividends and compounding interests.
This will further widen the gap between the rich and poor and undermine the government’s efforts in the national poverty eradication programme.
As such, the only viable alternative is to establish a robust social protection system instead of opting to further impoverish the poor by transforming EPF savings, a retirement fund, into an emergency relief fund.
The ongoing campaign by UMNO leaders together with their NGO affiliates for further withdrawal of individual retirement funds would only be a disservice.
In fact, they would only end up deceiving the very people they claim to help.