Malaysia's Employees' Provident Fund (EPF) has revealed that from the 8.1 million contributors who'd made withdrawals through the fund's four recent withdrawal schemes, about 3.1 million have since struggled to reestablish their savings.
The 3.1 million represent approximately 39 percent of the total number of withdrawers, and worryingly, the amount of savings that these individuals have at present only amount to around RM890 (US$195), according to Utusan Malaysia.
Out of the 8.1 million members making withdrawals, a mere 0.3 million (or four percent) have reached the age of 55 and can access their entire savings. Meanwhile, 4.6 million contributors (59 percent) have started rebuilding their funds, managing to save RM26.1 billion within eight months.
But here's the kicker: The percentage of members projected to have a basic savings amount of RM240,000 by age 55 had plummeted from 36 percent in 2020 to a paltry 29 percent by the end of 2022.
Abu Sofian Yaacob, a senior lecturer at Universiti Keusahawanan Koperasi Malaysia (UKKM), pointed out that nearly five million EPF members struggle to make contributions after a year of withdrawals.
In his view, pushing for a fifth round of special withdrawals would be impractical and exacerbate the predicament, especially for those already grappling with insufficient savings.
"For them, rebuilding their savings will be an uphill battle, taking a considerable amount of time," he explained.
Abu Sofian emphasized that EPF members shouldn't rely too much on special withdrawals. Instead, they should explore alternative avenues to confront the escalating cost of living.
Starting a small business, taking up part-time work, or venturing into new fields can provide additional income to cover expenses. Merely relying on the EPF won't cut it, he advised.
Recently the EPF also disagreed with calls for a fifth round of early withdrawals from retirement savings. According to EPF chief strategy officer Nurhisham Hussein, the current situation doesn't warrant emergency measures like during the early days of the COVID-19 pandemic.
Their studies revealed that only the first three rounds of withdrawals under i-Lestari, i-Sinar, and i-Citra were primarily used for contributors' essential needs such as food, goods, and debt repayment.
However, Nurhisham discloses that the fourth Special Expenditure, which amounted to over RM40 billion (US$8.79 billion) and which was permitted during the Hari Raya celebrations last year, was largely utilized for investments and emergency savings.
Support for EPF's stance against further withdrawals came from the Congress of Employees in the Public Service (Cuepacs), the Malaysian Trade Union Congress (MTUC), and the Malaysian Employers' Federation (MEF).
MTUC president Mohd Effendy Abdul Ghani asserted that allowing a fifth special withdrawal would be inappropriate, especially when 6.7 million contributors under the age of 55 have less than RM10,000 (US$2,200) in savings, risking financial burdens during retirement.
MEF president Datuk Syed Hussain Syed Husman expressed concern about workers having to toil for another four to six years just to cover their expenses, predicting that only a mere three percent of Malaysians would be able to retire comfortably.
Cuepacs president Adnan Mat also warned that further EPF withdrawals would result in more people retiring with insufficient savings.
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Cover image sourced from Soya Cincau and Reuters.
