With the rate being restored to 11% after having been cut to 9% in the wake of the Covid-19 pandemic, Universiti Putra Malaysia’s (UPM) Rusmawati Said cautioned that if employees are unable to save now, it would get complicated when they were older.

“Contributors would be ‘burdened’ by the increasing medical costs if they do not chip in more now,” she told FMT.

Last year, the employee’s share of the statutory contribution rate to EPF was reduced to 9% to boost disposable income during the pandemic. In July, it was set back to 11%.

Rusmawati said an individual earning RM2,000 a month would contribute RM220 based on the current rate. This came up to RM40 more than the contribution of RM180 if the percentage was at 9%.

She said the RM40 difference may seem vital for those struggling with the cost of living, but there was a need to look at the long term.

Barjoyai Bardai of Universiti Tun Abdul Razak welcomed EPF’s decision to revert to the 11% rate, pointing out that it was still the lowest compared to neighbouring countries.

He said contributions to EPF were needed even though there were other government-run saving schemes. “When employees retire, they will have savings that would allow them to get by.”

Barjoyai also said employees should not look at the amount deducted for such contributions as a loss as the sum would eventually “return” with interest.

“EPF isn’t a tax but a long-term saving scheme,” he said, adding that this was the best time to revert to the 11% rate to ensure that retirement plans would not be disrupted.