SHAH ALAM - It is extremely challenging to recoup retirement savings, especially monies from the Employee Provident Fund (EPF), once it is withdrawn and used.
While there are some who could find ways to do so, there are other extreme circumstances where the lack of retirement savings could lead to people not being able to cope with the rising cost of living in their golden years or even lead to homelessness.
Weighing in on further EPF withdrawals that were announced recently by the government, the Union Network International-Malaysia Labour Centre (UNI-MLC) President Datuk Mohamed Shafie BP Mammal said depositors must think of their olden years and how they plan to survive before making any further withdrawals.
"If everyone starts attacking EPF and makes a withdrawal, once they retire, most of them will face a hard time with no emergency savings for medical and living expenses or settlement of loans.
"As we can see, most of the senior citizens are working as security guards and their life seems miserable because there are no savings and if that continues, there are possibilities of the rise of homelessness in 10 to 15 years,'' he said. Instead, Mohamed Shafie urged the government to come up with the funds to help Malaysians affected by Covid-19.
For Universiti Tun Abdul Razak economist Professor Dr Barjoyai Bardai, he argued that further withdrawals from EPF would not hurt the institution as it received RM20 billion every month from depositors.
However, the effect will be severe on those who withdraw the full RM10,000 from their savings but those who do not could benefit from having RM50,000 in savings over a period of 30 years.
"Our concern is for the contributors who have less than RM10,000 in their account. If they withdraw now, there is no hope for them to have a comfortable retirement and they might have to work for life.
"We can get RM4,000 to RM5,000 a month if we have RM1 million in our EPF account but it will not happen to most contributors and it will take up to 12 years to recover the RM10,000," he said.
Senior Research Fellow at the Malaysian Institute of Economic Research Dr. Zulkiply Omar also advised the public to practise restraint and discipline when it comes to retirement savings.
"Almost 50 per cent of contributors have less than RM10,000 in their account and if the government allows for more withdrawal, chances of senior citizens with no retirement savings are high.
"The government should come up with a different mechanism to cope with the situation for example borrowing money without interest rather than borrowing in the future," he said to Sinar Daily.
Zulkiply also said that the EPF withdrawal is a short term relief that might even lead to homelessness in the future.