KUALA LUMPUR: The government has allowed a lower monthly contribution by employees towards their Employees Provident Fund (EPF) account in an effort to boost disposable income among the working group.
Finance Minister Datuk Seri Najib Razak said yesterday employees now have the option for a two-year period effective Jan 1, 2009 to contribute only 8% towards their EPF account instead of the current 11%, while the 12% EPF contribution by employers would remain unchanged.
“With a reduction of 3%, the total contribution towards an employee’s EPF account is still at a reasonable 20% mark,” said Najib when winding up the debate on the 2009 Budget at the Dewan Rakyat.
He said an employee with a salary of RM2,000 a month would have additional RM60 to take home while an employee with RM6,000 monthly salary would have an extra RM180 to spend.
“In the event all employees choose a lower EPF contribution, this would involve an amount of RM4.8 billion a year,” he said.
The government had previously under the Economic Stimulus Package in 2003 announced a reduction of EPF contribution by employees from 11% to 9% for a year
Hmm… First, let’s look at what the average Malaysian earns…
| Income range |
Percentage (%)
|
| below RM1,000 |
8.6%
|
| RM1,000 to RM2,000 |
29.4%
|
| RM2,001 to RM3,000 |
19.8%
|
| RM3,001 to RM4,000 |
12.9%
|
| RM4,001 to RM5,000 |
8.6%
|
| RM5,001 to RM10,000 |
15.8%
|
| above RM10,000 |
4.9%
|
Source: Malaysia’s Department of Statistics
Close to 80% of the working Malaysians are earning salary below RM5,000 with majority of them earning below RM3,000. A mere reduction of 3% for a RM3,000 earner is about RM60, and a single trip to Tesco would have easily vaporized that.
That being said, RM60 not paid to EPF is RM60 not going down to potential ValueCap deals in the future, which is not so bad after all. Maybe this “popularity-gaining-trick” is something the Finance Minister thought he could use to make the people happy with KWSP again.
Also, have another look at this statement:
“In the event all employees choose a lower EPF contribution, this would involve an amount of RM4.8 billion a year,” he said.
Sounds like a desperate link-up with the recent RM5 billion + RM5 billion KWSP-to-Valuecap fund transfer. Why did the Finance Minister had to emphasize on the figure “RM4.8 billion“? Pump out some figures on the spreadsheet and generate some figures close to RM 5 billion- seems like another desperate attempt to “benefit and pacify” the labour force of the nation.
I don’t know about you, but it just doesn’t sound too convincing to me. 3% reduction and RM10 billion for a private corporation just doesn’t sound like a balanced equation. How about 3% of the ValueCap’s net profit wired monthly to my Maybank account?
So if I am contributing my EPF, I would definitely opt to reduce my money by 3% and have that amount transferred to an alternative retirement fund. Yes, even with 20% of KWSP contribution, you can hardly retire comfortably in an inflation-proned Malaysian economy. So, let me emphasize this again, make sure after you reduced 3% of your EPF contribution, channel it to an alternative retirement fund.
Also, note that most of the Ministers we’ve do not belong to the working class ;-)
Save a little everyday, and you will realize how little you’ve saved.
You might want to read these too...
- Major Changes to Your KWSP Contributions
- New KWSP EPF Investment Calculator
- Don't Mess with EPF
- Watch Your EPF Accounts Closely
- Changes in KWSP
- EPF : Service Charges Capped at 3%
- KWSP in English
- KWSP: We Tried to Help
-
marcus
-
Jayce
