Older, wiser, but kept poorer

Columnists > Along The Watchtower

ALL over the world, the have-nots are wont to say: The rich are getting richer, the poor poorer. But in Malaysia, this version might be more applicable: The rich are getting richer, the old and the poor are getting poorer. 

At a time when they should be enjoying their “golden years,” many of our retirees still remain trapped in their never-ending “hungry years.” Each day, more of them are being forced to eke out a living as taxi drivers, security guards, cleaners and restaurant help.  

Own business? Few have enough in their hard-earned savings to gamble on anything riskier than joining a multi-level marketing scheme, selling insurance or opening a warung.  

Among those in the “old and poor” category are retirees from the civil service, including more than 80,000 armed forces veterans, who collect paltry monthly pensions of between RM200 and RM300. 

Things are also not much rosier for the unskilled and semi-skilled folk who used to work in the private sector and who contributed to the Employees Provident Fund (EPF).  

On the average, a retiree at 65 would have used up 70% of what seemed like a grand stash of EPF cash just 10 years earlier.  

The choices available for such a person is to either go back to work or depend on his children for the rest of his remaining years. 

But with employers reluctant to hire not-so-savvy older people, and with the easy availability of cheap foreign labour, hardly any job is open for retirees, especially in urban areas, making them most vulnerable to the socially painful aspects of poverty. 

While the EPF has, and still plays, a vital role in the provision of income security for the elderly, over reliance on it can only result in more distressing consequences in the years to come. 

Perhaps we need to develop a social insurance-based pension scheme that can offer an assured basic income for the elderly after retirement. 

The EPF’s policy makers, too, appear to have realised the inadequacy of existing arrangements to meet the needs of the elderly, currently estimated to comprise about 6% of our 26 million population. 

Earlier this month, EPF deputy CEO Rusma Ibrahim cited a recent survey which identified former workers from the lower income group as the hardest hit.  

She said there was a dire need to review the fund’s role in the wake of current demographic changes and the erosion of the extended family support system. 

The survey showed that most retirees would need between RM510 and RM1,000 a month to cover their basic needs. In other words, they must have at the very least RM120,000 in standby cash to survive over the next 20 years. 

Given such a scenario, the changes being proposed under the EPF Bill (Amendment) 2007 are puzzlingly unpropitious.  

To put it bluntly, they smack of blatant discrimination against older workers as well as foreign workers and are likely to further undermine the value of local labour. 

Under the proposed amendments, once a worker reaches the age of 55, the employer’s contribution to the EPF would be slashed from 12% of his or her salary to only 6.2%. The employee’s contribution, currently at 11% of the salary, will be cut to 5.7%.  

If the changes go through, employers of foreign workers need only pay RM5 a month.  

At such low rates, can we honestly expect employers to hire unemployed locals? 

Two other proposed changes also reflect bias against older people.  

Dividends will not be given to the savings of contributors above 70. It will be worse for those who live to 80 – their savings will be automatically transferred to the Department of Unclaimed Monies. 

To be fair, there are some positive things proposed, such as the amendment to allow contributors to withdraw their EPF savings to pay for housing loans taken by their spouse if a couple is registered as joint owners of the property. 

This will certainly help married couples settle their housing loans earlier. 

Clause 10 of the Bill seeks to amend Section 54 of the Act that will allow contributors to finance the higher education of their children and to buy insurance policies with EPF withdrawals. 

But the cons against the elderly certainly outweigh the pros. Workers groups have rightly expressed their indignation over the Bill, with the MTUC denouncing the changes as “unfair exploitation” of the elderly, as well as foreign, workers. 

Cuepacs, has also declared that it would not agree to the changes, saying that some 43,000 civil servants who had opted for the EPF were already at a disadvantage compared with those under the pension scheme. 

Yesterday, the EPF’s top brass briefed MPs over the proposed changes, stressing that they were in the interest of workers. 

The ball is now at the feet of our MPs and people expect them to do the right thing by scrutinising the amendments. 

If the changes don’t offer a better or fairer deal for all workers, they shouldn’t hesitate to send the Bill back to the drawing board, even if it is already scheduled to be tabled for second reading. 

It will be one way of proving that they are a part of the oft-touted caring society that we claim to be. 

  • Deputy News Editor M. Veera Pandiyan remembers this plea by prolific writer Pearl S Buck: Society must make it right and possible for old people not to fear the young or be deserted by them, the test of a civilisation is the way that it cares for its helpless members. 
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