by Lim Chee Wei
More than 90 percent of the Employees Provident Fund (EPF) members under the age of 30 will not reach the basic savings level of RM240,000 by the time they retire, according to a report by the Khazanah Research Institute (KRI).
Data from 2019 to 2022 showed that only the top 10 percent from the under-30 age group have EPF savings exceeding RM35,000, with an average savings of around RM49,000.
The under-30 group is among those least affected by the impact of EPF savings withdrawals during the COVID-19 pandemic as they usually do not carry various financial commitments like car or housing loans.
Looking at the data, the KRI report also mentions that by increasing contributions to Account 1 from 70 percent to 75 percent, the EPF can expect that 65 percent of contributors will achieve the basic savings level by 2035.
One question that has been raised in the report is whether the RM240,000 savings goal or threshold is still relevant to current needs. While RM240,000 may be sufficient to support a family today, it may not be adequate in 10 years’ time.
From a macro perspective, the country’s economic situation is considered to be increasingly stable. Inflation rates are consistently around 2.0 percent and the performance of Bursa Malaysia being among the best stock markets in Southeast Asia, supported by the strengthening of the ringgit against the US dollar.
These positive indicators provide strong evidence that the policies and approaches implemented by the Unity Government are starting to bear fruit. Although a small group continues to sensationalise issues involving race, religion and royalty (3R) to maintain their mantra of the politics of hate, it is clear that such outmoded strategies have had no adverse impact on foreign investors’ confidence as they continue to invest in Malaysia.
What’s the next direction?
Now, economic analysts are beginning to openly discuss the need for concrete follow-up actions regarding the rationalisation of RON95 petrol subsidies, considering the positive reaction to the rationalisation of diesel subsidies and mitigation measures implemented by the Ministry of Domestic Trade (KPDN) under the leadership of Datuk Armizan Mohd Ali.
Initially, the rationalisation of diesel subsidies was seen as akin to political suicide due to its unpopularity in doing so and a policy that no Prime Minister had dared to change in the past. However, when it was Datuk Seri Anwar Ibrahim’s turn to lead the federal government, he took significant political risks in the diesel rationalisation, which was seen as a bold step in economic reform.
The country’s current economic performance proves that economic reform is relevant to societal needs. However, for total reform to be implemented, the top leadership of the Unity Government must be brave enough to address the subject of targeted subsidies and to draft a liberal economic policy that can further stimulate investment while preventing wastage and leakages.
Economic reforms for Malaysia demand strong political commitment, balanced with a clear intention to ensure the protection and safety net for low-income groups and the disabled.
The distribution of national wealth becomes more meaningful when economic vibrancy is achieved without sacrificing fair social welfare alongside human capital development for the critical sectors to ensure Malaysia’s competitiveness.
As society grows weary of the stagnating 3R polemics, the well-being of the people is far more important than the matter of a vote of confidence, especially in Parliament. The real vote of confidence is actually in the hands of the people.
Langkawi-born Lim Chee Wei is a sharp observer of happenings and developments around him
WE