Tuesday, November 18, 2014

MALAYSIA:::KWSP's Proposal To Increase Age Limit For Wihdrawal Of Savings To 60 Needs Indepth Study

The government must not readily accept a proposal from the Employees Provision Fund (EPF) to increase the age for withdrawal of full retirement savings to 60 years, because not all choose to retire at 60.

Congress of Unions of Employees in the Public and Civil Service (CUEPACS) President Datuk Azih Muda said the age limit to withdraw ones savings should match their retirement age because not every employee retires at the age of 60.

"Currently, there are pensioners who chose to retire at the age of 58. How about them? Do they also need to wait another two years to withdraw their savings?

"The age limit to withdraw savings should match the retirement age to give them an opportunity to use the money to do things like buying a house or performing Hajj," he told Bernama, here, Monday.

Sunday, the media reported that KWSP was proposing to increase the age limit for withdrawing the entire savings from 55 to 60.

Deputy Chief Executive Officer (Planning and Strategy Management)of KWSP Tunku Alizakri Alias said the proposal was in tandem with the implementation of the retirement age at 60.

Meanwhile, Economic Faculty lecturer at International Islamic University of Malaysia (UIAM), Prof Dr Mohamed Aslam Haneef also agreed that the proposal should be refined, because the five-year difference for withdrawing funds would not bring significant differences to the total amount.

He said the move was probably to ensure the savings 'lasted longer' but it may not necessarily succeed if it was spent without prudence by the contributors.

"It is understood that there are many EPF contributors with savings of less than RM50,000 and are likely to finish their savings between the first and fifth year of their retirement," he said.

In relation to the matter, Mohamed Aslam said among steps that could be taken to 'help' the contributors, especially those with lower income, was 'intervention by related parties' to increase the income bracket for this group.

"Those with lower income can only contribute a small amount to the EPF until their retirement. If their income increased, so would savings amount in EPF," he said.

Mohamed Aslam also advised the public not to totally depend on EPF savings, and instead have their own personal savings or use investment channels available in the market to increase their pension fund.

"At age 55, even if someone received an EPF fund of roughly more than RM100,000, they would not be able to live comfortably with that amount because it would be insufficient to bear the expenses during their retirement.

"The best way is to have other savings and to save or invest at least 10 percent of their net salary,"

Up to last September, 68 percent of EPF members aged 54 had less than RM50,000 in savings and only 33 percent met the basic savings level, that is a minimum of RM196,800 to give a monthly income of RM820 for 20 years.


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