EPF: 80% retiring at 55 will live a poor life.
Retirees will not have enough to live above poverty line of RM830 for 20 years.
The Employees Provident Fund (EPF) says that nearly 80% of workers who will turn 55 this year will not have enough savings in their account to live above the poverty line. EPF chief executive officer Shahril Ridza Ridzuan said yesterday that the workers would not have enough in total EPF savings to enable them to live on RM800 a month for the next 20 years. Malaysia’s poverty line income is set at RM830.
The reason for this is that most of them were on low wages when they started contributing to the fund in 1980s, and continued earning relatively low salaries till they turned 55. More than 75% of 14 million EPF contributors earn less than RM2,000 a month. About 15% earn between RM2,000 and RM5,000 a month, and those earning more than RM5,000 are in the top 10%. EPF has set RM196,800 as a savings threshold that would allow a contributor to spend at least RM800 a month for the next 20 years.
The threshold is revised every three years to take into account inflation. Only about 20% of its contributors who turn 55 this year are expected to have RM196,800 in total savings. That percentage is likely to stay about the same in the coming years, said Shahril.
“Historically, we have a low wage environment, so that percentage has inched up only a little.” “This is why we tell contributors not to take out their savings till they are 60, when they really retire. “That extra five years can earn them an extra 40% through compound interest.” These figures, he said, reflect the new reality of working life in Malaysia, as people will have to work beyond 55 in order to save enough to live out the rest of their lives.
“This is the trend in developed countries and we are getting there. The reality is that you can no longer retire at 55 and enjoy yourself.” That age was set in the 1950s and has not been changed to take into account longer life expectancies. People are expected to live through their 70s.
“We need policies to deal with this, such as financial literacy training so that young people are aware of the need to save for retirement and how to integrate old workers into the market. “These are issues that advanced economies have to deal with and we are getting there.” (Source : Free Malaysia Today 13/3/2015)
Retirees will not have enough to live above poverty line of RM830 for 20 years.
The Employees Provident Fund (EPF) says that nearly 80% of workers who will turn 55 this year will not have enough savings in their account to live above the poverty line. EPF chief executive officer Shahril Ridza Ridzuan said yesterday that the workers would not have enough in total EPF savings to enable them to live on RM800 a month for the next 20 years. Malaysia’s poverty line income is set at RM830.
The reason for this is that most of them were on low wages when they started contributing to the fund in 1980s, and continued earning relatively low salaries till they turned 55. More than 75% of 14 million EPF contributors earn less than RM2,000 a month. About 15% earn between RM2,000 and RM5,000 a month, and those earning more than RM5,000 are in the top 10%. EPF has set RM196,800 as a savings threshold that would allow a contributor to spend at least RM800 a month for the next 20 years.
The threshold is revised every three years to take into account inflation. Only about 20% of its contributors who turn 55 this year are expected to have RM196,800 in total savings. That percentage is likely to stay about the same in the coming years, said Shahril.
“Historically, we have a low wage environment, so that percentage has inched up only a little.” “This is why we tell contributors not to take out their savings till they are 60, when they really retire. “That extra five years can earn them an extra 40% through compound interest.” These figures, he said, reflect the new reality of working life in Malaysia, as people will have to work beyond 55 in order to save enough to live out the rest of their lives.
“This is the trend in developed countries and we are getting there. The reality is that you can no longer retire at 55 and enjoy yourself.” That age was set in the 1950s and has not been changed to take into account longer life expectancies. People are expected to live through their 70s.
“We need policies to deal with this, such as financial literacy training so that young people are aware of the need to save for retirement and how to integrate old workers into the market. “These are issues that advanced economies have to deal with and we are getting there.” (Source : Free Malaysia Today 13/3/2015)
EPF: No investment into Edra Energy considered to date
We have not been approached, says CEO Shahril. The Employees Provident Fund (EPF) has not considered investing in Edra Global Energy Berhad as yet, its Chief Executive Officer Shahril Ridza Ridzuan said yesterday.
Edra Energy is the holder of power assets which 1Malaysia Development Bhd (1MDB) had previously acquired from tycoon T Ananda Krishnan. In the aftermath of its default of a RM2 billion loan granted by a syndicate of local lenders, 1MDB has been considering several options to raise funds to repay its debt obligations, including the sale of a stake in Edra Energy to Ananda. However, according to Shahril, to date the provident fund has not been approached to invest in the company. Accordingly, he said that it was premature to say whether or not the EPF would undertake any such investment.
“We have to wait for all filings to be done and approved by the relevant authorities before we start to look at it. If you look at every single possibility it will just be a waste of time. “
So we wait to see if something is likely to come to the market before we look at it. So, in this instance, we haven’t started any process,” he was quoted today by The Sun as saying
We have not been approached, says CEO Shahril. The Employees Provident Fund (EPF) has not considered investing in Edra Global Energy Berhad as yet, its Chief Executive Officer Shahril Ridza Ridzuan said yesterday.
Edra Energy is the holder of power assets which 1Malaysia Development Bhd (1MDB) had previously acquired from tycoon T Ananda Krishnan. In the aftermath of its default of a RM2 billion loan granted by a syndicate of local lenders, 1MDB has been considering several options to raise funds to repay its debt obligations, including the sale of a stake in Edra Energy to Ananda. However, according to Shahril, to date the provident fund has not been approached to invest in the company. Accordingly, he said that it was premature to say whether or not the EPF would undertake any such investment.
