The call by MTUC for the contribution from employees to EPF to be increased from 8% (suggested by the government) to the original 11% need careful study and analysis.
First of all how has the reduction of the contribution rate affected the economy of the country? How much spending money has been released to the retail sectors? Have they played any part in boosting our economy? Should such reduction be recommended again in the future when the situation requires it?
Secondly, how has it affected the employees' retirement benefit? Surely the amount at retirement would be less than if the contribution rate has not been reduced. Can this be overcome by an increase in the contribution rate when the economy has improved? Maybe EPF can increase the dividend rates in the future years with some help from the government. After all, the employees (EPF contributors)have played their part in helping the government to boost the economy when it was required by the government. So if the economy has improved as a result of the sacrifice made by the contributors, the government can help by providing subsidies to increase the dividend rates in the future.
Monday October 19, 2009
PETALING JAYA: The Malaysian Trades Union Congress (MTUC) yesterday called on the Government to allow the 2.2 million workers, who opted for the 8% Employees Provident Fund (EPF) deductions, to revert to 11% with immediate effect.
As the economy is recovering, MTUC vice-president A. Balasubrmaniam said EPF contributions were savings for old-age for private sector workers and it was important that the savings percentage be maintained.
Due to the economic downturn, the Government, in November last year, gave employees the option to either maintain the deductions at 11% or reduce it to 8% for a period of two years from Jan 1 this year.
According to the EPF, a total of 2.2 million or 40% of workers opted to reduce it to 8%.
Balasubramaniam said MTUC was now concerned for these 2.2 million workers as they were losing in terms of dividends and final pay out when they reach the retirement age.
He said that although the option was for two years, the Government should allow them to revert to the previous deductions now. — Bernama