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KUALA LUMPUR: The Employees Provident Fund (EPF) should specifically ask members to apply for lower deductions under the Covid-19 Stimulus Package instead of automatically reducing the contribution rate from 11 per cent.
Malaysian Trades Union Congress (MTUC) secretary-general J. Solomon said the move by the federal statutory body means that those who do not fill up the form for the reduction will automatically have their monthly EPF contributions cut by four per cent beginning April 2020.
“This is a misleading and deceiving tactic to compel workers to commit for the reduction.
“This amount will be channelled back as ‘extra’ salary to the workers to help them mitigate the economic impact from the Covid-19 virus outbreak.
“However, this also means that workers who opt for the ‘extra’ cash will suffer further reductions in their already meagre EPF savings.
“To make matters worse, EPF will only pay interest on the remaining seven per cent of employees’ contribution, instead of the normal 11 per cent, he said in a statement today.
In a March 5 statement, the EPF said employees wishing to maintain their employee contribution at 11 per cent must complete the Borang KWSP 17A (Khas 2020) and submit it to the EPF via their employers.
Solomon said while the MTUC does not begrudge the government for allowing workers to reduce their monthly contributions to the retirement fund to deal with the economic downturn, the retirement fund must not be seen as encouraging workers to take up the option unwittingly.
“Workers are generally not inclined to savings due to unaffordable living conditions and therefore the mandatory savings through EPF is obviously useful in the long run”, he added.
Solomon said accordingly, the congress fears that workers who do not fill up the required forms will be deemed as agreeable to have their contributions reduced, even when it is clearly against their wishes.
“As such, MTUC calls on the EPF management to compel only those who agree to have their EPF contributions reduced by four percent to fill up the said forms.
“All employees who do not fill up the forms must be regarded as wanting the status quo which is to keep their employee contributions at 11 per cent,” he said.
Solomon also said that the EPF also has a moral responsibility to discourage contributors from reducing their contribution merely to have some extra pocket money at month’s end.
He said while this extra cash is important to low wage earners, it should not be at the expense of eating into their retirement funds which is already inadequate, given the paltry income of workers.
“It must be also noted that the 4 per cent credited into the worker’s account will also attract tax for those who are taxable”, he adds.
The fund has also reported that 50 per cent of its members have only an average of RM50,000 in EPF savings by the time they hit the retirement age of 55 years. This amount will only last them five years.
He said as such, the four per cent reduction every month in EPF members’ contributions for even one year will worsen their situation in the long run.
“The government should inject funds in the form of family Cola (Cost of Living Adjustments) and loans at lower interest rates for B40 and M40.
“Such loan facilities are provided for the business community and why can’t it be extended to workers?” he said.
Solomon said the MTUC does not encourage any reduction of EPF member’s savings to stimulate the economy in facing the effects of Covid-19.
However, he said if the government still insists on doing so, as outlined in the stimulus package, the EPF must not be seen as compelling members to fill up forms if they wish to continue contributing 11 per cent to the fund.
“Only those who choose to take up the government offer should be made to give a written undertaking of agreeing to have their EPF contributions reduced to seven per cent in lieu of the money being channelled to them as extra wages and not the other way around,” he added.
Source : https://www.nst.com.my/…/mtuc-against-automatic-reduction-e…
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