16th November 2020
The decision to impoverish workers is political and not fiscal
It’s ironic when we have to teach the government about being responsible.
Tapping into worker’s savings to support its social protection policies is being irresponsible and complacent.
In other words, workers are asked to dig into their pension savings to help manage their current financial challenges when they are in dire need of state support.
Earlier in the year, the government introduced the i-Lestari scheme which allowed contributors to withdraw RM500 per month from their Account 2 of the Employees Provident Fund (EPF) for a period of 12 months, benefiting about 4.7 million people.
Budget 2021 proposes a similar approach, with RM500 withdrawal for a period of 12 months from Account 1 to help reduce the financial burden of workers.
But the numbers don’t favour the proposal by Prime Minister Muhyiddin Yassin’s administration.
For example, in 2018 EPF estimated that 38% (2.8 million members) of the 7.36 million members do not have enough money in their Account 2 to withdraw the maximum RM500 a month or RM6000 per year.
A further 18.8% of EPF members or 1.38 million contributors did not have a total of RM6000 saved up as of end-2018 to take advantage of the i-Lestari funds.
About 65% of EPF contributors aged 54 and below only had savings of less than RM50,000.
And approximately 60% of retirees used up their EPF savings within 3 years of retiring.
This gloomy reality indicates that a significant number of workers are in poverty.
This means a further reduction in their savings will lead to a complete loss of financial security upon retirement.
But the government chooses to further burden people who are financially struggling at this time.
The combined withdrawals will have an impact on the future earning capacity of workers through loss of dividends plus the compounding interests in lost savings.
It will also wipe out financial security for old age.
Let’s get this straight though: it’s not like the government doesn’t have the funds to support workers.
It has no qualms allocating millions of ringgit for projects that can be considered propaganda and political in nature, putting up buildings to promote individual personalities, or appointing a 70-person cabinet.
Can the government therefore revamp this budget?
For a start, it can transfer funds to support workers by eliminating or re-evaluating the following budget proposals:
1. Jasa’s allocation amounting to RM85.5 million
2. Penggerak Komuniti Tempatan amounting to RM8.63 million
3. PMO “Project Khas” amounting to RM1 billion
4. Ministry of Finance’s “Pelbagai Suntikan Modal” amounting to RM 13.61 billion
So you see, the government has the funds. But does it have the political will to support the people who need it most?
Or is Muhyiddin‘s administration taking the easy way out by transforming EPF savings, a retirement fund, into an emergency fund?
MP for Klang