PETALING JAYA: About 1.64 million or 23% of 7.11 million active Employees Provident Fund (EPF) members contribute less than the current minimum wage of RM1,000, which would result in lower retirement savings.
According to EPF statistics, 64% of members who have reached age 54 years have savings below RM50,000, which is a meagre sum considering the rising cost of living and household debt.
To address this issue, the EPF minimum contribution of both the employees’ and employers’ share will be aligned with the Minimum Wages Order (Amendment) 2018 of RM1,100 beginning Jan 1, 2019 nationwide.
“Low wages, particularly among low-income earners, is one of the primary causes that many Malaysian workers retire with insufficient funds. Alignment of the minimum wage should help EPF members achieve sufficient savings for their retirement and help strengthen their future financial resilience,” EPF CEO Tunku Alizakri Alias said in a statement.
With the alignment, the expected monthly contribution to be received by EPF for every worker who earn monthly wages will be at least RM264, subject to the worker being employed for the full month.
Different minimum contribution may also apply to members who are salaried on a weekly, daily or hourly basis.
EPF said it has sent notices to all employers registered with the EPF on the new measure, and will work closely with employers to ensure the smooth implementation of the policy.
“We are confident that employers will benefit from this in the long run as it will help to increase productivity, loyalty as well as incentivise employees to do their best for the organisation,” said Alizakri.
Source: The Sun Daily