Start contributing to EPF since birthday?

By ZAIDI ISHAM ISMAIL

The Employees Provident Fund (EPF) had highlighted numerous times that most Malaysians do not have enough savings to see them through retirement.

The EPF shared that most pensioners would exhaust their monies five years after 55.

EPF had said that most Malaysians now would have less than RM50,000 in their accounts by the time they retire at 55.

The retirement fund had again and again advocated and even pleaded to the rakyat especially to those with insufficient funds in their accounts to be prudent once they retire.

But sadly, we often hear cases of aging Malaysians in their twiliight years struggling to get through life due to lack of money.

Why is this so?

One reason is because most Malaysians are in the bottom 20 or B20 and middle income or M40 group.

It is highy likely that most of the contributions to the EPF are paltry as their salaries are meagre to begin with.

It is a known fact that most Malaysian employers have not increased salaries for their workers for years.

Secondly, the EPF which is the world's top five largest provident fund manages a staggering RM800 billion worth of funds.

The EPF's plate is full and contributors must on their own boost dividends by withdrawing part of their funds to be reinvested by external fund managers.

Contributors cannot expect the EPF to give high returns of double digit growth every year as the fund need to maintain a healthy cash reserve.

So what is the next option?

One of the proposals bandied about is for all parents of newborns to start contributing for their children as soon as they arrive in this world.

Parents can start contributing RM10 per child per month or as high as RM100 a month.

Sounds like a good idea and feasible as it might work to address the plight of Malaysians who do not have enough retirement funds.

A rough calculation shows that at RM50 a month, the child will have an estimated RM15,000 in his or her EPF savings by the time they graduate from university at 24.

The amount could be more due to EPF's yearly dividends and other compound interests.

Subsequently, the young adult will continue contributing once he enters working life.

Maybe this proposal might work but requires an act of parliament to enforce it.

However, it might also be a burden to the B40 group or even the M40 as they will have to start contributing to their children's EPF accounts.

An EPF source said there could be seething problems as some in the B40 group might have up to 5 children or more.

Some are single parents while some children might have a low mortality rate.

But perhaps this scheme could be made into a voluntary basis for those who can afford it.

This initiative can be carried out as it just requires political will such as the i-suri EPF programme.

Negeri Sembilan was the first state to implement the i-suri pension scheme which is aimed specifically for housewives to start saving up in the EPF.

This "saving up for the EPF since you are a baby" idea could be far fetched but it could be food for thought as Malaysia is already an aging nation.

More and more of our elders are living longer than the average mortality age of 75 years old due to better living standards, better food and nutrition and advanced medical facilities.

If nothing is being done now, we will continue to read news reports of old folk pleading for funds for medical help or in need of money to continue living.

And some of these old folks could be our children 70 years from now if they don't have enough retirement funds.

Think about it. - DagangNews.com

The writer is former NST Business assistant editor