“We have to wait for all filings to be done and approved by the relevant authorities before we start to look at it. If you look at every single possibility it will just be a waste of time. “
So we wait to see if something is likely to come to the market before we look at it. So, in this instance, we haven’t started any process,” he was quoted today by The Sun as saying
EPF money is not your money alone
How to help Malaysians expand their means and grow out of their income trap.
I refer to TK Chua’s piece entitled “Utilising EPF savings does nothing to help those in debt”. While I respect his learned opinion that the Employee Provident Fund (EPF) should only be used for retirement, he is missing the main point in his rather rambling discredit of the idea.
The MP of Langkawi suggested that EPF withdrawals be allowed to pay off credit card debt. I, as pointed out, was for EPF withdrawals to be used by bankrupts to clear debt and for those who wish to start a business, to use the funds as capital.
There is a huge difference. And furthermore, Chua is discrediting one major and important fact; the EPF is not the money of the government or that of himself, but that of each of the 13.7 million individuals that have invested in it. His objection is denying a person to spend their own monies as they see fit, even if they know better on how to get bigger returns, out of fear they might “spend it foolishly”.
Are we going to deny this to those who can top a dividend rate in 2013 of 6.35 percent? If anything, I do agree that Malaysians should be spending within their means. However, what I have suggested is to allow the opportunity for Malaysians to invest in expanding their means by using the EPF funds to first, pay off their bankruptcies and second, to venture out as entrepreneurs, if not angel investors and provide venture capital or at least become stock market players.
At a time where a person’s gross (before EPF and Socso deductions) salary and wages is at a median of only RM1,500, thus making a household income based solely on this income only RM3,000, shouldn’t all Malaysians be given an opportunity to invest further to grow their income?
And to set the record straight, this is not a government bailout. It is giving people access to their own hard earned monies.
While Chua may believe that the money should be left for retirement, and I believe we should be able to use the money to allow some to live unencumbered by a bankruptcy before they retire, both of us are just two out of 13.7 million people subscribing to the provident fund.
I suggest we allow the rest of Malaysia be given the ability to decide what to do with their money (and it is their money) rather than trust the EPF to do so. And to Chua, my suggestions are not based on adventurism. It is allowing people to take out their own money rather than rely on banking loans further, or be stained with a black mark and stress for most of their lives in bankruptcy. This is about being a realist.
Source : Hafidz Baharom is an FMT reader.
With a firm belief in freedom of expression and without prejudice, FMT tries its best to share reliable content from third parties. Such articles are strictly the writer’s personal opinion. FMT does not necessarily endorse the views or opinions given by any third party content provider.
- See more at: http://www.freemalaysiatoday.com
How to help Malaysians expand their means and grow out of their income trap.
I refer to TK Chua’s piece entitled “Utilising EPF savings does nothing to help those in debt”. While I respect his learned opinion that the Employee Provident Fund (EPF) should only be used for retirement, he is missing the main point in his rather rambling discredit of the idea.
The MP of Langkawi suggested that EPF withdrawals be allowed to pay off credit card debt. I, as pointed out, was for EPF withdrawals to be used by bankrupts to clear debt and for those who wish to start a business, to use the funds as capital.
There is a huge difference. And furthermore, Chua is discrediting one major and important fact; the EPF is not the money of the government or that of himself, but that of each of the 13.7 million individuals that have invested in it. His objection is denying a person to spend their own monies as they see fit, even if they know better on how to get bigger returns, out of fear they might “spend it foolishly”.
Are we going to deny this to those who can top a dividend rate in 2013 of 6.35 percent? If anything, I do agree that Malaysians should be spending within their means. However, what I have suggested is to allow the opportunity for Malaysians to invest in expanding their means by using the EPF funds to first, pay off their bankruptcies and second, to venture out as entrepreneurs, if not angel investors and provide venture capital or at least become stock market players.
At a time where a person’s gross (before EPF and Socso deductions) salary and wages is at a median of only RM1,500, thus making a household income based solely on this income only RM3,000, shouldn’t all Malaysians be given an opportunity to invest further to grow their income?
And to set the record straight, this is not a government bailout. It is giving people access to their own hard earned monies.
While Chua may believe that the money should be left for retirement, and I believe we should be able to use the money to allow some to live unencumbered by a bankruptcy before they retire, both of us are just two out of 13.7 million people subscribing to the provident fund.
I suggest we allow the rest of Malaysia be given the ability to decide what to do with their money (and it is their money) rather than trust the EPF to do so. And to Chua, my suggestions are not based on adventurism. It is allowing people to take out their own money rather than rely on banking loans further, or be stained with a black mark and stress for most of their lives in bankruptcy. This is about being a realist.
Source : Hafidz Baharom is an FMT reader.
With a firm belief in freedom of expression and without prejudice, FMT tries its best to share reliable content from third parties. Such articles are strictly the writer’s personal opinion. FMT does not necessarily endorse the views or opinions given by any third party content provider.
- See more at: http://www.freemalaysiatoday.com