Low Wages Is The Reason EPF Contibutors Have Savings Below RM1,000 Says EPF Chief
Wages were around RM500 just a few years ago, he said.
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Some Employees Provident Fund (EPF) members have total savings of less than RM1,000 in Account 1 due to them earning low salaries, said EPF Chief Executive Officer Tunku Alizakri Alias.
He said the low savings of Account 1 can be attributed to the contributions made based on the basic salary, especially as the minimum wage in the country a few years ago was very low.
Alizakri added that previously, many contributors had a low base salary and the rest was paid in the form of allowances. Though, the situation has now improved following the setting of the minimum wage implemented by the government.
Try to imagine, a few years ago, the average basic salary was around RM500 a month. With a statutory contribution of employee share of 11 percent, this means a monthly contribution of RM55 a month, which is very low.
EPF Chief Executive Officer Tunku Alizakri Alias via Berita Harian
Earlier, the government has announced in Budget 2021 that EPF contributors can withdraw up to RM500 a month from their Account 1 for the span of 12 months starting January of next year.
Unfortunately, based on the data from EPF, approximately 32% of contributors have an average of just RM1,000 in their accounts while only 10% of them have a RM5,000 balance.
Lowest salary increase in years
According to a recent survey, salaries are expected to increase a mere 4.7% in 2021 with industries such as retail, manufacturing and logistics having the biggest dip.
Despite the challenges triggered by the Covid-19 pandemic, the survey noted that salaries increased by 4.5% for 2020 – the lowest in four years.
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