This comes in the wake of the announcement that the retirement fund had reverted the statutory contribution rate to 11% from July, from the 9% it was reduced to last year to boost disposable income during the pandemic.

Malaysian Trades Union Congress president Effendy Ghani said EPF should give workers until the end of the year to decide whether they want to go back to the old rate.

He said this was because many were still struggling with the rising cost of living and the higher interest rates charged on loans.

“The extra cash (from a lower contribution rate) can help them cope with the higher prices and costs. The purpose of reducing the rate in the first place was to put more money in people’s hands,” he said.

Effendy said allowing employees to retain the 9% contribution rate till year-end would give them time to revise their financial plans.

To prevent abuse, he suggested that employees who wanted to retain their 9% contribution rate be required to apply for it.

On the concerns of economists that a reduction in the contribution rate would affect the contributors later in life, Effendy pointed out that private sector employees typically received annual pay increases. This could help make up for the reduction in the retirement savings.

“Private sector employees usually get a raise at the start of every year, so if they can postpone (increasing their contribution to 11%) until December, their financial situation will stabilise from January,” he said.