This article first appeared in The Edge Malaysia Weekly on February 27, 2023 - March 5, 2023

At the height of the pandemic, when many Malaysians either couldn’t earn a living or had to take a pay cut, withdrawing money from retirement savings might have seemed like a good bet — after all, the choice was between “survive today in order to see tomorrow” and “die today, but have lots of money for the funeral tomorrow”.

So desperate were people that the slightest delay in government approval to permit withdrawal from the Employees Provident Fund (EPF) was viewed as lacking in empathy — especially when seen from the lens that the money isn’t even the government’s to withhold. A government that granted permission was therefore seen as benevolent.

But when half of all EPF members now have less than RM10,000 saved up for their old age, and more than 80% of these have less than RM1,000, permitting any more withdrawals would be outright negligent of any government. Depleting retirement savings is not the way to help the rakyat.

Nevertheless, the government must still try to ensure that Malaysians have enough saved up to independently sustain them in their old age. The challenge, therefore, is to ensure that people earn more than they need, so that there is sufficient excess that can be set aside for retirement.

The unity government’s new Budget 2023 pledge to eradicate absolute poverty in this very year is commendable. 

By providing incentives for the private sector to hire fresh graduates — especially those from the TVET (technical and vocational education and training) stream — and vulnerable members of society, and encouraging them to provide creches in the workplace so that more women can join the workforce; and with the government itself budgeted to give monthly assistance to those just getting on their feet, and reducing the income tax rate for the M40, contributing a one-off payment into the EPF savings of the poorest members, and postponing PTPTN loan payments for low-wage earners until they earn more, at least these proposals (if passed) will be the first step in making sure people are employed, and take a little burden off their shoulders.

Even so, more needs to be done to address the widening income gap in Malaysia and it will be interesting to see what plans, if any, the government has to impactfully improve wage levels.

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