MTUC Sarawak concerned over lack of savings

KUCHING: Malaysian Trades Union Congress (MTUC) Sarawak is concerned over its contributors’ lack of retirement savings.

MTUC Sarawak stated that the 5.2 percent dividend for Employees Provident Fund (EPF) is within their expectation.

“However, our concern remains when 30 percent or about 1.6 million members may withdraw almost all of their savings from Account 1, while another 60 percent or three million members ‘have or will use up all savings in Account 2’.

“We noted that some RM130 billion in funds had been and are still being released to members and employers via various schemes to alleviate Covid-19 related hardships since last year,” it said in a statement.

“We also noted that there has been reduction in contribution rates even before Covid-19. While the aim is to enable members to have more disposable income and to increase domestic consumption, we suspect that most of the withdrawals may be used by contributors to pay off borrowings.

“This means that the increase in consumption may not be significant. With increased withdrawals and reduced contributions, it is no surprise that the savings adequacies of most of its members are expected to deteriorate further,” it added.

MTUC Sarawak also mentioned that despite the fact that the EPF’s total investment assets stood at RM998 billion at the end of 2020, the average savings of its members are well below the amount needed to have a sustainable retirement.