KUALA LUMPUR, 2 November 2018: The Employees Provident Fund (EPF) notes that the Government tabling of the Budget 2019 balances long-term imperatives with short-term needs.
EPF Chief Executive Officer Tunku Alizakri Alias said, “We recognise that the near-term measures announced in the budget are necessary to stabilise the country’s fiscal situation in order to put us on a solid growth trajectory, but at the same time, we are glad that the long-term well-being of Malaysians, ranging from affordable housing, healthcare, insurance coverage and public transportation, are also being looked into.”
He added that beyond the short term challenges facing the country, Malaysia is expected to become an aged nation by 2030, when there will be fewer working age people in the economy compared to today, supporting the needs of those who are retired. The related measures are as follows:
1. Reducing statutory contribution rate for post-retirees
The proposal to reduce the statutory employers’ share of EPF contribution rate for post-retirees from six (6) per cent to four (4) per cent should incentivise employers to hire or retain their older workers and can continue to leverage on their skills and knowledge. This is in line with the concept of active ageing, where retirees continue to contribute to the workforce.
In addition, the proposal includes the employees’ share of contribution to be set to zero per cent once they have reached 60 years old. The EPF views this as a positive measure, as it will allow post-retirees to have higher take-home pay should they continue to work regularly, taking into account the need for liquidity in their retirement years. Post-retirees who wish to continue saving with the EPF may opt for voluntary contributions instead.
2. Tax relief split between EPF contributions and takaful and life insurance premiums
The EPF notes the Government’s move to separate the tax relief for EPF contributions and takaful and life insurance, in recognition that they fall under different aspects of a comprehensive social protection system.
While the measure may reduce the tax shelter element of EPF contributions, the move is a step in the right direction as it should be seen as an improvement in Malaysia’s social protection system as a whole.
3. To continue e-Kasih RM40 monthly contribution for i-Suri
In line with extending coverage to those in the informal sector, the Government will continue its monthly contribution of RM40 for a minimum contribution of RM5 into the EPF i-Suri housewives’ account.
The i-Suri initiative, which was launched on 15 August 2018, has received positive response and as of end October 2018, the total number registered is 28,963, which is equivalent to 13.29 per cent of those who are eligible under e-Kasih. This incentive is expected to provide housewives with an avenue to save for their future well-being.
Tunku Alizakri commented, “This is an inclusive budget which takes into account the needs of all the major vulnerable segments of society. The measures broaden the foundation for the development of a strong social well-being infrastructure.”
“Therefore, we are pleased that the budget is geared towards enabling Malaysians to live their lives with dignity before and beyond retirement. In addition, retirees will now be able to continue to play a role as part of a productive workforce. The Budget brings improvements to Malaysia’s social protection system and is a further step towards allowing Malaysians to reach their potential and aspirations, in line with the EPF’s mission of helping our members achieve a better future.”
About the Employees Provident Fund (EPF)
The Employees Provident Fund (EPF) is Malaysia’s premier retirement savings fund to help its members achieve adequate savings for a comfortable retirement. This is in line with EPF’s vision to help members achieve a better future and the mission to safeguard members’ savings and deliver excellent services. The EPF has evolved significantly from transaction-centric to a professional fund management organisation with a strong focus on retirement security. The EPF is guided by a robust and professional governance framework when making investment decisions. It continues to play a catalytic role in the nation’s economic growth and seeks to cultivate a savings and investment culture among its members to improve the country’s financial literacy level.