The government should introduce more investment tools to help Malaysians increase their savings and plan their own retirements through prudent financial planning.

EPF announced last Wednesday 6.1% dividend rate for 2021, much to the jubilation of its members.

Hua Zong has described the high dividend rate as “the most encouraging in the midst of the pandemic”.

This has been made possible thanks to EPF’s prudent operation and investment to create maximal profits and returns for its members.

A 2021 survey showed that EPF was among the most trusted institutions among Malaysians. Due to the pandemic, economic uncertainties and natural disasters, 2021 was not a good year to many. They hoped government institutions and private businesses alike would offer timely help during such challenging times.

As such, the dividend rate announcement came as a morale booster for many.

Unfortunately, the savings of many EPF contributors have dwindled remarkably compared to previous years, triggering fears many may not have sufficient funds to last them through their retirements in future.

According to EPF, some 6.1 million people, or approximately 50% of its members below the age of 55 have less than RM10,000 savings in their accounts.

Today, EPF should play the role of preparing Malaysians for their retirements. If too much cash is withdrawn from their retirement funds, they may be left with too little for their old age expenses.

To sustain the most fundamental lifestyle after retirement, we will need to institute early financial planning so that we can enjoy a relatively care-free retirement.

Besides EPF, there are other savings plans available in the market, including fixed deposits, unit trust and other investment tools which we can adopt. But to people not well versed with financial planning, perhaps EPF is the best and safest option around.

EPF statistics show that other than members with pathetically low savings, there are also this group of members with exceptionally high savings, and this highlights the stark polarization in Malaysians’ retirement preparations.

Low personal incomes could contribute to low savings, but an individual’s financial and retirement planning abilities are equally important.

Two years into the pandemic, many EPF members have been facing acute financial difficulty. To help them through the tough times, the government has allowed members to withdraw from their EPF accounts to meet their immediate financial needs.

The government introduced i-Lestari, i-Sinar and i-Citra withdraw schemes in 2020 and 2021 to allow EPF members to draw certain amounts of money from their savings to relieve their financial burdens and help tackle the challenges of the pandemic.

Among them some really need the money to meet their urgent needs, and hopefully after they have improved their financial positions with more steady incomes in the future, they will put the money back into their accounts to make up for the shortfall for the sake of their future retirements.

Unfortunately, there are others who feel that they should just take as much as they are allowed to, since the money inside their accounts are theirs anyway, without taking into consideration the possible consequences.

Some others even think that the authorities should lift the restriction further to allow them to withdraw from their accounts anytime they want.

We even have irresponsible politicians who keep exerting pressure on the government to allow EPF members to continue withdrawing from their accounts “for emergency use”.

As a matter of fact, the right concept of financial planning should be saving more and drawing less.

Other than deducting a certain percentage of a member’s monthly salary to be deposited into his or her account, EPF also encourages members to deposit more into their own accounts if they can afford to.

In the meantime, the government also encourages self-employed individuals to deposit into their EPF accounts through i-Saraan and Caruman Pilihan Sendiri schemes. This shows that the government has systematically introduced various schemes to help Malaysians save for their future.

The government has said it is impractical to allow EPF members to keep withdrawing from their accounts to solve their current problems because this will transfer the burden to the younger generation.

EPF’s decision is farsighted and commendable. In fact, before we introduce any withdrawal scheme, its long-term consequences, in particular the impact on the members’ families, must be taken into account, because their children may have their own families to take care of and may not be able to bear their parents’ retirement expenses.

It is not advisable to keep introducing similar populist measures. In its stead, the government should introduce more investment tools to help Malaysians shore up their savings and plan their own retirements through prudent financial planning.

If they are really serious about the needs of the people, these politicians must immediately stop pressurizing EPF to come up with more “contingency withdrawal schemes”.