KUALA LUMPUR (Oct 31): The Employees Provident Fund said RM101 billion has been disbursed to over 7.4 million members — about half its total members — to cope with the pandemic, following the introduction of the special withdrawal facilities of i-Lestari, i-Sinar and i-Citra.
The three exceptional withdrawals have left 73% or nearly three quarters of members in a serious state of having inadequate funds to retire above the poverty line, it said in a statement Sunday.
It also estimates that members will need to work an extra four to six years to rebuild savings that have been used during the pandemic, which has also led to a significant drop in the percentage of members meeting the Basic Savings threshold (RM240,000 at age 55) from 36% in 2020 to an estimated 27% by the end of this year.
In the face of this, the EPF said future exceptional withdrawals will need to be very carefully considered.
"While they (the exceptional withdrawals) provided some financial relief to members during the pandemic and various MCOs, the withdrawals have inevitably led to 6.1 million members now having less than RM10,000 in their EPF accounts, of which 3.6 million have less than RM1,000, leaving them vulnerable and unprotected for their retirement.
"The drop in savings is particularly worrying for Bumiputera members, as they made up 78% or more than three quarters of the withdrawal applicants. As a result, 4.4 million or 54% Bumiputera members now have less than RM10,000, and 2.0 million or 25% have less than RM1,000," it said.
In addition, the distribution of savings has become increasingly skewed, it said.
"The bottom 40% of EPF members (about 5.0 million members) saw their savings drop by 38% to just RM8 billion, translating into a median savings balance of RM1,005. The middle 40% also suffered a decline of 18% to RM155 billion, or a median balance of RM24,995.
"Only the top 20% of members aged below 55 saw an increase in savings, but this translates to a median of RM152,043, or equivalent to just RM633 per month for 20 years.
Fundamental reforms for Malaysia's social protection system being looked at
The EPF, meanwhile, noted that the recently tabled Budget 2022 includes an allocation of RM8.2 billion for Bantuan Keluarga Malaysia (BKM) and RM4.8 billion for Inisiatif Jamin Kerja Keluarga Malaysia (JaminKerja), as well as a number of measures to assist the rakyat, which it said exemplified the government’s strong stance in strengthening the social protection agenda for Malaysians.
"This can also be seen particularly in the continuation of i-Saraan and Kasih Suri Keluarga Malaysia incentives. These efforts go some way towards addressing the shortcomings of the country’s social protection system for the vulnerable members of society, to ensure that they have access to at least a minimum standard of living, even during unprecedented times.
"The social protection agenda is being overseen by the Malaysian Social Protection Council (MySPC), chaired by the Prime Minister, and is currently looking at fundamental reforms to the nation’s social protection system. The EPF is in full support of these moves, and will work closely together with the government to ensure a secure and protected future for our members and the rakyat," it added.