Will EPF laws change in tandem with that of the retirement age?
THE idea of raising the retirement age has generally been welcomed by a large number of Malaysians but some do wonder what will happen to their retirement savings.
For many, their main savings will be the money kept diligently every month with the Employees Provident Fund (EPF).
That sum of money grows with incremental monthly additions along with yearly dividend.
The money grows quite nicely especially when the power of compounded interest is factored in and for many this bulk of money is locked away until it is ripe to be withdrawn when they are 55 years old.
But the stringent rule where employees can only withdraw their EPF money upon retirement has now raised another question. In the event the retirement age of all Malysians is raised, will the EPF Act that currently allows full withdrawal at age 55 also be amended?
Starbizweek has received a number of letters from concerned readers since the issue of the increase in retirement age from 58 to 60 first surfaced during the announcement of Budget 2012.
While this has been sanctioned for government sector employees, there is already talk that the retirement age for private sector workers could also be upped from the current 55.
A reader, aged 54 in his letter lamented that if that is the case, he would be “in deep trouble”.
“Like everyone else, I want financial freedom.
“My EPF savings is quite substantial and I have been looking forward to my next birthday to make a full withdrawal of my EPF savings that will enable me to pay off all my loans and realise my dream of financial freedom,” he writes.
“If the EPF Act is amended disallowing a full withdrawal of my EPF savings next year, what shall I do then? Turn to Ah Longs?
“I am very sure there are many fellow Malaysians who are in a similar predicament,” he adds.
Another reader wrote in saying that he has “worked hard all these years” and plans to withdraw the full sum of his EPF savings to finance his daughter's education when he turns 55, which is two years away.
“If I am not allowed to do so, I will have to find other means, which is easier said than done,” he says.
Although there has been no formal announcement, their concerns are certainly not unsubstantiated.
Human Resources Minister Datuk Dr S. Subramaniam says the current retirement age of 55 was set when the life expectancy of Malaysians was around 55.
“Now, it is around 75, so we can't keep the retirement age at 55,” he was quoted as saying after launching the Malaysian Employers Federation (MEF) national conference 2011 last month.
Meanwhile, industry experts contacted say they believe the EPF will not be drastic in its amendments, if an increase in retirement age for the private sector is to take effect.
“It is too early to jump the gun but I am sure the EPF will try to be fair to its members, many of whom are depending on their savings to fund their children's higher education,” says a financial planner.
“In any case, working those five extra years will supply a steady income for those who are gainfully employed and that is bound to help a little,” he says.
By YVONNE TAN
yvonne@thestar.com.my
For many, their main savings will be the money kept diligently every month with the Employees Provident Fund (EPF).
The money grows quite nicely especially when the power of compounded interest is factored in and for many this bulk of money is locked away until it is ripe to be withdrawn when they are 55 years old.
But the stringent rule where employees can only withdraw their EPF money upon retirement has now raised another question. In the event the retirement age of all Malysians is raised, will the EPF Act that currently allows full withdrawal at age 55 also be amended?
Starbizweek has received a number of letters from concerned readers since the issue of the increase in retirement age from 58 to 60 first surfaced during the announcement of Budget 2012.
While this has been sanctioned for government sector employees, there is already talk that the retirement age for private sector workers could also be upped from the current 55.
A reader, aged 54 in his letter lamented that if that is the case, he would be “in deep trouble”.
“Like everyone else, I want financial freedom.
“My EPF savings is quite substantial and I have been looking forward to my next birthday to make a full withdrawal of my EPF savings that will enable me to pay off all my loans and realise my dream of financial freedom,” he writes.
“If the EPF Act is amended disallowing a full withdrawal of my EPF savings next year, what shall I do then? Turn to Ah Longs?
“I am very sure there are many fellow Malaysians who are in a similar predicament,” he adds.
Another reader wrote in saying that he has “worked hard all these years” and plans to withdraw the full sum of his EPF savings to finance his daughter's education when he turns 55, which is two years away.
“If I am not allowed to do so, I will have to find other means, which is easier said than done,” he says.
Although there has been no formal announcement, their concerns are certainly not unsubstantiated.
Human Resources Minister Datuk Dr S. Subramaniam says the current retirement age of 55 was set when the life expectancy of Malaysians was around 55.
“Now, it is around 75, so we can't keep the retirement age at 55,” he was quoted as saying after launching the Malaysian Employers Federation (MEF) national conference 2011 last month.
Meanwhile, industry experts contacted say they believe the EPF will not be drastic in its amendments, if an increase in retirement age for the private sector is to take effect.
“It is too early to jump the gun but I am sure the EPF will try to be fair to its members, many of whom are depending on their savings to fund their children's higher education,” says a financial planner.
“In any case, working those five extra years will supply a steady income for those who are gainfully employed and that is bound to help a little,” he says.
By YVONNE TAN
yvonne@thestar.com.my
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