Geoffrey Williams of the Malaysia University of Science and Technology described it as a “dangerously foolish and populist” idea, while Yeah Kim Leng of Sunway University said it was “unrealistic” and “undesirable”.
Williams, who is an economist, said while it could come to benefit the wealthy non-bumiputera EPF contributors, it would end up causing economic and social damage for the rest.
Going by the numbers alone, the situation already seems dire, especially for the bumiputeras.
“A total of 81% of EPF contributors who have less than RM1,000 in savings are bumiputeras,” Williams told FMT Business.
In fact, half of all bumiputera EPF contributors have less than RM7,385 each in their nest egg that will have to last them over the next two decades, taking into consideration average lifespan.
It is worse for those in the B40 group. Half of them have less than RM920 each in total (EPF) savings, Williams pointed out.
“The majority of those in the B40 and M40 groups have so little in their EPF savings that they will live in poverty in their old age,” he said.
“They have virtually no savings left to take out. This will not benefit the PN and PAS voter base,” he added.
PN is a coalition of Bersatu and PAS, which are Malay-Muslim parties, as well as Gerakan, STAR and Sabah Progressive Party, which are multi-racial and multi-religious.
On Nov 6, when unveiling his coalition’s manifesto for the 15th general election, PN chairman Muhyiddin Yassin announced that targeted withdrawals from the EPF could be allowed if it wins in the polls.
Yeah, also an economist, said PN should take another look at the proposal given that savings are already at a low level as a result of withdrawals allowed during the Covid-19 pandemic.
If this comes through, it will be the fourth withdrawal from the retirement fund since the Covid-19 pandemic began in March 2020. Incidentally, Muhyiddin was the prime minister when the first withdrawal was allowed.
Deputy finance minister Shahar Abdullah said about RM145 billion had been withdrawn by EPF contributors so far.
Savings are now at a “worryingly low” level, he told the Dewan Rakyat in August.
Yeah said the appropriate strategy would be to look for ways to boost the people’s savings to rebuild social protection, especially for those in the lower income groups who are approaching retirement.
“The economy is already in recovery mode, unemployment rate is declining while income is rising,” he told FMT Business. “Therefore the challenge now is to find ways to encourage people to save for emergencies and retirement.”
He said this could be done by raising the retirement age from 60 to 62. He said the government could also help by looking for ways to help people increase their income so that a larger proportion of their earnings could be set aside for savings.
Last Tuesday, the statistics department revealed that the number of unemployed persons stood at 605,000 in September, down from 612,000 the month before, making it the 14th month in a row of decline.
Yeah added that the government could also provide complementary support by contributing, for instance, 50 sen for every ringgit saved by Malaysians.