KUALA LUMPUR, 19 Jan 2009: The proposal to convert the Employees Provident Fund (EPF) scheme to a monthly pension scheme for private sector employees is not viable as individual savings are too small.
Malaysian Trades Union Congress (MTUC) secretary-general G Rajasegaran said that on average, savings of the majority of the seven million private sector employees in the EPF upon retirement was less than RM50,000.
“Assuming the retiree lives for the next 20 years and if this savings was given to him in monthly instalments instead of one lump sum, he would receive about RM214 monthly as pension,” he told Bernama today.
He said this amount was definitely insufficient for the retiree to sustain himself.
Rajasegaran was commenting on a statement by Human Resources Minister Datuk S Subramaniam that the cabinet had given the green light to the ministry to study the possibility of converting the EPF scheme to a pension scheme for private sector employees.
Public sector employees in Malaysia are already enjoying a pension scheme, including free medical treatment at government hospitals for life.
Rajasegaran said the proposal was nothing new, as this was discussed between the MTUC and EPF Board more than 15 years ago and no viable solution had been found, so far.
Meanwhile, the Malaysian Employers Federation (MEF) suggested that to make it viable, the government should give the employees an option either to withdraw their savings in a lump sum or on a monthly instalment basis.
Its executive director, Shamsuddin Bardan, said savings in the EPF rightly belonged to the employees and they had a right to do what they wanted and the government could not decide for them.