Work until longer retirement wage and increase in employer’s EPF contribution….is it a good or bad news for those working in private sector?

August 23, 2012 12:49PM

Private Sector’s Productivity Appreciated

By Zulkiple Ibrahim

This is the first of the two-part series on the government’s appreciation for private sector workers, when the Parliament passed the Minimum Retirement Age Bill that extends their mandatory retirement age to 60.

KUALA LUMPUR, Aug 23 (Bernama) — When tabling the 2012 Budget in the Dewan Rakyat on Oct 7, 2011, Prime Minister Datuk Seri Najib Tun Abdul Razak stated that the retirement age for civil servants would be extended to 60 years.

He said the government had taken into account the ‘productivity’ of Malaysians who now have longer life expectancy due to improved standard of health.

According to the Health Ministry’s statistics, the life expectancy of Malaysians is now up to 79 years for men and 86 years for women as compared with early post-Merdeka years due to better health and medical care as well as facilities made available by the government.

The increase in life expectancy is the result of continuous improvements in the medical field and the greater availability and accessibility of health care in the urban and remote areas.

With remarkble health and medical infrastructure development, Malaysia has now achieved longer life expectancy where the government has allocated up to RM16 billion annually for medical and health services for the society.

PRIVATE SECTOR WORKERS

In line with the extension of the retirement age for civil sector employees, the government also extended the retirement age of workers in the private sector.

Last June 27, the Dewan Rakyat passed the Minimum Retirement Bill allowing private sector employees to work until 60 years old.

This will be effective from January 2013.

Meanwhile, contributors to the Employees Provident Fund (EPF) earning a monthly wage of not exceeding RM5,000 will enjoy a boost in their retirement savings when the revised employers’ statutory contribution rate of 13 per cent takes effect from January 2012.

The one per cent increase from the current 12 per cent benefits 5.3 million working Malaysians, comprising 92 per cent of EPF’s active members.

However the employees’ contribution rate remains at 11 per cent.

As for employees who are 55 years and above and earning wages not exceeding RM5,000, they will also benefit from the revised rate as their employers are now required to contribute at 6.5 per cent which is an additional 0.5 per cent from the current 6.0 per cent, while the employees continue to contribute at 5.5 per cent.

MOVE WELCOMED

Even though the Minimum Retirement Age Act Bill passed by Dewan Rakyat allows a private sector worker to work until 60, the full withdrawal of EPF funds still remains at 55 as announced by the Finance Ministry.

Ismail Mat was elated after hearing that the retirement age of private sector workers has been pushed to 60 years.

“That means I will have more EPF savings if I am able to work until 60,” he told this writer.

Ismail, 50, is an administrative employee with a local bank.

“If I decide to drive a taxi after retiring from service, It will mean only to kill the boredom,” he said in a lighter vein, adding that the bigger EPF (Employees Provident Fund) savings will help him in his retirement years.

Ismail is among the many private sector workers who cannot afford to retire at the age of 55.

And Ismail is among the private sector workers who welcome the government’s move to push the age limit for retirement.

“At the moment I have about RM160,000 in my EPF Account I. As for Account II, I use the money to reduce my housing loan,” said Ismail without elaborating further.

(Each contributor has two accounts with the EPF. The money in Account I can only be withdrawn after the contributor reaches the age of 55 while the EPF allows yearly withdrawal from Account II if a contributor wishes to reduce his or her housing loan taken from commercial banks).

— BERNAMA

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